All accomplishments are manifested by a person’s thoughts. A thought leads to actions, which produce results. Taking that into account, it’s evident that wealthy people’s thoughts about money differ from those of poor people. That’s the reason their results vary.
The mindset that you have about money is crucial because it determines your financial results. So, how do rich people think differently about money than poor people?
Wealthy People Believe Money is Important
Not only do they believe that money is important, but they teach that to their children. There is nothing wrong with saying that money is important, possibly the most important thing. I understand if you feel that family and health are more important. I agree with you. But if your loved one or you need a life-saving operation, the only thing that will provide that is money. Kissing and hugging the doctor will probably not be enough encouragement for him to operate, but money definitely will.
Wealthy people have no inhibitions about talking about the importance of money and rightfully so. In my experience, anyone who said that money wasn’t important simply didn’t have any.
Money is a tool that provides freedom, not just financially. The more money you have, the more freedom you’ve got. If you had enough money, you would not tolerate asking an adult at work if you can take a day off. That’s the cold, harsh reality for most people with jobs.
Understanding how important money is will make you see it in a completely different light and should make you act accordingly. That usually leads to actions such as compiling a budget that entails saving a certain percentage of your income, reducing expenses and dedicating as much money to debt as possible. Those actions are typical of somebody who values money.
People who don’t believe that money is important don’t even have a budget.
Wealthy People Don’t Care What You Think About Them
I have avoided a tremendous amount of stress by not worrying about what people think or expect of me. I live my life for myself and make decisions that favour my finances, not my ego. Poor people are concerned about what their neighbours, family and colleagues think about them. They buy vehicles, live in certain neighbourhoods and take vacations to impress others.
Other people’s opinions of them are very important. Poor people want to appear to be rich and successful, so they use material possessions to convey that image. But since they can’t afford those possessions, they use borrowed money. They finance vehicles, pay for designer clothing with credit cards and take out personal loans to travel.
Poor people’s purchasing decisions are heavily influenced by other people’s opinions of them.
Wealthy people care more about what they will think about themselves for making a stupid purchase, as opposed to enjoying seeing other people being impressed by their purchase. They make financial decisions that inflate their pockets, not their egos.
A wealthy friend of mine drove the same car for many years. Before I understood rich people’s mentality, I wondered why he never bought a supercar. After gaining financial knowledge, I realised that wealthy people receive more satisfaction from seeing their net worth grow than from owning a liability.
Rich people make lavish purchases, but those transactions are a small percentage of their net worth. Poor people build up a negative net worth with their purchases.
Wealthy People Think Long-Term
Do you ever wonder why you’re living paycheck to paycheck? It’s because you’re not considering your financial situation a year or ten years into the future. I understand that you may think your income isn’t sufficient to cover all your expenses. But I learnt that my expenses were too big for my income.
I worked in corporate finance and made a good income, yet I didn’t save money because my expenses were exorbitant. After being homeless and learning about money management, I worked at a restaurant, earning less than half of what I made in the corporate world, yet I saved money. The reason is that I lowered my expenses.
I thought about paying off my debt quickly, saving money to invest so that I could increase my net worth. It took me six years to pay off all my debt and save $50,000. Some people may think that’s a long time, but I managed to do it because I thought long-term.
When a wealthy person receives an income, they think about how to invest the money so it grows and spend only a small portion of it in the future. A poor person makes a plan to spend money as soon as they receive it. Even if a poor person receives a salary increase, they always find a way to spend the additional funds. It’s almost never saved or invested. It’s spent immediately because they favour instant gratification over saving and investing, which are long-term.
Wealthy People Seek Multiple Streams of Income
Layoffs have become ubiquitous in several first-world countries. If your only income is from a job and you lose it, you no longer have an income. Wealthy people know that having only one stream of income is extremely risky, so they diversify.
They have businesses, rent out several apartments and invest in financial markets. Most people don’t have the funds to enter into such ventures. But anybody can get a side hustle along with their full-time job. Over time, the side hustle could grow into a profitable business. With the savings from the business, they could eventually buy an apartment to rent out. But that process starts with thoughts about generating additional income.
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