Going from having no money to having money has taught me a lot.
One thing that has really stood out to me is how rich people think about money.
Poor people have a completely different mindset regarding money than wealthy people do, in general.
With the few exceptions, no one ever gains a large amount of wealth on accident. It happens on purpose. And the entire process starts within the mind.
I was always fascinated with stories of how people became successful, escaped poverty, and dramatically changed their lives for the better.
Mostly because I wanted to do this myself.
Now I’m not trying to say that I have all the answers on this subject, because I’m not rich.
But I’ve come a long ways from broke and I’ve spent a lot of time around rich people. Enough time to learn a few things.
This article is a summary of some of those lessons.
Here’s what you get from the Money Mindset:
- 2 common myths about money busted
- Why six figures isn’t as much money as you think it is
- How people really gain massive wealth
Before I get into the lessons I’ve learned – first I want to bust a couple of myths that broke people love to believe. I should know, I was once one of them.
Myth #1 – Money is Evil
There’s a popular belief that money is the root of all evil.
Personally, I just don’t buy it.
There’s nothing inherently evil about money. Before people used money, or even gold, as currency we simply exchanged goods. Is rice or cotton evil?
Money is no more or less evil than the person who owns it.
So why does this matter?
Because it acts as a coping mechanism for us when we don’t have money. And more importantly, it discourages us from wanting to earn a lot of money.
It’s easy to write-off rich people as evil, because we are jealous. But really we’re just justifying our own financial shortcomings.
Having gone from growing up poor to frequenting millionaire social circles – I can say that there are always going to be good people and evil people. Some of those people will have a lot of money and some won’t. That’s it.
Have you ever noticed that churches are big advocates of this myth? But what’s the 1 thing they ask for at EVERY service?
You guessed it.
But your money is paying for God’s work… or it was never your money to begin with, it’s God’s money…
The logic doesn’t add up for me.
Money is no more or less evil than you are.
Money is simply a medium of exchange.
There’s a reason you have that desire in the back of your head to make a lot of money, because you can use that money to bring a lot of GOOD into your life and the lives of others.
Myth #2 – Money Doesn’t Buy Happiness
I honestly think that 99% of people know this is complete bullshit, but are afraid to admit it.
I have no problem admitting that in my life, money absolutely does buy happiness.
Let me give you an example:
If you’re a regular reader than you know I grew up relatively poor. There’s one particular Christmas that I will never forget. This was during a time that was especially tough for us. My mom warned my sister and I that she wouldn’t be able to get any Christmas gifts that year. We didn’t complain, because we knew she was struggling and it wasn’t the end of the world or anything. But, obviously as a little kid I was pretty disappointed.
Then a couple of weeks before Christmas we were surprised by a local charity that helps out poor families during the holidays. Apparently my mom’s co-worker had nominated our family, without telling my mom, and we were selected.
I can’t tell you how happy and grateful we were! They ended up giving my mom money for Christmas gifts, buying us a month’s worth of groceries and giving each of us $200 gift cards. It felt like winning the lottery to us. I just couldn’t believe that random strangers would do such a nice thing for us. To this day it remains one of the best acts of kindness I have ever experienced.
But you know what provided that happiness? Money.
Happiness is more than just being content with yourself. All the money in the world can’t stop some people from hating themselves, but that’s besides the point.
That kind of happiness is a choice.
I’m talking about day-to-day situations and events. That’s the kind of happiness that money can buy.
Do vacations make you happy? Does buying a friend dinner make you happy? Does having working utilities at all times in your home make you happy?
Of course they do.
It’s ok to admit that money buys happiness. Because it does.
But come on now, you already knew that..
The only people who think that money doesn’t buy happiness are either a) delusional or b) they’ve never been without money.
Now, of course, you reach a point of diminishing returns where extra money doesn’t bring extra happiness. But that doesn’t take away from the happiness you gained up to that point.
Your Standards Matter
Rich people and poor people have different standards for money.
I used to think six figures was a lot of money.
Then I got into the oil business.
The first year my business was in operation, my tax bill was twice the amount that my parents paid for the house I grew up in.
I say that to give you my perspective on how far I had come.
I may have been doing well for my standards, but I was small time compared to the people I was surrounded by.
