It’s been well-documented that the wealthy think differently – and not just about money – than the poor and middle classes.
Nor are these differences found only in the occasional opinion or political leaning. Rich people genuinely have different thought patterns, different assumptions, different subconscious attitudes. They interpret the world differently than the rest of us.
Want to stop thinking like a middle-class worker bee, and start thinking like a wealthy businessperson and investor? Here are ten ways your subconscious mind is keeping you poor… and how to change both your attitudes and behaviors to shift your life into a higher gear.
1. You haven’t systematized your progress.
Have you written out a detailed description of your goals? Not a vague “I’d like to buy a rental investment over the next couple years,” but exact specifics of your short-term goals (within a year), medium-range goals (12-36 months) and long-term goals?
Most people have not.
If you haven’t even written out the details of your goals, how will you ever achieve them? The most successful people not only write out detailed plans and goals, they actively build progress into their routine and schedule.
James Clear makes a strong case that even more important than setting goals is systematizing behavior to reach them. Anyone can say “I want to lose weight,” but how many people schedule in an hour of exercise every morning as part of their day? It’s great to set a goal of learning more about rental investing, but it’s another thing to set aside 5:00-6:00 every afternoon for building expertise in local markets and networking with local realtors, contractors and property managers.
Wishes are intangible. Goals are often overwhelming and too broad. But routines and systems? If you systematize behaviors that create success, day in and day out, your routine will inevitably lead to real results based on actions, not vague aspirations.
2. You think you know “the important stuff” about money.
The poor and middle classes are quick to say “yeah yeah, I got it.” They accept common money myths recited by common people as truths. The rich, in contrast, know that financial systems continually evolve, and strategies for financial success change just as quickly. They can never learn enough, because they know their success depends on their ability to adapt.
To lift a line from every B movie ever made, forget everything you think you know. Follow personal finance and rental investing magazines on Flipboard, and read them before bed at night. Start reading financial news. Become obsessed with the idea of your money going out into the world and working as your minion, to earn you more money. Which brings us to the next mistake.
3. You work for money, rather than believing your money should work for you.
Robert Kiyosaki made this line of argument famous, and rightfully so. Every dollar of yours is a potential worker, who can dress up and go off to work every day to earn you more money.
Every dollar you spend, by contrast, is a worker you’ve fired.
Most people choose to drive the nicest car they can afford. What if they spent $5,000 less on their car, and instead made a down payment on a rental investment property? They’d drive a slightly less fancy car, and have an extra few hundred dollars/month in their bank account.
Middle class people think that success is all about finding a good job, showing their friends how successful they are, working up the corporate ladder. The wealthy understand that true success is about building ladders that others can climb.
It starts with a mindset, that your money works for you. As you send more money out in the world earning returns for you, you can start finding ways to add other people’s money and other people’s efforts to earn even more money for you.
4. You dismiss successful people as “crooks” and “greedy.”
Do you think it’s selfish, putting other people’s money and efforts to work toward your goals?
In a recent survey by the Pew Research Center, a full 55% of Americans said wealthy people were greedy, and only 12% said they believed successful people to be more honest than average. But consider for a moment: how is it selfish to create jobs and investment returns for others?
It’s an understandable impulse, when you work hard all day only to come home and stress about money. You turn on the TV and are bombarded with stories about the rich and famous, and it’s easy to feel a stab of resentment and think “rich people have more than their fair share.” But that mindset is not useful. On the contrary, it’s counterproductive.
Because what’s useful is always claiming responsibility, in order to retake control over your outcomes.
5. You aren’t 100% accountable.
People love making excuses. Almost all of us are guilty of it – you get into a car accident, and it’s “that maniac’s fault for cutting me off!”
The most successful people take responsibility for every single thing that happens in their life. They look at what happened and try to understand what they did wrong or right, and then apply that lesson moving forward. Self-flagellation not required.
Try an experiment: for one week, take responsibility for every outcome in your life. No exceptions, no excuses. When something goes wrong, it wasn’t bad luck, it was poor preparation for all contingencies. When something goes right, reflect briefly on how your actions helped it succeed, and what you could have done to make the outcome even better.
Far from feeling bad about yourself, you’ll probably find yourself feeling empowered and more positive.
