What is the difference between the rich vs poor mindset? How do the successful differ from the rest of us? It is not a matter of luck, birth or connections. The biggest differences between the rich and poor people can be traced back to mindset, outlook and behavior. Rich people have a way of thinking that is different from poor and middle class people.
They think differently about money, wealth, themselves, other people, and life. By doing so, you will have some alternative beliefs in your mind from which to choose. In this way, you can catch yourself thinking as poor people do and quickly switch over to how rich people think.
A positive attitude, focusing on doing the right thing over looking good, becoming a continual learner and careful risk management are all differences between the rich and poor. This reduces their odds of becoming poor after disaster strikes, and it helps them achieve their financial goals over the long-term.
Let's examine twelve crucial differences between how rich people think and how poor or middle class people think.
1. Rich People Believe “I Create My Life”
Poor mindsets believe “Life happens to me.”
If you want to create wealth, it is imperative that you believe that you are at the steering wheel of your life; that you create every moment of your life, especially your financial life.
Instead of taking responsibility for what's going on in their lives, poor people choose to play the role of victim. Of course, any “victim's” predominant thought process is “poor me.” And presto, through the law of intention that's literally what they get; “poor,” as in money, me.
Here's some homework I promise will change your life. For the next seven days, I challenge you not to complain at all. Not just out loud, but in your head too. I've given this little challenge to thousands of people and several hundred have personally told me that this exercise completely transformed their lives.
2. Rich vs Poor Mindset: Rich Play the Money Game to Win
Poor mindsets play the money game not to lose.
Poor people play the money game on defense rather than offense. Let me ask you, if you were to play any sport or any game strictly on defense, what are the chances of you winning that game? Most people agree; slim and none.
Yet, that's exactly how most people play the money game. Their primary concern is survival and security, not wealth and abundance. So, what is your goal? What is your real objective? What is your true intention?
Rich people's big goal is to have massive wealth and abundance. Poor people's big goal is to have “enough to pay the bills…” on time would be a miracle! Again, let me remind you of the power of intention. When your objective is to have enough to pay the bills, that's exactly how much you'll get; just enough to pay the bills and usually not a cent more. You get what you truly intend to get.
3. Rich Mindsets Are Committed to Being Rich
Poor mindsets are uncommitted to being rich.
Most of us have good reasons as to why it would be wonderful to be rich, but what about the other side of the coin? Are there reasons why it might not be so great to be rich or go through the process of trying to get rich?
Each of us has a file on wealth in our mind. This file contains our personal beliefs that include why being wealthy would be great. But for many people, their file also includes information as to why being rich might not be so great. These people have mixed internal messages around money and especially wealth. These mixed messages are one of the biggest reasons that most people never become rich.
In fact, the #1 reason most people don't get what they want is they don't know what they want. Rich people are totally clear they want wealth. They are unwavering in their desire. They are fully committed to creating wealth. They will do “whatever it takes” to have wealth as long as it's moral, legal and ethical. Rich people do not send mixed messages to the universe. Poor people do.
I hate to break the news to you, but getting rich is not a “stroll in the park.” It's takes focus, expertise, 100% effort, and “never say die” perseverance. You have to really commit to it, both consciously and subconsciously. You have to believe in your heart you can do it and you deserve it. If you are not fully committed to creating wealth, chances are you won't.
4. Rich vs Poor Mindset: Rich People Think Big
Poor people think small.
We once had a trainer teaching at one of our seminars who went from a net worth of $250 thousand to over $600 million in only 3 years. When asked his secret he said, “Everything changed the day I began to think big.”
Another way of understanding this is to answer the following question: How many people do you actually serve or affect?
For instance in my business, some trainers enjoy speaking to groups of 20, others are comfortable with 100, others like an audience of 500, still others want 5000 people or more in attendance. Is there is a difference in income between these trainers? You bet there is.
Who are you? How do you want to live your life? How do you want to play the game?
Do you want to play in the big leagues or in little league, in the majors or the minors?
Will you play big or play small? It's your choice.
But hear this. It's not about you. It's about living your mission. It's about living true to your purpose. It's about adding your piece of the puzzle to the world. It's about serving others.
Most of us are so stuck in our egos that everything revolves around “me, me and more me.” But again, it's not about you, it's about adding value to other people's lives. It's your choice. One road leads to being broke and miserable, the other leads to money, meaning, and fulfillment.
