In every single person there is a poor person. There is still a poor person in me and there is a poor person in you. Inside most of us there is also a middle-class person. This is the most common kind of person. A middle-class mindset is a mindset that wants security, safety and a consistent and steady paycheck.
And again, inside each and every one of us, there is a rich person. All these different persons live within us. The problem is that very few of us have ever had our attention potodrawn to this.
If you stop and think, you will identify two types of people in the world. Those who are successful and those who aren’t. The measure of success or failure is very personal and therefore cannot be measured.
What success means to a mother who is trying to potty train her toddler is very different to the CEO of a company that has scaled the corporation’s turnover.
But in all circumstances, there is one key element that is identical to all circumstances
The Rich Mindset vs the Poor Mindset and The Success Mindset vs The Failure Mindset.
The mind is a powerful tool, and it is only the mind that sets a rich person with an abundance mindset from a poor person with a scarcity mindset. So if you would like to know where you lie – watch this video till the very end!
Related: 10 Strategies of Success
Rich Mindset vs Poor Mindset
#1 What We are Taught at School – Rich Mindset vs Poor Mindset
One of my favorite authors of all times is Robert Kiyosaki. I must have read “Rich Dad Poor Dad” at least ten times, and I always find something new that makes an impact on me. I always find something that I had previously missed out on.
Naturally, the first time that I read the book, I was totally shocked, when he spoke about what we are taught at school. Yes, it is true, that at school, we are taught to study hard, get good grades, find a secure job and get a pay-check. This is so true, that I personally, followed exactly that roadmap.
I went to school. Graduated from high school, strived for good grades. Got a safe job at the bank. Continued studying for another five years, graduated in finance, and started seriously climbing the corporate ladder.
Everything I did followed the perfect roadmap. Inside the roadmap was also finding a nice guy with another safe and secure job. Get him to buy me a nice sized diamond, get engaged, buy a small apartment as a first investment, get married and have a family. Now the truth is that this roadmap is a happy suburbia plan, which our parents map out so that they feel safe and secure themselves.
But life today is very different. Although, I could not fault the roadmap, I had a problem. I was bored. And although I did not know it at the time, I was kicking my middle-class mindset, in search of my rich mindset.
At school you are never taught on how to get rich. At school you are taught how to aspire to become middle class. At school we are taught on how to get educated and get a job or get a profession. But we are never taught how to actually make money.
In “Rich Dad Poor Dad” Robert Kiyosaki goes to explain that his rich dad refused to give him a paycheck for all the Saturday afternoons that he spent working at the little “all-purpose shop” that he owned. Robert gave up playing football with his mates in the hope that we would earn some extra money working his Saturday afternoons.
When the paycheck did not arrive, he became creative. He basically made an arrangement with the supplier of the comic books which would be returned to the printing house when they were “the past due date” to be destroyed and started selling them at 25% of their price to his friends. This brought in so much more than the couple of cents he would have been paid.
#2 An Entrepreneur is a Mindset, and a Skillset– Getting a Rich Mindset over a Poor Mindset
Let us get a point clear. I am not saying that a paycheck is bad. A paycheck simply means that you are trading your time for money and as a result you could become a slave to money.
As an entrepreneur you know that if your business fails for any reason, you will simply create a new business. You do not depend on anyone but yourself. And therefore, you do not need anyone to take care of you. Being an entrepreneur is not so much the business itself, as much as it is the mindset and the skill set.
If there was ever the best time to showcase this example, it is now. We are still living through a pandemic. It is a time where many people who safe and secure jobs, have either had to take a massive pay cut, or even lost their job.
Until business picks up momentum again, this is going to be a real-life event for many. Especially those, who have a poor mindset and never developed the skills to be creative and look for another source of income.
You must also remember that 85% of being an entrepreneur is the Mindset and it is just 15% that is the skillset. The skillset is taught. The mindset is acquired.
#3 What is so different between a Rich Mindset vs Poor Mindset?
I still remember my last day at work, some three decades ago. It was also the day that I got my last paycheck. I looked at this check – which at the time we still received as a handwritten draft and felt elation and tremor. Both, at the same time.
One of my colleagues had come up and nailed my feelings with a hammer and asked me – aren’t you afraid of venturing out on your own? What if you fail?
I remember looking this guy straight in the eye and I told him “What if I fly?”. The truth is that I knew that I would need to work hard and that I would evolve into my skills as time would pass by. I also knew that I would have failures. But the one thing that I knew for sure would be the fact that even if I failed, I would never go back to being employed.
And that attitude is the big divide between a rich mindset and a poor mindset. If you have the attitude that you will take the altitude without the safety net, you are on your way to success.