6. You don’t actively practice gratitude and positivity.
Note the word “actively.” Some of us are naturally more sunny, or more surly, but none of that makes a lick of difference.
All of us can take steps to improve our attitude. One easy step is to review three things you’re grateful for, each night before falling asleep. Want some more easy ways to boost your positivity and confidence? Here are several more from CNN, and you don’t even have to buy a tie-dye shirt or patchouli.
How do gratitude and positivity affect wealth?
Successful people recognize opportunity, and believe in their heart of hearts that their lives (and their finances) will get better if they put enough work and expertise toward it. It also boosts self-confidence and self-esteem, which are crucial to success in any format.
Want a convincingly non-touchy-feely example? Athletes who practice gratitude and meditation experience better self-confidence and better performance on the field.
But when people merely complain that life has passed them by, it quickly becomes true.
7. You dismiss the importance of money.
Stubborn, defiant clichés like “I don’t need money to be happy” and “Money doesn’t buy happiness” are just not very true. Up to a certain income (around $200,000), there is actually quite a strong correlation between money and happiness.
These clichés are what many people tell themselves to try and feel better about their lack of success. Read: defense mechanisms.
Start by acknowledging that money does matter, that you do want more of it. The right thought process is “What actions and systems do I need to implement to reach my (written) goal?” rather than “Whatever, I don’t need that anyway.”
8. You don’t have a written, enforced budget with savings as the first priority.
Like goals, having a budget in writing matters. But just as important is your willingness to strictly enforce your budget.
Try this exercise: put your after-tax biweekly income at the top of a spreadsheet, then multiply it by two for a monthly figure. (That’s important – not your annual income divided by twelve, but rather four weeks’ worth of income, because that’s what you can actually count on in any given month.)
Now start your list of expenses with the word “savings”, and make it 25% of your net income. Then, go ahead and list all of your monthly expenses, in order of size. Rent/mortgage, car (if you have one), utilities, groceries, gasoline for the car, clothing, entertainment, etc.
Next, list all of your annual and semi-annual expenses: all insurance premiums, property tax bills, doctor checkups, dentist appointments, the works. Add estimated expenses as well: home and car repairs, gifts for others, home supplies, any other irregular but real costs we all face every year. Add these up and divide them by twelve for the monthly figure.
You are probably way, way over your income. Your first impulse will be to slash your savings, but don’t do it. Cut from entertainment, from gifts, from groceries, from utilities.
Set up automatic transfers from your operating account to your savings account, on the same day you get paid. You can also split money into a separate account for annual and irregular expenses. Until you’ve developed the discipline to never go over your budget, only use cash or your debit card for your monthly expenses, to enforce it on yourself.
9. You don’t have an emergency fund.
Emergencies happen. Maybe it’s the loss of a job, maybe it’s a medical crisis, maybe it’s your trusty car suddenly dying, maybe your spouse runs off to the Caribbean with the local pool lifeguard. But they do happen, and more often than we’d like to think.
Nearly two-thirds of Americans don’t have the money to cover an unexpected $500 bill, much less a real emergency. Before you start investing, first put aside at least $1,000 so that you can handle the next nasty curveball life throws you.
10. You have an immediate-gratification mindset instead of an investment-return mindset.
A recent study asked people if they could have a theoretical $100 now, or a larger amount in a year from now, how much would it take for them to wait a year?
It turns out there was a right answer. The lower the amount that people quoted, the more likely they were to be both wealthier and healthier. Less patient people, who required an outlandish return on investment in order to delay getting their hands on the cash, tended to be much poorer.
Successful people take the long view, and understand the value of investment. The idea of delayed gratification doesn’t bother them; they’re happy to have all of their little dollar bills out in the world working for them.
Think rental properties provide immediate returns? It takes years to earn back the up-front costs of buying, repairing, maintaining and managing rental properties. But does that mean you shouldn’t invest in rental income properties?
Wealth comes from patience, from positivity, from discipline, from knowledge. Start your journey toward financial independence by changing your mindset; it’s free, and will pay off in more ways than you can imagine.♦
What mental habits have helped you achieve better real estate investing success? What’s dragging you down every month? Talk to us, we love stories!