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?