Why Do The Rich Keep Getting Richer?
When it comes to financial wealth, your mindset matters, and there are two different mindsets. There is the rich mindset and the poor mindset.
The main difference between rich people and poor people is the fact that rich people spend their time and money bettering themselves, looking for new income sources, and investing in the future.
On the other hand, a poor mindset is all about immediate returns. Most poor people think in terms of hours for dollars, they think certain things aren’t worth paying for, and they think they can accomplish everything if they work hard enough.
To build lasting wealth, you need to develop a rich mindset. Let’s talk about some traits people with rich mindsets have that their poor-mindset counterparts don’t.
The poor spend more time watching television and being entertained. Wealthy people focus on self development and learning more in their field.
The average American adult watches over six hours per day of television content according to a Nielson’s report. That’s nearly half a day of either watching some form of entertainment or interacting with media content. It’s no secret the average person has their face buried in their phones on social media whenever they’re not consuming traditional media. For instance, the typical adult spends about an hour a day on Facebook, around forty minutes a day on YouTube and roughly about the same on Twitter.
Wealthy people understand in order to be on top they need to stay one step ahead of the competition. This is why they’re constantly reading and educating themselves where it counts. It doesn’t mean they are constantly collecting degrees like the typical nine to five person thinks is the only way to earn a better wage. Instead, they increase their knowledge within the areas they’re strongest or weakest and in areas where it translates to more money.
The wealthy have daily habits such as listening to audiobooks during their daily commute instead of their favorite music playlist. Most of it is educational or career related material. They also read about other successful people — biographies, current events, history, documentaries, etc.
Warren Buffett spends over five hours a day reading the newspaper, Bill Gates reads fifty books a year, and Arthur Blank, the co-founder of Home Depot, reads for at least two hours every day. What could you do if you stopped watching TV?
The poor will give up easily when challenged. The wealthy are relentless at being resourceful.
As Chris Guillebeau says, “It’s easier to ask for forgiveness than permission.” People with a rich mindset don’t wait for someone to tell them what they should or shouldn’t be doing or if they’re qualified enough to do it.
Rich people go for what they want. They don’t need instructions, and if they are weak in a certain area — they either outsource, hire someone, or partner with someone with the skillset needed.
If a person with a rich mindset doesn’t know something (say, for instance, starting a business), they figure it out by asking for help, reading, or taking a class. They value intellectual growth, and they never feel like they know everything.
When poor people are confronted with a similar obstacle, they don’t take the time to search for a solution thoroughly. They would rather substitute finding a proper solution with just simply staying ignorant of what could have been a life-changing opportunity.
Poor people live outside their means to feel wealthy. The wealthy live within their means to sustain what they have.
Minimalism is a hallmark trait of both Mark Zuckerberg and Steve Jobs. Wealthy people only make decisions they have to make, simplifying all other decisions in their lives. When you have to make million-dollar business deals, what you wear in the morning isn’t really that important. In contrast, poor people favor the instant gratification gained from impulse purchases, and they often find themselves burnt out by microdecisions.
Poor people have a consumer mindset. Wealthy people have an investor’s mindset.
You won’t catch a rich person standing in line all night for a television on Black Friday. In fact, you won’t find them shopping holiday deals at all. People with a rich mindset aren’t concerned with getting discounted material possessions, because they’re more concerned with assets versus liabilities such as the stock market or the real estate market. Wealthy people will utilize coupons for things they’re already going to purchase, but they don’t spend their free time beating each other over the head for a flat screen television.
The wealthy understand the difference between assets and liabilities. Assets add value to your portfolio and increase your net worth, while liabilities decrease your net worth and even contribute to your overall debt. Wealthy people make it a point for their assets to outweigh their liabilities because they think long term — not short term.
Most often, poor mindset people don’t understand debt and credit cards, and they don’t know how to use them towards their benefit. They think of credit cards as free money, something they can use for instant gratification now and pay it back later. On the other hand, wealthy people see credit cards and loans as a way to multiply funds. Rather than going into debt for a new pair of shoes or a massage, they go into debt to grow their business or to purchase new assets such as real estate, arts & collectibles, intellectual property, technology or precious metals.
The poor focus on income. Wealthy people focus on net worth.
There’s two types of income. Active and passive. The average or poor mindset focuses solely on one stream of income which is typically their main job or career. This is an active stream of income where they basically sell their time for money. In most cases, the more time they spend, the more money they feel they will make.
The wealthy on the other hand, they focus on accumulating passive income or income that is earned through investments. Interest and dividends that are earned through businesses, real estate or stocks prime examples of passive income. We’re not referencing the fantasy definition of passive income like most YouTubers and Instagram models try to sell you where you’re under the impression you do zero work and magically reap millions each month. Real passive income is normally front-loaded with active work and you reap the rewards later.
Wealthy people understand that the more money you have, the easier it is to make more money. This is why they never depend on a single source of income like the average. Instead, they focus on multiple streams of income. This is the key to becoming wealthy and staying wealthy. The excess money that you generate from multiple income streams gets invested into newer business ventures. Rinse and repeat.
Visit our article on passive income strategies to see what examples are out there versus the article we wrote on side jobs that represent active income streams.
Poor people have a lottery mentality. Wealthy people don’t gamble on their future.
A few years ago, Americans spent over $70 billion dollars on lottery tickets according to the North American Association of State and Provincial Lotteries. A majority of those Americans are struggling financially, categorized as lower income and have a median household consumer debt of at least $16 thousand dollars not including a home mortgage.
The poor will routinely play the lottery despite their chances of winning being more than 1 and 300 million. Instead of focusing on what is more practical, they do the only thing they can to increase their odds — buy more lottery tickets. Unfortunately, most lottery winners are more likely to declare bankruptcy and end up right where they started or worse.
You would be hard pressed to find successful wealthy people playing the numbers regularly, if at all. The wealthy don’t depend on luck for their wealth, nor do they want to wait on that for their children’s future either. They focus on making their own luck.
Do You Want To Be Amongst The Wealthy?
It’s possible to develop a rich mindset. The first step is to develop your goals. Once you have your goals, make an actionable plan to achieve them. Don’t be afraid to say no to things you don’t want to do, don’t feel like doing, or don’t have time for.
Above all, never stop learning. Warren Buffett hasn’t, so neither should you.
