Growing up, my family didn’t have much money. There were times when the light switch triggered no response because the electric bill hadn’t been paid, and we were even homeless for a time. I remember being jealous of my friends who lived in large houses and received brand new cars for their 16th birthdays and wondering how I could have that. More than anything, I wanted to be wealthy, yet when I did start making money, I spent it all.
What was I doing wrong? Why were my actions totally out of line with my financial goals? My income wasn’t to blame; neither was my education, my career choice, or my network. I could spend money changing my clothes or accumulating more stuff, but that wouldn’t fix the problem either.
The problem was my mindset. I wasn’t the lower class kid living on a friend’s couch anymore, but I still thought like her. And her way of thinking was keeping me poor. I wished to be a millionaire, but how far was that actually going to get me? My husband has a great saying, “Wish in one hand and s*** in the other, and see which one fills up faster.” It’s crude, but it’s true.
You aren’t going to become wealthy by wishing for wealth while still continuing to think like you’re poor. If you want to accumulate wealth consider adopting these mindsets of the wealthy.
Wealthy Mindset 1: The wealthy think long-term
The decision to purchase a new car or go on an expensive vacation isn’t one they make likely because they consider the long-term consequences of their purchases.
Use the Rule of 72 to put large purchases in perspective. The Rule of 72 defines the number of years it takes to double your money at a given interest rate. If you assume an interest rate of 7% per year, then it will take 72 / 7, or just over 10 years, to double your money. With this kind of thinking, a $5,000 vacation suddenly becomes a lot less appealing than a $5,000 contribution to your investment account.
Takeaway: If you tend to have buyer’s remorse after purchases or your house looks more like a storage facility than a home, adopting a long-term view of your money might help you cut back your unnecessary spending.
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Wealthy Mindset 2: The wealthy understand that learning doesn’t end in the classroom
Wealthy people love to read. Some of the world’s most famous millionaires and billionaires are also some of the world’s most prolific readers. They keep their competitive edge both professionally and personally by constantly expanding their knowledge. Their reading habits are especially astounding when you consider that many run some of the largest and most successful companies in the world and have constant demands on their time. They have the same 24 hours we do and find reading such a valuable habit that they spend a considerable portion of each day engaged in it.
Takeaway: Expanding your mind is intrinsically rewarding, but it can be so much more. Both of the side hustles I’ve cultivated began as a desire to learn about a new topic and turned into fun ways to make extra money.
Wealthy Mindset 3: The wealthy have a growth mindset.
According to Carol Dweck, author of Mindset: The New Psychology of Success, a growth mindset is one in which you are always looking to improve yourself. When something goes wrong in your life, you look for the lesson life is trying to teach you, and you find ways to grab life by the horns and steer it in your favor. This is the mindset that allows millionaires to keep going when their businesses are going under, when the market is tanking their investments, and when they’ve reached a slump professionally.
Takeaway: Bad things happen to everyone. The measure of your integrity is how you handle yourself during the bad times. It can feel so easy and comfortable to wallow, but it won’t change your situation. Only you have the power to improve yourself and affect change in your future.
Wealthy Mindset 4: The wealthy know that success doesn’t happen overnight.
It’s easy to look at successful millionaires and forget about the years of hard work that preceded. But that’s a huge mistake. Wealthy individuals don’t make their money in a vacuum. They go through the same professional and personal struggles we do. The only difference is that they visualized their goal and made one prudent decision after another for a really long time, never losing sight of their destination.
Takeaway: Staying the course for the long haul is hard. Be patient, and learn to see the value in the journey. If achieving wealth was simply a matter of snapping your fingers, imagine how few people would hold onto it. The road to wealth will teach you the discipline, determination, and level-headedness you need to maintain a wealthy mindset. Don’t give up.
Wealthy Mindset 5: The wealthy hustle.
Many millionaires own their own businesses, but even those who don’t usually have a side hustle that generates extra income. They understand that you receive value from adding value, whether through designing a new product or service or being so essential to your employer that you move up the corporate (and income) ladder. And when that extra income does roll in, they don’t fall victim to lifestyle inflation; instead, they invest in themselves and grow their wealth.
Takeaway: Develop super-human tenacity. Learn to stand out professionally among your peers, and I promise you’ll be rewarded.
Wealthy Mindset vs. Poor Mindset
The difference between rich and poor goes so far beyond yearly income or net worth. A minimum wage income and a wealthy mindset will take you so much further than a $100,000 yearly salary and a poor mindset. Your journey to wealth starts in your mind. If you can learn to adopt the mindset of the wealthy, to think like the individuals who have achieved what you desire, then you too can become wealthy.
Article written by Ansley Fender and originally published on Financial Literacy EDU.