This article may seem more like a rant than an educational piece, but I think it’s a necessary risk. So here we go…. Us poor people have our mindset and financial approach all types of backwards! I say us because I know exactly what it’s like to think this way and to be poor. Back on track though….
As I’ve gained more experience and have had the great pleasure of helping clients become financially secure, I’ve noticed a distinct difference in mindset between my rich clients, poor clients, and those that fall in between. I’ll be the first to tell you, it’s not even close. In some cases the views on finance and investments are like night and day. I would argue that this vast difference in mindset plays a bigger role in people staying broke than most will ever admit.
This difference can be seen in multiple different aspect of life that can seem so small, but continue to make or break people’s financial future. In reality I could probably come up with about 15 of distinct differences, which will most likely result in a Rich Mindset vs Poor Mindset, but today I’m only going to address 5.
1) Opinion of Financial Advisors
The views on financial advisors and financial representatives could possibly be the biggest difference between the rich and the poor. I can honestly say that I know very few rich people that don’t have at least 1 financial advisor and very few poor people that have even 1 financial advisor. I can also honestly say that I know very few rich people who don’t consult with their financial advisor on a monthly to weekly basis for proper financial guidance, that’s of course if they’re not a financial advisor themselves.
Yet in impoverished areas we look at financial advisors as the enemy… Ok, maybe not the enemy, but they’re definitely shied away from or never heard of. This is extremely perplexing to the mind. It just makes sense that if you’re broke then you need financial advice to learn how not to be broke anymore. Obvious right? The fact is that if you’re poor, you need a financial advisor. If the rich have 1, and in some cases 2 or 3, then you can’t afford to be without at least 1… In some cases, maybe 10…
2) Life Insurance
Why so many poor people in this day and age don’t have at least a term life insurance policy still boggles my mind till this very moment. This is possibly the single easiest way to build generational wealth out of any investment or insurance I’ve ever seen so far. Plus it’s extremely cheap if you get it early enough! I’ve yet to find any other investment that allows you to pass on $500k to your family for only around $50 a month if you pass away within the term agreed upon.
I know, I know, a term policy has no benefits until you pass away… Wrong! Now there are even term policies that’ll benefit you in times of sickness to help you cover your bills and expenses. There’s virtually no excuse for not having a policy. If you have $100 to pay for a cell phone and another $120 to pay for cable, you have at least $50 to buy a life insurance policy. Plus the rich have been passing on wealth for centuries via these policies, so we should be doing the same. Don’t hurt your family’s well being by staying ignorant to the benefits of life insurance.
3) Views of Material Items
Now this is kind of a tricky topic to hit on. There’s no hiding that all people place a false value on material items, but the difference is the portion of income spent on material items. So many people are keeping themselves broke by spending their last on nice cars, a nice house, expensive clothes, and fantastic vacations. Instead they should be investing in their financial future or investing in an additional revenue stream.
I can’t tell you how many times I’ve seen someone hop out of a nice expensive car then walk into the bank and see their account only has tens of dollars, not thousands of dollars. Then the very next moment I see someone get out of a busted or average car to see they have hundreds of thousands of dollars in their accounts. One of my biggest clients while at the bank is worth millions, but yet still buys clothes from Walmart and the thrift store.
I’m going to let everyone think about that one for a moment…..
4) Measures of Success
Growing up in poverty the common measure of success for us was if you make it out the projects, the hood, or can afford to feed yourself and pay all your bills most of the time. The job expectation bar is also set at the same level, if not lower, for every generation born into poverty. We’re seen as highly successful if we can land a good job at a factory and barely encouraged to go beyond a fast food job in most cases. There was no expectations of having a great credit score, emergency fund, living well below your means, and having a well paying professional career or successful business.
When it comes to rich families though, being highly successful and financially well to do is expected and the floor of success, not the ceiling. From birth, you’re expected to be either be the owner of a highly successful company or at the top of a highly successful one. This type of mindset and expectation breeds success on a consistent basis and instills confidence in a person’s abilities.
I’ll arguably say that one of the main priorities instilled in every rich person and their families is to pass on an inheritance. Basically, don’t fuck up this money for the next generation! Their financial advisors become apart of the family and wealth conservation along with the accumulation of wealth is apart of their daily conversations. They understand the importance of life insurance, trust funds, and more in order to keep passing the buck for the next generation to grow and thrive off of.
On the other hand, most of us who grow up in poor families only inherit a bill for the burial of our loved ones and lose thousands of dollars trying to provide a proper burial. We tend to live by the motto of “You can’t take it with you”. BTW I absolutely despise that motto with a passion! It’s possibly the most ignorant shit I’ve ever heard!! Anyway, start making a plan to build a family inheritance if you want to eliminate poverty from your current and future generations.
Growing up and living in poverty is like the verse from Grandmaster Flash’s song The Message ” A child is born with no state of mind, blind to the ways of mankind”. Often times us kids born into poverty have no clue what the world is really like and what’s truly needed to be successful. I personally had no clue what a credit card, a mortgage, and other important financial components were until I was in my mid to late 20’s. Often times people in their 60’s have no clue about the basics of finance. This is exactly why we must do better and we must seek out the education needed to improve our financial situations.
Change your mindset, change your life……