It's time to stop hiding out and start stepping out. It's time to stop needing and start leading. It's time to start being the star that you are.
5. Rich Mindsets Are Bigger Than Their Problems
Poor people are smaller than their problems.
Getting rich is not a stroll in the park. It's a journey that is full of obstacles, twists, and detours. The simple fact is, success is messy. The road is fraught with pitfalls and that's why most people don't take it. They don't want the problems.
Therein lies one of the biggest differences between rich people and poor people. Rich and successful people are bigger than their problems while poor and unsuccessful people are smaller than their problems.
Poor people will do almost anything to avoid anything that looks like it could be a problem. They back away from challenges. The irony is that in their quest to make sure they don't have problems, they have the biggest problem of all… they're broke and miserable.
The secret to success is not to try to avoid or shrink your problems; it's to grow yourself so you're bigger than any problem.
It's just an everyday occurrence, like getting dressed or brushing your teeth. Whether you are rich or poor, playing big or playing small, problems do not go away. If you're breathing, you will always have so-called “problems.”
What's important to realize is that the size of the problem is never the real issue. What matters is the size of you!
Remember, your wealth can only grow to the extent that you do! The idea is to grow yourself to a place where you can overcome any problems that get in your way of creating wealth and keeping it once you have it.
Rich people do not back away from problems, do not avoid problems and do not complain about problems. Rich people are financial warriors and when a warrior is confronted with a challenge they shout: BRING IT ON!
6. Rich vs Poor Mindset: Rich People Focus on Opportunities
Poor people focus on problems.
Rich mindsets see potential growth. Poor mindsets see potential loss.
Rich mindsets focus on the rewards. Poor mindsets focus on the risks.
We're not merely talking about “positive thinking” here, we're talking about a habitual way of seeing the world. Poor people come from fear. Their minds are constantly scanning for what's wrong or what could go wrong in any situation. Their primary mindset is “What if it doesn't work?” or, more bluntly, “It won't work.” Rich people, as we discussed earlier, take responsibility for creating their life and come from the mindset, “It will work because I'll make it work.”
In the financial world, as in most other arenas, risk is directly proportionate to reward; generally, the higher the reward, the higher the risk. People with rich mentalities are willing to take that risk.
Rich people expect to succeed. They have confidence in their abilities, they have confidence in their creativity and they believe that should the “doo-doo hit the fan”, they can always make their money back or succeed in another way.
On the other hand, poor people expect to fail. They lack confidence in themselves and in their abilities, and should things not work out, they believe it would be catastrophic.
You have to do something, buy something, or start something in order to succeed financially. You have to see opportunities for profit all around you instead of focusing on ways of losing money.
7. Rich Mindsets Always Focus on Positive Attitude
Poor people lack a positive attitude.
Poor is a mindset. It is a lack of hope.
Dave Ramsey once explained the difference between broke and poor is attitude. The broke have no money right now but have a positive outlook; they believe they can do better and can do better when they work toward doing something better. They think they’re doomed to remain in poverty. The little man can’t get ahead. The poor are oppressed by the rich.
They can’t save money because they think it will be taken from them, and they waste money they do save or receive as a windfall on pleasures because they don’t think they can do better by doing anything else. For example, when you think you can’t do better, you won’t finish that challenging degree program or take the second job to get out of debt because there is no point.
Or they think they can’t be wealthy because they believe the lie that most millionaires inherited their wealth and class. The truth is that 80 percent of the rich are first generation, and less than 3 percent inherited enough to become millionaires.
A negative attitude can hinder those with even a good income. A classic case is being afraid of investing, so you leave money in savings or CDs and earn less than the rate of inflation. Another is seeing money as immoral, so they give it to charities and “needy” friends and family.
They have nothing themselves, ensuring they have no savings for their own emergencies or retirement. This is why long-term financial success requires a positive mental outlook. Setbacks like unemployment or massive medical bills are seen as temporary and then worked through.
8. Rich Mindsets Do Not Flaunt Their Wealth
People with rich mindset lead frugal lives.
The public perception of the rich is that they flaunt their wealth. We are lied to when they show “the rich” wearing designer clothes, taking fancy vacations they brag about and having lavish parties. In reality, a very small number of the truly rich ever live this way, and most who do live this way are high income earners who have almost nothing saved.
Once the windfall of a signing bonus or record contract is used up, they have nothing. Unfortunately, this image is compounded by marketing efforts to say you have to spend money this way to become rich. Yet wasting money on fancy cars, expensive trips and other trappings of success prevents you from doing so.