Everyone’s a millionaire in the oil industry. Well, not really, but it seemed that way because of the people I was around.
I noticed that all the big money guys had big money standards. They weren’t interested in deals that didn’t involve at least tens of millions of dollars. Preferably hundreds of millions.
Are your standards too low?
Have you ever noticed that people tend to gravitate towards a certain standard? Most people are happy enough with being average.
Most people compare their income to the average income.
Well the average person working this job makes x amount, and I’m making a little more so that’s good enough for me…
That’s why most people tend to make an average income. They never aimed any higher than average and everything above average is considered a bonus.
Rich people focus on what’s possible, not what’s common.
How to Raise Your Standards and Why It Matters
Let’s talk about the why first.
Why should you have high standards?
- Your standards reflect your beliefs. Your beliefs shape your decisions. Poor beliefs lead to poor decisions.
- You will rarely be paid more than you ask for.
- Because you should demand more of yourself. Not based on entitlement, but based on pushing yourself beyond perceived limits just for the adventure of it all.
Now let’s talk about the how.
Start by accepting some simple truths:
- $100,000 a year is not a lot of money
There’s not a single career path I would EVER consider if I didn’t feel I could be making at least that much in a short amount of time.
Although, to be honest, I don’t think there are any careers where it isn’t possible to make that much. Jobs, yes – but not careers.
For some reason $100,000 is the golden standard of financial success. The problem is that the world has moved on and that standard hasn’t been adjusted.
All things considered (inflation, cost of living, etc) you would have to make $287,000 to have the same purchasing power as $100,000 in 1980 – according to this Bureau of Labor Statistics calculator.
It’s time for the golden standard to receive some inflation.
- Millions of people are millionaires
That’s right. The percentage is low, sure, but there are 7 billion people on the planet after all.
But as of early 2014, over 9.6 million households have a net worth of $1 million or higher – in the United States alone.
When it’s put that way, the odds look a little better.
So you need over a quarter of a million just to equal what we believe to be $100,000. And millions of people have become millionaires. So couldn’t you reasonably shoot for a million and fall short on a quarter or half? Then repeat that cycle several times?
I believe you can. I’ll talk more about how you could even shoot for a million later in the post.
Make having a higher standard a habit
Regular readers know – I am fascinated by habits. They are so powerful.
brainwash yourself undo the brainwashing that’s been done doesn’t happen overnight. Most people can’t simply tell themselves to start thinking differently about money.
You want to think big, not just dream big.
But here’s what you can do – raise your standards in other areas of life. Eventually you’ll standards for money will change naturally.
Most wealthy people I’ve spent time with have VERY high standards for themselves.
- They have a high standard for where they eat
- They have a high standard for how they present themselves
- They have a high standard for themselves in terms of knowledge and skills
Basically, they expect the best and they expect to give their best.
I’m no saying you should go out to an expensive steak houses every night and have a designer suit custom-tailored for each day..
Keep it simple.
Have a high standard for your health. Stop eating shit. Do something active each day.
Have a high standard for your appearance. Wear clothes that fit well and make you feel good. Look people in the eye, give a firm handshake and for god’s sake stop slouching!
Have a high standard for where you spend your money. Don’t be afraid to give negative feedback to a business if you didn’t get what you paid for. I’m not saying make a scene or go trolling for refunds, but don’t settle for being ripped off.
Have a high standard for your work. If your name is on it, make sure you’re proud of it.
Do you see how this could lead to you having a higher standard for money?
Higher quality food, clothes, and services cost more money. The more you appreciate quality, the more money you will want so you can keep getting higher quality goods/services.
And when you are sincerely busting your ass and giving your all at work, won’t you eventually expect to be paid more?
Change in one area of life always spills over into other areas.
Everything is an Investment
Rich people see every dollar spent as a dollar invested.
They focus on value over price. It’s all about the ROI (return on investment).
The ironic part of it all, is that it’s cheaper to be rich than it is to be poor.
In some ways..
Rich people can afford to buyer higher quality things, which last longer and don’t need to be replaced as long. Thus saving them money in the long run.
However, there does reach a point of diminishing returns where the ROI is no longer based on quality – but on status. That’s not what we’re after here.
