This post is going to be more or less a TL;DR of Kiyosaki’s “Rich Dad, Poor Dad”.
I’ll start with a couple clichés that I think are pretty good mottos for life, if your aim is to make a substantial amount of money.
1 - “The main difference between the rich and poor is how they spend their spare time and how they spend their spare money”.
2 - “We’re all self made, only the successful will admit it."
The second one is important because if you want an excuse, you’ll find a dozen of them. Then you’ll find 100 people to agree with you, validate the excuse and ; but the cold hard truth is with only some extreme exceptions by a certain age we are all self made. We’ve got what we went for or what we are justify settling for what is, rather than what could be.
“If you’re born poor that is not your mistake, if you die poor that is your mistake” ~ Bill Gates.
Now let’s talk about how the cycle of “Getting by” tends to work. Most people spend most of their income quite quickly and then they end up with a period of time during which they have no money. By the time their income is coming in again they’ve had such a long time with no money that they celebrate having money by splurging on luxuries. This creates a cycle and the neural pathways get deeper ingrained into the mind to make this the easier way to be. Habits are formed and a lot of the time the experience of your life comes down to the structure of your habits.
This is the “Instant gratification” trap. See nice thing. Want nice thing. Buy nice thing. It’s how many people live their entire lives. Habits you’ve learned from your peers around you and your elders before you. The trouble with bad habits is it becomes easy to see them as “Just the way I am / the world is”. Which is not true. Habits are a product of repeated actions and actions are the product of dominant thoughts and your thoughts are something you have autonomy over. It’s easier to blame your circumstances, but it’s easier to escape circumstances when you take full accountability.
People who attain significant levels of wealth most often master the mindset of “Delayed gratification”. The doing of things you do not benefit from right now but will benefit you some years in the future. Paying for only necessities, putting surplus money into investments and avoiding luxuries until such time as you can buy them without it affecting your net worth substantially. The real “Secret” of a lot of self made rich people is they forewent the buying of luxuries to put this money into assets. Then from the income of the assets they bought the luxuries … and they still have the assets.
Give a rich person $200 and they’ll turn into $2,000. Give a poor person $200 and they’ll turn it into a pair of trainers and a hangover. Being “rich” and being “poor” are not as simple as how much money you have.
“If someone gives you a million dollars, you better become a millionaire. Or you won’t keep the money” ~ Jim Rohn.
The obvious evidence for richness or poorness being more related to mindset and finiaital IQ can be seen in any study of big lottery winners. Most of them end up with no money, less than they had to start with and depression (And worse) are very common outcomes. Winning the lottery turns out to be a curse for most people. They do not understand their problem is not they do not have enough money, it’s that they do not have enough understanding of how to use money well.
I’m sure most of you will have heard the notion that if we equally split all the money in the world between all of the people in the world it would not take long for all the money to again be concentrated in the hands of the few that currently hold it. This is true, because most people are going to think “What do I want and can buy with this money?”, and only a small handful think, “What do they want, and how do I use my money to be able to give them what they want, get my money and also get their money?” Most people will do what they feel serves their best immediate term interests and only a few will do the things that serve them a longer term interest.
Long term wealth usually comes at the expense of short term sacrifice.
If you found this post useful, you can find more of my posts on Reddit at Earn passive income through various online sources. (reddit.com)