That perpetual 500 dollar a month car payment and the largest house you could afford prevent you from becoming wealthy. Most real millionaires live in a house they can afford, and they prioritize paying off the mortgage. They own their cars for years and avoid car payments, though they may buy a used luxury car and keep it running for ten years.
They are content with what they have while they build their businesses and portfolios. And they earn their money honestly. There is a popular myth that most millionaires are liars and cheats. One lie is that the rich don’t pay their taxes, though the top 1 percent pays 40 percent of the taxes.
Another lie is that the rich are dishonest scammers, that they only got wealthy by hurting others. In reality, surveys show that the number one trait of millionaires that they consider key to success is integrity. You can’t stay in business if you’re known for scamming customers or being sued for fraud all the time. Nor can you create the quality relationships that are necessary to build a business network if you’re a liar or cheat.
9. Rich Mindsets Understand The Value of Education
Poor mindsets are oblivious to the importance of constant learning or education.
Rich mindsets learn and update their skills throughout their lives.
Education remains a major determinant of lifetime income. Note that this doesn’t mean you have to go to an expensive private college or earn an advanced degree. However, you nearly guarantee you’ll be poor if you don’t finish high school.
One difference between the rich vs poor mindset is that the rich understand the value of knowledge. They’re not part of the 40 percent of adults who don’t crack open a book after graduating high school. They’re reading industry publications to learn more about their field and excel at work.
They’re reading about money management and personal development so that they do better in life. They’re constantly learning. They’ll ensure that they keep up their certifications, and they’ll proactively earn additional certifications to qualify for raises and promotions.
10. Rich Mindsets Are Better At Risk Management
Poor mindsets often live in fear of taking new risks.
The rich aren’t gambling with their money, whether it is taking trips to the casinos or taking big risks with penny stocks. They are careful to manage risk. One way they do this is by having the right insurance coverage. They have life insurance, health insurance and disability insurance so that a personal disaster doesn’t wipe them or their families out.
They have emergency funds with several months of savings so that they can cover a major unexpected expense without having to go into debt. They prioritize protecting themselves over spending money on wants. This doesn’t mean they don’t invest in stocks or real estate. It means they do their homework before investing money.
They research the properties and the costs to rehab and sell them before they buy. They research stocks or mutual funds before putting in their money. Educating themselves about various subjects reduces their risk level. And that is why one of the differences between the rich vs poor mindset is that the poor often live in fear of catastrophe, while the rich expect to be able to weather the storm.
11. Rich vs Poor Mindset: Rich People Build Multiple Streams of Income
Poor people have one stream of income – their job.
Poor people put all of their eggs in one basket by being dependent on one stream of income.
The wealthy are known for a work ethic, but there are plenty of people who work hard but remain in poverty. There are several ways the rich work differently. One is that they devote time to planning their financial future. They save for retirement so that they have a passive stream of income before they have to retire from their job.
They aggressively pay down debt and avoid taking on new debt so that their income goes further. They dedicate time to handling their investments while investing every month, whether it is in a 401K or rental properties. If they own a business, they capitalize on it to generate additional income.
It might be licensing intellectual property or renting out one of the suites to generate additional revenue. They may hold a day job but teach or consult on the side to earn additional income. This can be a form of risk-management, too, since it gives them a head start if they lose their job or simply want to start their own full-time business.
12. Rich Mindsets Believe in Saving, Investing And Multiplying
Poor mindsets splurge on materialistic things.
Poor people end up saving nothing to invest.
Rich mindsets save, save, save. They save 10% to 20% of their net income every year. The rich are intentional. They don’t put off saving for the future. They start saving with every paycheck, and they choose not to splurge so they can make that next 15 percent contribution to retirement.
They don’t say they’ll pay off debt later. They create a plan to pay down debt and follow it, month after month, until they’re debt free. According to “The Millionaire Next Door” and Chris Hogan’s follow-up book “Everyday Millionaires”, most millionaires by net worth either follow a budget or deliberately send a set percentage to savings and live off the rest.
In short, they devise plans and follow them. They set goals, and by focusing on them and constantly working toward them, typically achieve them. Note that it isn’t just money. This is why the wealthy are less likely to be overweight, too. If you’re already used to consistently working toward financial goals, an exercise and diet plan is just one more plan to follow.
Being Good, Looking Good
Multiple Streams of Income