I’m not suggesting you buy expensive stuff for the sake of buying expensive stuff..
This is a trap that many people fall into. In Dallas, we call them the “$30k millionaires”. You see these guys who just graduated college and get their entry-level $30-40k a year job. Forget the fact that they have student loan debt, they’re in the most expensive clubs every weekend poppin’ bottles, flashing their designer brands like they just stepped on set of a rap video.
Start thinking more critically on what you get for your money.
If you only have $50 of fun money left until payday, what has a better ROI? A trip to the bar that provides fun for a few hours – or some books and gym gear that will improve your life indefinitely?
Sounds corny, but rich people have corny habits.
Because a lot of those pieces of advice you hear over and over and over and over again from highly successful people are ACTUALLY TRUE.
How Massive Wealth is Really Earned
Alright, you’ve made it this far in the article.
You’re thinking yeah, yeah I don’t really care about thinking like a rich person, I WANT TO GET RICH!
I’m going to give you 3 harsh truths about how people really get rich.
1. Wealth Comes in Huge Windfalls
We’re told this story our entire lives:
You make good grades
You get a degree
You work hard for someone else
You eventually can retire a millionaire (Notice how IRA calculators always want you to aim for $1 million)
But seriously, when does that ever happen?
Business owners, hollywood actors, professional athletes, authors – they all get rich in windfalls.
Granted, it often takes years beforehand. Professional athletes prepare their entire life.
But business owners and authors usually don’t.
It’s a regular occurrence where a group of guys bootstrap a Silicon Valley startup and get bought out in a matter of 5 years or less and are now millionaires/billionaires.
Could you turn up the Obsession Throttle full blast for 3 years, if you knew that you could have so much money that you could live the rest of your life however you wanted?
The lady who wrote 50 Shades of Grey had never written a book before she self-published 50 Shades of Grey in 2011.
Today she’s sitting on $80 million. She made $95 million only 2 years after the book was released.
This is the only way to be rich and be young enough to enjoy your money.
You want to look for any opportunity that could result in a big windfall.
Now that I’m out of the oil industry, which was a great place for that – I’ve got my sights on authorship.
50 Shades of KW
The key is that behind the event of these ‘big windfall’ success stories is that there was a period of hard work, obsession and struggle.
Once you raise your money standards, the struggle won’t sound so bad.
2. Most Wealthy People Have Multiple Income Streams
- Financial Investments
- Business Investments
- Rental Income
In the oil business we call it “mailbox money”, maybe you’ve heard that term before?
You get mailbox money by owning royalties on oil wells. Some wells will produce for over 100 years. I can’t tell you how many farmers I’ve met who have been getting six figure checks in the mail EVERY MONTH for years now, with no sign of stopping. And many of them still lived on their farm, drove an old truck and dressed like a small town farmer.
Most rich people have multiple revenue streams. That’s how you not only maintain your wealth, but increase it exponentially in your lifetime.
3. It Won’t Happen Overnight
Very rarely do people get rich overnight.
Even E.L. James was in her mid 40’s or 50’s having a midlife crisis that spawned her book where she wrote about her wildest fantasies.
The windfall was fast, but everything that led her to write that book took years.
Get rich quick does not exist.
Get rich in a few years does, sometimes.
Anything that promises you that you can get rich quick is a scam. Don’t even read past the headline or title. It’s a lie and in your heart you know that. But we want to believe.
What that means is, don’t give up when you don’t see results right away. Keep making progress.
Money isn’t evil, because it can buy happiness.
Making a couple hundred thousand a year will not get you rich.
Invest in value.
It’s possible to get rich by – working obsessively hard for 2-5 years for the windfall and then using that money to create multiple income streams that bring you mailbox money for the rest of your life.
But it won’t happen overnight.
The Money Mindset is the first step to creating your big windfall.
From there, you’re on your own. The problem is that it’s one of those things that completely depends on your skills and personality. No one can tell you what you should do.
The idea here is that if you can learn to think like a rich person – that will lead to you figuring out that answer for yourself.
Until Next Time,
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What do you think? Do you agree, disagree or have any thoughts to add? Let me know in the comments below.
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