THE BROKEN WALLET

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Ever so often I’ll stumble across an article comparing a rich mindset with a poor mindset. In just about every case the general consensus is that the latter – that being a poor mindset – keeps some people in a financial rut. However, people with a rich mindset (which obviously includes rich people) manage their money differently.

Granted, not everyone strives to be rich. Some prefer a more simple life.

Even so, if you’re looking to break a paycheck to paycheck cycle or improve your financial outlook, managing your money like a rich person — even on a smaller scale – might help.

So after researching several traits and mindsets common among the rich, these are (in my opinion) the most interesting seven.

1. Think about themselves first

To be clear, this doesn’t mean that rich people aren’t generous. Plenty of people with money give to charities, volunteer their time, or get involved with philanthropy.

But generally speaking, they’re not careless with their money. So before giving anything to anyone they consider the impact this decision will have on their finances…and what’s in it for them.

Some might call this selfish, but it’s actually a smart move. Everyone should consider how decisions will affect their financial health long-term.

For example, someone might ask you to cosign a loan. Understandably, you might want to help. But it’s your responsibility to protect your finances. Don’t do anything to jeopardize your financial well-being.

2. Believe “being wealthy” is a right

Interestingly, some rich people feel that being wealthy is a right, whereas the average person believes it’s a privilege.

When I think of something being “a right,” the first thing that comes to mind is a sense of entitlement or feeling that you deserve something. And if you feel that you deserve something, this can create a stronger drive to achieve it.

But if you don’t feel deserving, there’s no motivation. You might not try to make a situation better – because you don’t believe it can get better.

Now let’s tie this to our finances. Personally, I think everyone deserves to feel financially confident, which can mean different things to different people. For you, this can be having a fully-funded emergency fund, paying off a credit card, buying a house, or getting one month ahead on your bills.

Whatever your goal, you have to change your mindset. Instead of viewing “not being broke” as a privilege, view it as something you deserve – and then come up with a plan to make this happen. Never underestimate the power of positive thinking.

3. Raise their kids to be rich 

Some rich people also make it a priority to teach their kids about money – and they start at a young age.

They teach their kids abundance, money management, as well as the belief that being rich is a right.

But even if you’re not in a position to send your kids into the world with a huge safety net (most people aren’t), having regular conversations about money when they’re teenagers (or even younger) builds a foundation. This can help them manage money better as adults.

Personal finance isn’t taught in many schools, so it’s really your responsibility to show your kids the ropes. If you don’t teach them, they’ll learn through trial and error, where they make a bunch of mistakes and then spend their early adult years cleaning up the mess.

On the other hand, if they learn about managing credit responsibly, the importance of saving, frugal living, and investing, they’ll start on the right foot – even if they don’t have a lot of money.

But, of course, you can only teach what you know. It’s important to educate yourself too.

4. Action-oriented 

To put it simply, most rich people don’t wait for things to happen to them. They make things happen.

I’ve always felt that procrastination holds a lot of people back from improving their finances. When your money isn’t right, or when you don’t know how to fix a situation, it’s sometimes easier to put your finances on the back burner and worry about it another day.

Yet, things won’t improve until you take the first step, and ignoring a problem often makes it worse. So get to the root of the problem, come up with a plan, and be patient. In other words, give your situation time to improve.

5. Not afraid to invest 

There really isn’t much to say here – rich people know that saving money will only take them so far. As soon as they can, they’re investing their money whether it’s in the stock market, funds, real estate, commodities, art, etc. They’re going to make their money work for them.

Likewise, you should do the same.

Keeping some liquid cash for a rainy day or emergency is only smart. But once you have enough tucked away – and you’re confident in your ability to handle an emergency – it’s time to start investing outside of your retirement account.

I know investing can be intimidating if you’re a newbie, but don’t let fear keep you on the sidelines. You can choose from individuals stocks, mutual funds, index funds, ETFs, and other assets. Make sure you research your options and understand what you’re investing in.

6. Surround themselves with like-minded people

Another trait of rich people is that they surround themselves with other rich people – for multiple reasons, some which are pretty obvious. 

Depending on a person’s level of wealth, their habits and lifestyle doesn’t work with everyone’s budget. Therefore, they choose friendships with people who can do activities on their level.

But this isn’t the only reason.

Some rich people also believe that you’re only as successful as those you associate with.

Now, I don’t think anyone should measure success by the size of their bank account. But there’s a lesson to be learned.

If you’re in a “not-so-good” place financially, you have to identify situations and people who’ve had a bad influence on your money.

Some people could care less about their own financial health, so they’re not going to encourage you to do better. They might, however, undermine your efforts, or even say being frugal isn’t necessary.

Therefore, choose your company carefully. Spend less time with people who don’t support your financial journey.

7. Multiple income streams 

I once read that the average self-made millionaire has between five and seven income streams. I am a big believer in multiple income streams, and I think it’s dangerous to only rely on one source.

Multiple streams can help you reach financial goals sooner, and you can create a bigger nest egg. It’s essentially another level of protection.

But keep in mind, another income stream isn’t always about getting a second or third job. There are only so many hours in the day and you only have so much energy.

So the key here is supplementing with passive income streams. Passive meaning money you earn over and over again from work you’ve already completed, or money earned from something that doesn’t require a lot of active work.

Examples of passive income might include selling a digital product or online course, affiliate marketing, blogging, renting out your house, renting out your car, real estate, and other similar hustles.

You’ll definitely put in work. But once you get a passive hustle off the ground, you can literally earn money in your sleep.