The Mindsets That Take You From Poor to Rich

Close your eyes, and think of as many people that you know who  went from poor to rich.

Do you ever wonder how they did it? What made them different? How were they able to change their financial situation in one lifetime?

Was there a determining factor that pushed them to do the impossible?

A study done a long time ago, highlighted the fact that a lot of it came down to mindsets. It showed three mindsets that people who went from living in poverty to  being wealthy had in common.

These three mindsets are believed to have significant value in your ability to change your financial status.

1. They all had a Long-Term Vision and Plan

These individuals lived life from decade to decade instead of day to day. They had a clearly defined goal. A goal that they broke down into years, months, weeks and days. They tried their best to make decisions that would bring them closer to that goal every single day.

These people knew where they needed to be. They developed systems and routines along the way. This made it easier for them to stick to their long-term goal. At the end of the day, every decision was geared toward accomplishing their goal.

They remained flexible in their approach to obtain their goal. They were open to trying new things, so long that it didn't affect the direction they were taking.

2. They Believed in the Power of Delayed Gratification

They understood that they would need to work hard for a decade or more to build their wealth. They believed that they would be free to pursue the life they wanted after. So they would give up the parties and socializing so that they could stick to their goal.

They would give up all the things that people around them were enjoying now. They knew that there would be a time later  where they would be free to pursue and enjoy these things.

3. They used the Miracle of Compounding to Their Advantage

They realized that they could make their money earn interest. Then they could add that interest to the principal. Over time, both the principal and the interest grew, making their money work for them.

This is the basic idea behind compounding, and they took full advantage of it.

These three mindsets, as simple as they may seem,  were important to take people from living in poverty, to a lifestyle of abundance.

Unsurprisingly, the study also found that the exact opposite of these mindsets drove wealthy people into poverty at the blink of an eye.

1. Short-term vision is King

Most people who were wealthy and ended up losing their wealth, all focused only on a short-term vision. They were more focused on all that they could enjoy now. They took full advantage of the purchasing power that was in their wealth today.

They didn't have a vision for their life, or their wealth. At least not a vision that focused on anything past today. They wanted the immediacy of all that it could give them now.

This led to reckless decisions about their money. They never had any long term interest in preserving and protecting their wealth. Eventually, this resulted in the loss of the money they had.

2. They were Chasing Instant

Gratification

These people who ended up losing their money were after all the pleasures money could give them now. This leads to them engaging in lots of destructive behaviors. They over-consumed alcohol and other drugs. They indulged in gambling and were in pursuit of many partners at a time.

Although indulging in these things felt good today, they resulted in the depletion of their financial resources.

Their decisions were all based on getting them a state of ecstasy right now.

3. They Abused the Power of Compound Interest

Time is your best friend when dealing with compounding.

But lacking the patience and discipline to allow your assets to work for you, can be detrimental.

Since these individuals lacked the patience, they started using up assets they were never supposed to use. At first, it was a small amount, but as their visions got narrower, so did their regard for the future. Eventually, they used up all of their assets that were working for them.

This removes the security of their wealth. They started buying fake assets without ever contributing to their compounding fund. They ended up in a life of poverty.

So here we can see that the mindset of building wealth is exactly the opposite of the mindset of losing wealth.

The challenge

This week, I challenge you to take some time and review your mindset about money. Do you have a long term vision for your life? Are you more focused on now, and all that your money can do for you today? Ask yourself if your money is working for you, or if you are working for it?

Based on your response, be honest and decide if your money mindset is that of a person who is building wealth or one who loses it?