If on the other hand you embark on your entrepreneurial mission, with the thought that you could always go back to what you left, you have started your journey with a “poor mindset” and you are guaranteed to fail.
If you go without a paycheck, you simply get hungrier. But you also get smarter, and this is the test of your character. How will you deal with life without a paycheck? Will you become a crook and steal and cheat, or will you become a better human being? When you become an entrepreneur when you don’t have anything, you really find out what kind of human being you really are.
You may have heard this maxim time and again
“First Generation – Create It
Second Generation – Grow It
Third Generation – Ruin It”
The reason for this is that the first generation who create a business are hungry for success. The second generation are visibly growing into the hard work and their skill sets are honed, in the right direction. The third generation are usually born into wealth and therefore take it for granted. They never know the desire to grow a rich mindset. This is when most businesses, even very strong ones, go bust.
As long as you stay hungry, and money does not flow into your pockets without effort, you will always be creative on how to make money.
#4 The Rich Make Money Work for Them whilst The Poor Work for their Money
Rich people understand that you can never make good money if you are constrained to an hourly rate and a paycheck. If there is one thing that is the same for everyone, irrespective of whether they have a rich mindset or a poor mindset, is that we all have the same 24 hours in a day.
Therefore, we are limited into how much we make if we have a fixed pay rate per hour.
The difference in how the rich get paid as opposed to how the poor get paid, is because of the value that they bring to the marketplace.
Rich people make money by earning on top of the hourly rate that they pay to their workmen. If it is done right, with integrity and imagination, what they will bring into the marketplace will have a lot more value that the isolated work of the poor mindset.
People with a rich mindset, will invest in business, or property or investments that bring a passive income and therefore they free up their time to create something new.
Poor people, or people with a poor mindset, spend their lives working around the clock at a fixed rate, and they will in fact be building someone else’s dream with their time and effort.
I am not saying that being employed is a bad thing. On the contrary, I employ people, and therefore advocate for it. Employment gives you the foundation to amass enough capital to start building your own business and as an employee you need to learn when it is time to invoke your exit clause, use your knowledge and create your own wealth.
#5 Investing versus Saving. The Rich Invest but the Poor Save
Rich people invest their money. They invest in growing their business, or in property.They take opportunities by getting advice from well informed sources to invest in stocks and shares of other companies.
A person with a rich mindset will invest to win a big return. He will not invest to get marginal interest on his investment. Rich people are willing to take risks, but the smart ones only take calculated risks – risks that are measured with good information.
On the 13th March 2020, when the pandemic seriously hit the world the financial market crashed. A lot of people who were afraid they it would never recover and scrambled and bailed. They took whatever was left from fear that they would lose everything. Fortunes worth billions of dollars were lost.
Some others though, saw this as the best opportunity to buy in at a very cheap price. The market not only recovered it actually shot through the roof.
For example, the price of Bitcoin crashed to just $3000. Those who took the risk and bought in, knowing that one day the market would recover and bought just one Bitcoin are today sitting on a value of $60,000 for that same Bitcoin.
As with everything else, the bad moments in life are always cyclical as are the good moments. This is true for the pandemic, the weak economy, the dead hospitality market.
A person with a rich mindset will think “when we hit rock bottom, the only way is up” whilst a person with a poor mindset will think “this is never going to be over”.
People with a poor mindset will not take a risk. Most of the time, poor people will build a small nest egg, from scrimping and saving and even going without essentials in order to build their safety savings. Most likely they will put the money on a savings account. The truth is that banks today pay negative interest – meaning – you will have to pay the bank interest if they are going to hold your money. Even when they did pay some interest, the interest is invariably smaller than rate of inflation so in the end you end up with a melting capital.
#6 Rich People are Always Hungry to Learn More
In the first Mindset Coaching Session that we teach in “M.Y. Biz Academy” we advocate the following “Feed your Body and Feed Your Brain”. You feed your brain by reading the right books, taking the right coaching, or getting advice from the right mentors.
Warren Buffet who just turned 90, reads five hours a day. He learns continuously. Ask yourself a question. When was the last time you learnt something? How many hours do you devote to learning something new?
Sparing just 30 Minutes a Day can go a long way to increase your knowledge. For those who do not have time or the patience to sit and read, you could try Audible, and hear your book narrated by the author or a professional whilst commuting.
You could also try Blinklist – where a book is shortened into an abridged version of the most important highlights of the book.
It is important to be selective of what you read. Don’t just read anything. Choose books that will expand your knowledge.
People with a poor mindset stop reading the minute that they step out of school. Did you know that 25% of adults in Europe and America has not read a book in the past 2 years and a staggering 55% have not read in the past year.
Growing your knowledge is growing your opportunities.
