What Separates The Poor From The Rich

Hazelle

Ever thought about how you can get rich one day? You are not alone.

Every day, there are so many people slogging hard at work with the goal of earning more money and the end goal of becoming rich. But how many of these people actually managed to attain that end goal?

Perhaps that’s because the way to getting rich is not by blindly slogging hard at work from 9am to 10pm everyday.

Perhaps you’ve got to change your mentality first.

There are many differences between how the wealthy and the impoverished think. In fact, some of these differences do not only have an impact on our financial levels but also have an even more far-reaching impact on our personal growth and development.

Here are some of the most important ones we have picked out so that we can learn and start changing our mindsets today.

1. Acquiring assets to make money work for us vs Acquiring liabilities and work for money

The wealthy are willing to spend their time and effort to find the things that will work out to pay off in the long term. They see every dollar as a ‘seed’ waiting to be sown. This is why they work hard to gain assets such as investments in stocks and bonds. They understand the concept of risk and reward and acquire assets that they believe can reward them sufficiently for the risk they take.

The impoverished, on the other hand, are skeptical towards risks. They rather work hard for their guaranteed return even if it means little. Often, they have almost zero risk tolerance and hold on to a mindset of constantly finding low risk investments. As a result, they don’t see the value in acquiring assets such as investments and instead ‘focus’ on acquiring liabilities such as credit card bills by spending money on unnecessary items. This is why they end up working for money when the wealthy are making money work for them.

Take some time to think about this. Who are the ones, around you, investing in marketable securities? Are they people who are enjoying better things in life? Or are they the people who are struggling to pay back their debts?

And did you know? Salaries have a higher tax percentage as compared to Singapore tax-exempt dividend incomes and other investment incomes. The higher the tax, the lesser you’ll receive. And that is one of the reasons that makes dividends and other investments so appealing to the wealthy.

To maximum your revenue flow, you can take a fixed portion of your monthly income and invest it in an investment. ETFs can be a relatively safer choice to start with, since they are generally less volatile than stocks. By doing so, you will be using your money to grow more money, thus creating a continuous flow of income. How nice is that, isn’t it?

2. Optimistic about opportunities vs Pessimistic about failure

“Is the glass half empty or half full?” What’s your stand on it?

Well, this is often used to point out the differences in mindset between the optimistic and the pessimistic. The optimist will view it as half full, and focus on what can be done to make it full.

Whereas, the pessimistic will view it as half empty, and focus on the fact that half of the water is gone. In this case, the wealthy are often the optimistic while the impoverished are often the pessimistic.

3. Embracing competition vs Avoiding competition

The wealthy celebrate the success of others, and embrace competition healthily. They understand that ‘iron sharpens iron’ and learn from their own flaws.

The impoverished view competition as a threat to them, and feels bitterness about the success of others. They are discouraged by any competition and tend to be overly complacent.

Take for instance, a friend has been promoted to a higher position. The wealthy will take it as an opportunity to learn from their friend’s success to improve. What about the impoverished? They will most likely feel jealous, gloomy and give up easily.

4. Learning as a lifelong journey vs Learning ends in the school

A stark contrast lies in the attitude towards learning. The wealthy treasure every learning opportunity and constantly devote their time towards learning through various means such as reading, or even taking up classes. Instead of working their time to earn money, they spend their time on improving their knowledge and keeping up with the new trends in their fields. They invest their time into learning throughout their lives. Because success is about always getting better.

The impoverished often do not do the same. They view learning as a journey that should end the moment they stepped out of school.

Now ask yourself. When was the last time you read a book? When was the last time you learned a new skill? If you have not been doing so, it’s not too late to start now! It can be really tiring after a day of work so perhaps you can try to allocate a couple of hours a week on the weekends to learn a new skillset or improve on your current skills. We know the inertia to start is real so you should always start with an area that really interests you. But remember, do not rush yourself into learning as that may end up backfiring your learning journey!

There are many reasons why the wealthy are wealthy and the impoverished are impoverished even though they start off at the same ground. Mindset is one of the most important determinants as it creates the path for our future. Having a strong and healthy mindset is important in life, apart from blindly working hard.

About Hazelle

Chief trainer of The Moneyball Investors Playbook program and founder of The Joyful Investors, a financial education firm that seeks to help avid investors learn to invest better and make the journey a joyful one. I graduated with a first class honors in Bachelor of Accountancy from Nanyang Technological University (NTU) and started my auditing career in one of the Big Four. I believe that once we know how to build our wealth sustainably, we can then live our best lives ever.