Having a rich or poor mindset may have nothing to do with your current financial situation. You could be a trust fund baby with a poor mentality or be working three minimum wage jobs with a wealthy person mindset.
Your financial situation is temporary; your mindset will last for the rest of your life.
1. Time Frame
An abundant mindset considers how choices will affect them in the future. When someone with a productive mindset receives unexpected cash, they think what the payoff of spending it now is in 5 hours, five months, and five years. A wealthy mindset sees the power of compound interest in investing in education or the stock market, while a poor mindset wants to spend it on consumption immediately. In other words, a poor mindset runs on the weekly cycle “Thank God it’s Friday, oh God it’s Monday.”
An abundant mindset makes connections because they want to grow their network and because they know it will pay off in the future. A poor mindset wants immediate gratification, while shines clearly through network events that people mob you with business cards offering you used cards.
The Standford marshmallow experiment explains this. Children were left alone in a room with a marshmallow. They were told they could eat the marshmallow immediately or wait 15 minutes and receive two. This experiment demonstrated the idea of delaying gratification for a greater reward. Success in life can be explained by delaying gratification– whether through investing money for years in retirement accounts or spending 30 years in school to finally become a doctor. Just replace that marshmallow with a new car, a luxury apartment, or a cruise.
2. A rich mindset focuses on opportunities while a broke mindset focuses on barriers.
Financially poor people face more barriers than the rich, but remember: I’m talking about mindset. If you get a job offer in New York City, there are two opposite mindsets to consider. The rich mindset sees the opportunity of a big city with a fat paycheck and a lucrative career path while the poor mindset sees high living expenses, an uncomfortable transition to a new city, and the possibility of failing in the role.
Both mindsets will face the reality of a high cost of living. But the positive mindset will focus on how to work within their resources to meet their goal, whether it’s getting a second job, living in someone’s closet, or commuting a painful distance. I’ve found that I get nothing productive from focusing on negative situations for more than five minutes at a time.
A broke mindset sees money and success as a zero-sum game. If someone’s making more money than you, they are sucking that money away from you. The same applies to success. But in reality, there are enough problems in the world for you to solve and cash out with more money than you can easily spend. A rich mindset focuses on results rather than hours spent.
3. A rich mindset focuses on results rather than hours spent.
If you spend your life exchanging hours for a dollar amount you will never grow rich. Instead, a rich mindset focuses on productivity. Consider a job in which you’re paid by the hour versus by commission. Two people may spend the same number of hours working but have considerably different results. But you should still know how much your time is worth so you can delegate other tasks such as managing your calendar, answering emails, and mowing your lawn so that you can maximize your work. A poor mindset sees the maximum value of an eight-hour workday as their hourly pay, whether they get work done or not.
Being productive doesn’t mean you spend 10 hours a day working. It means you don’t waste half of your time by scrolling through social media or looking for things you misplaced.
4. A rich mindset welcomes challenges while a broke mindset complains about new responsibilities.
Settling in a work role can be dangerous. You can trick yourself into thinking you know everything only to be fired and left without marketable skills when your position is automated. While you can master your current responsibilities, you can also fall into the rut of a routine and “wake up” in 20 years still doing the same tasks. Instead, you should constantly be pushing yourself to learn new tasks. If you’re comfortable in your daily role, you’re doing it wrong. A broke mindset sees new responsibilities as “not in their job description”, but that’s the point: to push outside of your responsibilities, as well as your pay grade.
5. A rich mindset believes it creates its own future. A poor mindset believes things happen to it.
Bad things happen to everyone. But it’s how you react that defines who you are who you will become. A rich mindset believes you create your own destiny, that you are the master of your fate, in the words of Henley. A poor mindset takes life’s punches and stay knocked down. Everyone knows someone who constantly complains about their life, even though their actions brought them to that point. It’s easy to complain about your debt load, the job market, or your boss. But a rich mindset knows their actions directly correlate to their future outcome. If you get three jobs and pay off your debt, you will find financial freedom. If you create insane value, the market will respond with higher pay. Don’t be a victim. If your job sucks then find a better one. If you’re underpaid, then prove it. There’s no end to the incredible opportunities available if you grab life by the horns.