#7 Rich Mindset vs Poor Mindset Looks at the Bigger Picture
People with a rich mindset know that the road to success is fraught with problems and challenges and that it is not easy. But instead of focusing on the roadblocks and the difficulties they focus on finding solutions.
They are not looking for instant success. They understand that it takes time and effort to build sustainable wealth. They are very disciplined when it comes to spending their money and they may defer buying lavish assets in the short term, knowing that delayed gratification is going to taste sweeter.
In short the rich will make sacrifices today in order to have a better life tomorrow.
Rich mindsets do not waste their time complaining but instead they focus their energy on finding a way around the hurdles.
On the contrary poor mindsets are usually making mountains out of molehills. They are usually not just complaining but feeling very frustrated and almost invariably give up. They find it difficult to pick themselves up when faced with adversity and will not have the energy to kickstart their journey again.
You will also find that people with a rich mindset will surround themselves with positive and enthusiastic people, whilst people with a poor mentality are surrounded by people who will dissuade them, question them and inhibit them from growing.
Jim Rohn famously says “Show me the people you surround yourself with and I will tell you your level of success”. If you want to grow rich, choose the people that you hang around with, with great care.
Poor people usually do not look at the bigger picture. They look at today, tomorrow, and maybe next week. They want to become rich fast. They live from paycheck to paycheck because they do not have visibility for the future. When poor people are young, they never plan for their retirement. They keep thinking that they will always have the strength to tap into their resources and earn a salary. We know a different truth. Our risk appetite decreases as we grow older – even if we are groomed to take calculated risk.
And a such people who do not see the bigger picture and plan to have a passive income for their future and actively invest in their future, will find that in their old age, they are unable to support themselves and will need to lean in on the very marginal social security – which we know really leaves you poor.
#8 Rich People Never Settle in Comfort Zones – Poor People Never Leave their Comfort Zones
My teachers called all sorts of names when I when I was at school. Jack in the box. Ants in your pants. You name it, I got it. Being constantly called out was not fun, although I orchestrated enough situations to merit it.
As I grew older, I realized that I also kept moving from one house to another, from one country to another, and creating different types of businesses as I went along. What was misinterpreted as restlessness when I was young, was in fact a huge curiosity and a desire to achieve.
People with rich mindsets are always looking for an opportunity. They face their problems head on even when they are afraid.
People with poor mindsets on the other hand, run away from problems. They would rather not ruffle the waters and prefer to stay in their comfort zone. This means that they will stay safer but that they will never be able to leave their comfortable way of life and achieve something better. If an opportunity knocks at their door, and it presents itself differently from what they know, they will not take it on.
Rich people are innovators whilst poor people are consumers.
#9 The House That You Live in is Your Biggest Liability
The first time that I heard Robert Kiyosaki challenging the belief that your house is an asset, I thought that I was hearing wrong. But in fact, I was hearing well.
Kiyosaki explains that most middle-class people, invest the largest part of their income in their home. They build a small equity and then take a mortgage, which they then proceed to pay through their lives.
By the time that they have paid a quarter of their mortgage, their family needs change. The couple are probably earning more but start planning a family and they need bigger space.
If they are lucky, their property will have appreciated, and they may have some equity on it – but the houses that they are now looking for have also appreciated in value exponentially.
If they are not as lucky, as happened around 2008, the value depreciated and many people ended up with a mortgage that is bigger than the value of the property itself.
Kiyosaki explains, that if you are going to sink in all your money in your home, you are always going to be chasing your tail. It is not true that your house is your capital, because you will never realize the profits of your investment, unless you sell to go to an old people’s home. More likely, it will be your heirs who will enjoy the benefit of your hard work.
Kiyosaki goes on to advise that if you have the rich mindset, you will always live in a small place, but invest your extra income into equity for a second place, which will not only pay for itself from rental income but will probably also pay for yours.
#10 If you Want to Learn How to Grow Rich – Play Monopoly
Robert Kiyosaki admits that his Rich Dad never paid him a wage for the Saturday afternoons, but he did spend his Sundays playing Monopoly with his son and his friend Robert.
Up till today, Monopoly remains the only real game that can teach you how to make money. You start by buying small parcels of land. You consolidate when you buy enough. You start off with one red brick house, and then add another and another until you have four. In the meantime, you will get a passive income, every time someone falls on your property.
In real life this would be rental income on property. Again, once you grow, you consolidate, and you turn your four houses into a hotel, always commanding higher rates and therefore increasing passive income.
As with everything else, there is an element of luck, but if you master the game of Monopoly, you will have mastered the game of becoming rich.
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About the Author: Marie Ella is a finance major and entrepreneur who has built several 7 figure businesses. A Business Coach who specializes in helping women get a strategy from chaos and build their own financial freedom.