confident senior businessman holding money in hands while sitting at table near laptop

Life Lesson #99 Why the Rich are Rich and You’re Still Broke

Let’s be real, I was broke till not too long ago. But no more. I’ve been learning the ways of the rich and I’m here to share these golden secrets with you. It’s actually not a secret at all —the rich love to talk openly about how they got to where they are. You know what it is? It’s hard. That’s the real barrier to entry. The rich can feel comfortable sharing all their secrets because most won’t listen and those who do won’t follow through. It’s why the rich get richer and the rest of us resent them.

How Not to Get Rich

Sometimes it’s not about what you do or don’t do, but how you think. I first learned this lesson in Robert Kiyosaki’s Rich Dad Poor Dad. Most notably, he said his rich dad thought he was rich before actually being objectively rich. He didn’t say “I will be rich” he said, “I am rich.” Right now I’m reading Napoleon Hill’s Think and Grow Rich and it’s the same deal— those who believed without a plan B that they will accomplish something, inevitability accomplish that something. If you don’t have the rich person’s mentality, you lack vision and therefore cannot grow rich.

Most of us cannot conceptualize this mentality because we see things at face value. How am I rich now if my bank account is empty? To us, being rich is an objective, observable and measurable thing to be. You are rich if you have X amount of money and assets, full stop. The secret here is that being rich is NOT a status, it’s a mentality. In Think and Grow Rich, Hill describes it as desire plus faith. If you desire something deeply AND you have faith you will get it, it will come. Of course not magically out of thin air, but it will come eventually because with desire and faith, you will keep working and working at it until it comes true. If you don’t desire with relentless faith, you lack commitment and therefore cannot grow rich.

What I’ve come to accept despite my reluctance is that commitment is not enough. You could be fully committed to accomplishing your goals and end up getting knocked down so many times that you eventually give up. Say your an actor whose gone to 300 auditions and never had a call back, would you go to the 301st audition or would you finally call it quits? If you’d call it quits then you do not have a rich person’s mentality. Rich people are winners and winners don’t quit. According to Hill, Thomas Edison failed at inventing the light bulb over 1,000 times before he finally get it to work. If you quit, you lack perseverance and therefore cannot grow rich.

Rich Habits 101

People don’t grow riches, riches are inside all of us. Maybe your parents or your community didn’t teach you how to foster a rich person’s mindset but it’s never too late. It all starts with your mindset. You can cultivate this mindset by doing as the rich do.

  1. Hone in on your problem solving skills
  2. Change your spending habits
  3. Keep learning and Think Smart
  4. Obsess over the goal
  5. Be flexible

Hone in on your problem solving skills.

Poor dad thinks, well this was the hand that I was dealt, can’t do much about it, while rich dad thinks, I am rich, I just need to get the money to show it. Poor dad thinks, can I do this? Rich dad thinks, how can I do this? Problems are only problems because we don’t know the solutions yet. According to Kiyosaki, the rich do not disengage when there are obstacles, in fact, that’s when they lean in. That’s why it took Edison over 1,000 tries to figure out the lightbulb. Smithsonian Magazine reports a quote of Edison saying “I have not failed 10,000 times—I’ve successfully found 10,000 ways that will not work.” It’s the kind of mindset that fuels perseverance and that never give up attitude that allows failures to turn into lessons and lessons to turn into riches.

Change your Spending Habits.

Here’s a practical one. It’s not all in your head, you do also have to make literal changes to grow rich. I dive deeper into this topic on my post, Your Broke because You Act Rich, Except Rich people don’t act like that. One common mistake people make is living at capacity, or in other words, spending every dollar you make. When you live at capacity, you don’t have room to save and then what happens when you need money for an unexpected expense? You go into debt, that’s what happens! Even if tomorrow you start making loads more money, if you aren’t careful, you will experience lifestyle creep, where your spending habits re-adjust to match your income and your back at capacity. Changing your spending habits so that you live under your income capacity is a great way to secure funds for savings and cut out unnecessary (and detrimental) spending.

Keep Learning and Think Smart.

Attaining knowledge is one of the first steps to attaining success and wealth. Of course, it’s not just about attaining knowledge, it’s about how you use that knowledge. As Hill said in his best seller, professors hold a great amount of knowledge but they get paid very little. Someone who doesn’t hold half the knowledge of a professor but thinks smart has the potential to make triple that of someone who knows many things but not how to use them. The trick is to know what to do with what you know and to know when you should enlist in someone who knows more. For example, I know from experience if I have a salaried job I can easily do my own taxes because it is not very complicated. On the other hand, if I am self-employed, I should hire a professional that can help me get more bang for my buck and masterfully work through a more complicated process. In this way, thinking smart is simply knowing how to use what you know and what others know to your advantage.

Obsess over the goal

No one accomplishes a really hard goal that they are mildly interested in. First of all, if it’s extremely difficult or seems impossible (like building generational wealth) only someone that is unapologetically obsessed with accomplishing it will get it done. That’s why Bill Gates and Paul Allen spent day and night working on a software for a micro-computer that was more sci-fi than reality at the time. Gates and Allen were not only obsessed with the goal, they’re entire futures were resting on this goal. That’s the type of energy and weight needed for someone who wants to see their dreams come true. Let’s be clear here, it’s not just Harvard dropouts that make their dreams come true; Eminem started off with major disadvantages as a poor, white kid with nothing but a dream, only to become one of the most widely recognized and acclaimed lyricists in his genre. His story of rags to riches, like so many others, speaks to the tunnel vision and ‘can’t give up’ attitude that can bring you success and prosperity.

Be Flexible

Don’t be flexible with your goals, be flexible with the means. I once interviewed the CEO of a company I worked for and she said something I’ll never forget. She said, I am where I am today because I always said yes first and figured out how to do it later. She said first they asked her to open a branch office in another town she’d never lived in, so she said yes and then she learned how to open a branch office; then they asked her to manage the team at the branch office so she said yes and then she learned how to manage the team; then they asked her to be the director, she said yes, then they asked her to be the CEO and she said yes. Along the way she was asked to do so many other tasks she’d never down before but she said yes anyhow. The point is not to go around saying yes to irrelevant things, but to be flexible and take risks, learning as you go.

The Bottom Line

I hope everyone gets a few takeaways from this post, but most importantly, if you want something enough and you are willing to work hard for it, push through the lows and keep moving, you will get there. As humans we all have doubts, but our courage has to be stronger than our doubts. Most importantly, we have to believe more than anything that we will get there.

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