Note From Kalen: This article makes some great points about becoming rich. Being “rich” may not be the goal for everyone, but if you want to become wealthy, it starts with your mindset.
What’s the difference between the rich and the poor mindset? What lacks in the poor mindset to become rich?
These are the flaws in the poor mindset and how to get a “rich mindset.”
Let’s get started.
1. Rich People Have More Work for Them: Poor People Work for Money
This is the most common trait that makes the difference between rich and poor. Rich people have money that works for them. They risk their money to get out of poverty.
After the release of Rich Dad Poor Dad, we all learned the meaning of “rat race.” But some people still don’t understand what it truly means.
The rat race is a pattern of repetitive actions. Poor people repeat the pattern of the rat race.
Rat race patterns looks like this: “Get up, go to work, work for money, pay bills… get up, go to work, pay bills.” This pattern makes the poor poorer.
But rich people know the meaning of the rat race. They take risks to get out of the rat race.
Main Point: Rich people have money—they earn from their past job or borrow from the bank—that works for them. Poor people are victims of the rat race.
2. Rich Have Financial Knowledge: Poor People Only Know Work
It’s time to compare the knowledge graph. Who has a higher level of knowledge?
Often poor people do, because they think more knowledge means more money.
Rich people have three things:
- Financial knowledge from accounting to investing
- They are not afraid to take big risks
- They work hard 90 hrs/week in the beginning
Poor people have degrees, diplomas, PhDs, and things needed to perform accurate jobs.
Rich people have a strong desire, mindset, financial basis, and learn-to-earn thinking.
Main Point: Rich people have the right knowledge and the right mindset to harness money. Poor people have a higher level of knowledge that helps them to do high paying jobs, but they end up with less money in the end.
3. Rich People Have a Learn-to-Earn Mindset: Poor People Have a Learn-to-Work Mindset
There are two types of growth: nature and nurture. Nature means learning from your surroundings by yourself. Nurture means being taught by others to fulfill the specific intent.
In Rich Dad Poor Dad, Robert Kiyosaki’s father (poor dad) was a government employee. His mindset was to learn to work.
But rich dad has a different mindset. He taught his students to learn to earn. Learn to set up an empire. Learn to get people ready to work for you.
In simple words, Poor people have a mindset that pushes their children to learn to get jobs.
Main Point: Poor people motivate children to get jobs. Rich people motivate children to learn how to acquire wealth.
4. Rich People Acquire Assets: Poor People Acquire Liabilities
Poor people aren’t morons. They tend to think from their level — from the bottom level. They accept their situations and move on. They are afraid to take risks. They think getting rich is difficult.
Poor people end up where they started because they don’t know the difference between assets and liabilities.
Poor people think a home is a great asset. But in reality, that’s not always true, because it’s taking money from them not giving money to them.
An asset is a thing that puts money in your pocket. It helps you to become rich.
Liabilities are things that put your money into other people’s pockets.
If you believe, your home is an asset, then accept “YOUR HOME ISN’T AN ASSET, IT IS A LIABILITY.” and start to change your mindset. Here we are specifically referring to a personal home, not an investment property.
There are ways to make your home hold value, like investing in art. Purchasing artwork from established artists, and emerging artists with great potential, is a great way to keep your home trendy whilst your investment appreciates.
Main Point: Knows the difference between asset and liability. Put your effort into obtaining assets. Get rid of worthless liabilities.
5. Rich People Pay Low Tax: Poor People Get Trapped by Taxes
Poor people think, if you earn high wages, you are taxed high. Thus, they believe, rich people pay more taxes.
In reality, the rich often pay very little tax. Rich people get rid of taxes through financial knowledge.
Rich people use things like corporations to pay fewer taxes. Corporations have different laws.
Moreover, poor people get taxed higher than rich people, especially when they think the key to being rich is earning more money from your job.
Here is one of 151 Chinese Proverbs that best describes the situation of rich people:
“Those who can do a good trade don’t wrangle over taxes.”
Main Point: Poor people get taxed higher than rich people. Rich people have financial knowledge that helps them avoid taxes.
6. Rich People Think Long-Term: Poor People Think Short-Term
In accounting, there is one topic known as “current assets,” which has two different types: one is current assets (short-term) and the second is non-current assets (long-term).
Current assets are those that are expected to convert into cash within 12 months or less. Long-term assets are converted into cash for more than a year.
Rich people invest for the long term, which takes a higher risk and higher investment, and thus, a more gain.
Poor people invest for the short term. They invest their savings or some portions of their salary. They take the little or null risk and earn little profit.
If rich or poor invest wisely, they earn. This is how the poor can become rich.
Main Point: Rich people take more risks and earn more profit. Poor people take fewer risks and earn little.
Remember, this isn’t intended to demotivate you. If you are demotivated, these quotes on making money may help you.
This article presented facts. You have to change your mindset to become rich. Find the positive points of the rich and follow them.