As a teacher who is passionate about helping people win with money, I am nearly always in “student mode.” One area I focus upon is the individual way people choose to approach their finances.
It is very apparent that a person’s “mentality” (synonyms: attitude, mindset, outlook) really affects their financial decision-making. I’m going to discuss this mentality in just a bit, but for now let’s compare the mentality of wealthy people versus broke people.
Again, these are my general observations. There are certainly individual cases where this is not true – for both the wealthy and the broke.
- Wealthy people focus on long-term results. Broke people focus on the short-term.
- Wealthy people are far more likely to prepare and follow a budget than those who are broke.
- Wealthy people value financial margin (savings/on-hand cash) more than those who are broke.
- Wealthy people tend to focus on the big picture (strategic approach) while broke people tend to focus on details (tactical approach).
- Wealthy people are more likely to say “I don’t know” or “That topic confused me, can you explain it another way?” when faced with challenging financial topics while broke people are more likely to make a financial decision without seeking to fully understand it.
If one wants to be wealthy, it should be helpful to ponder these observations and see what adjustments we could personally make in our own lives.
Why are wealthy people more focused on the long-term (#1) and the big picture (#4)? One reason is because they value margin (#3)! When you have saved a substantial amount of money (3 to 12 months of expenses), it is much easier to focus on the future. Conversely, when you have saved nothing, it is virtually impossible to think about the future. All energy must be spent on making it through this week and month!
Look at the five observations again. Which mentality do you tend to lean toward?
Do you have a “wealthy” mentality? Great – choose to live generously. Teach others so they can win with their money too.
Do you have a “broke” mentality? Most of us have been there before. Learn from the ones who have broken out. CHOOSE to think longer-term. CHOOSE to value financial margin. CHOOSE to prepare a budget each and every month. CHOOSE to seek wisdom when a financial topic confuses you.
I broke out a decade ago. My life has never been the same.