Why do some people become rich while others stick to the middle of the road?
Is it because rich people have had some kind of unfair advantage, or because they’re just plain lucky?
We don’t think so.
We think Australians are lucky to live in a country where everybody has the opportunity to become wealthy. So the question is: what do rich people do differently?
Understanding how rich people build their wealth and what their attitudes are towards money can help the rest of us catch up a bit quicker.
So here are five lessons to learn from the success of the rich.
Build wealth through earning … not saving
Budgeting and saving are incredibly important financial habits, and we’ve been writing about how to do them well for years.
But no matter how diligent a saver you are, if you’re not increasing the amount of money you’re pulling in, the chances are your savings won’t make you rich.
Wealthy people understand that they need to focus their precious mental energy on earning big money and expanding their earnings potential, rather than obsessing over the small stuff.
Don’t be afraid to believe in yourself and take smart risks
Wealthy people know that you can’t earn significant rewards without taking on some degree of risk, whether that risk is personal, financial or both.
Of course, the reason many people don’t want to take risks is the possibility of failure. But wealthy people recognise that failure is the ultimate learning opportunity, and have the self-belief to back themselves to succeed next time.
As that old saying goes, fool me once, then shame on you, fool me twice …
Don’t get emotional about money
For many people, money can be a highly emotional subject. Especially as the pain of losing money can be twice as strong as the joy of gaining it.
But rich people understand the importance of being rational about money, and not being blinded by negative emotions such as greed, fear, envy or regret.
A rational approach to building wealth will serve you much better than letting emotions guide your financial decisions. And provide a much better chance of success.
Maximise your opportunities
Wealthy people understand that it’s always possible to achieve more in any given situation, whether that’s a project, a negotiation or a partnership.
They appreciate the importance of networking, always finding new angles on a business deal and are comfortable using their existing assets to generate new income streams.
Good enough is fine if you’re happy staying in the middle of the road, but for the rich, it’s never enough.
Over time, applying this positive attitude to every interaction compounds the returns they achieve both in their career and in their wealth.
Understand that your time does not equal money
It goes without saying that most wealthy people have worked hard for what they have.
But they also realise that there are only 24 hours in a day, and you can’t magically create more time in which to work hard and earn money.
In order to break away from the daily grind of the mortgage belt and become wealthy, at some stage you have to divorce yourself from the idea that the time you spend working is directly equivalent to the money you earn.
For example, a successful business can generate a return for its owner that’s disproportionate to the amount of effort they’ve put in, as can a canny investment.
Other things contribute to this too, for example being recognised as an expert in your field — no matter what it is — can lead to almost endless opportunities.
So take a minute to see money through the eyes of the rich and how you can incorporate some of this thinking into your life. It might just see you successfully steer away from the middle of the road.