I’ve spent my nights after work and my days off researching the wealthy. I wanted to learn what they did differently in their lives to see if I could learn from it. To my surprise, I tend to behave rather similar to wealthy folk in some areas.
I read a lot for self-education. This one seems to top most of the lists I’ve come across. While unsuccessful people tend to be big sports fans and watch a lot of movies and television shows, the wealthy tend to spend more time reading. Warren Buffett spends several hours a day reading, for instance. That is probably why the millionaire I met years ago advised me to read books written by people who had accomplished the things I wanted to do in order to improve my knowledge. I would not be where I am today if not for taking his advice to heart.
Wealthy people invest in themselves. Whether it be investing in their health or their education, they tend to spend more time and money to improve themselves than the poor do. While I don’t have much use for the medical community, I do spend a small fortune in books for self-education.
There are other items on the lists I’ve uncovered, but one item in particular stood out.
While the rich buy assets, the poor tend to buy liabilities.
What does this mean? It means that the rich tend to spend their money on things that will make them money instead of costing them money. For instance, while a poor person (I hate to use this term on someone who can afford to do something I can’t currently dream of) might buy a boat what will cost them in taxes, marina fees, and whatnot, a wealthy person would use the money to buy a piece of a business or some rental property. As a result, while the wealth of a person with a poverty mindset will decrease over time, the wealth of someone with a rich mindset will grow.
To my surprise, I’ve discovered that it’s not really about how much money you make. Doctors and lawyers have a lot of money coming in but since they don’t buy many assets quite a few of them struggle financially. Truly wealthy people actually frown on the behavior of these people, since they invest in bling instead of their futures.
Looking back on my life I’ve seen where I’ve committed the exact same mistake. Instead of using any extra cash I had on hand to invest in assets, I merely saved it, stretching it so that I could take time off to spend with my kids. While I don’t regret this decision, I no longer have children to worry about so it is time I start to change that mindset.
Now the next question is: how do I apply what I’ve learned?
6 thoughts on “Difference Between the Poor and Wealthy”
Thank you for another great thought provoking article. Because you have no debt and know how to live frugally you have a good base to start building assets. One way I started was to find a checking or savings account that paid a little interest but didn’t have the minimum balance or other fees. Kasasa accounts in credit unions have some requirements but I can meet them and so I make a little on my money. Every little bit helps.
Your books are great and if you can find a way to sell more and write more – hoping for a book about your journey as you learn and grow in this next phase of your life. Am so grateful for your sharing your inspiration and journey with us.
I’m so glad you’ve found a way to allow your money to make money. As I study this, I’m learning that a simple shift in mindset can work wonders. I do intend to write more about this as I learn and explore, though to be honest, I’m not quite sure how things will work out yet.
There is another factor with doctors and lawyers. They are usually also paying off massive debts they incurred while learning their business. The setup for a doctor’s office comes out of their pocket as well, which is investment in their business. They are also reading and honing their skills constantly, if they are good at their profession. The costs up front are the killer here.
This is very true.
Annie – thank you for this great post! It has made me think about the assets vs. liabilities issue – that is so true. I especially enjoyed your comment about how the wealthy read a lot. I have always loved reading, and lately the how-to and DIY books at my local library have helped me save a lot of money. Knowing how to buy what I need and then take care of it has not only helped my budget, but has also made me feel more self-confident in my abilities. For me, that is true wealth. I love reading your posts and am excited about your new plans for investing. You are such an inspiration!!
Awesome! I absolutely LOVE to hear from someone who learns how to save money by doing things themselves. Keep up the great work!
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