The reality of the situation is that money is not a subject that is taught at schools. It is something that is learned at home.
Therefore, for those of us coming from a poor or middle-class way of thinking, the same thinking continues.
The rich get richer, the poor get poorer and the middle class struggles in debt because our thoughts about money don’t change.
Therefore, to really change our financial situation and make a sound financial plan, we have to learn how to think appropriately.
The poor think that the only way to make more money is to work harder:
Get a second job,
work longer hours,
get more skills to get paid a higher wage, etc.
The problem with this approach is that you are applying no leverage at all.
Your standard of living deteriorates and you get very little time to do things that matter: Time with your family, following a passion, giving back, etc.
Secondly, the Poor way of thinking does not follow the principle of ‘Pay yourself first’.
Accordingly, the Poor, spend as much as they earn and have little or no savings and no real assets.
The Middle class is only slightly better.
They also believe that the only way to make more money is to work long and hard. Their earnings are more than their expenses, so they land up saving a little more.
However, they have good credit and are able to buy luxuries now and defer the payments.
They believe that the assets that they are buying are true assets: a large home, a big car, jewelry, etc.
But what is really happening is they are stuck in this race to look good in the eyes of others and land up buying liabilities that they think are assets.
The rich don’t do things differently, they do things oppositely.
They start by paying themselves first. They always set aside money to invest in real assets. They buy real assets that use leverage and make money work for them, using other peoples’ time and other peoples’ money.
They let these real assets pay for the luxuries they enjoy.
The Rich spend time and money to acquire skills and knowledge. But unlike the Poor and Middle class, they acquire the knowledge and skills required to invest wisely and efficiently.
Adopt the right thinking to get the financial success you want. Think right.