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The way we think plays a much bigger role in achieving our financial goals than we realize. What if your goal is to become wealthy? The good news is that you can work on your mindset to turn that goal into reality.
Building wealth is certainly a very exhilarating and rewarding (no pun intended) life adventure.
And when I talk about getting rich, I'm not talking about luxury cars or caviar for breakfast. I'm talking about building your future, your health and your financial independence, for lack of a better term.
For some, not having to worry about putting food on the table or having enough to pay the bills is motivation enough to take control of their finances. For others, it's about building good habits now so that they can become financially independent later on, and ensure they can live their lives the way they want to.
But for many, getting rich will always be a dream. The reason? It's because most people think that this goal is actually not really attainable. In addition to the fear of stepping out of their comfort zone, for many, building a fortune seems impossible without being a Rothschild heir.
In this blog, I present to you why, in reality, getting rich is all about mindset. Here are 5 ways to think about changing for your future financial success.
A large part of the population has a love/hate relationship with money.
Some people say that money is not the key to happiness... but they would still like to have more. Others think that the most important thing is to spend money now for fear of depriving themselves, even if it means sacrificing their comfort later...
In most cases, these money-related problems stem primarily from a lack of knowledge about personal finances.
The game of wealth is a long-term one, and requires a concrete strategy to be put in place. You think the subject of finances is boring, frustrating or too complicated? Imagine the trouble, frustration and complications you'll experience for years to come as you worry about the amount in your bank account each month.
Learning how to manage money is a lot less complicated than it sounds (for starters, you can check out our Resources page which has dozens of resources for getting started). It's all the small, regular efforts you make now that will then allow you to earn money from your passive income and investments.
Do you think you have a fixed mindset or a developmental mindset? This is an important question, as it is usually what distinguishes success from failure.
And if the second mindset seems much nicer to have, there's a reason. As those with a developmental mindset believe, there is actually no limit to the money you can earn.
The most comprehensive study, conducted by Thomas J. Stanley showed that only 8% to 20% of millionaires are heirs or descendants of wealthy families. And yes, that means that between 80% and 92% of millionaires became millionaires on their own.
You thought the percentage of heirs was much higher? It's normal: this bias comes from the human brain's tendency to want to find excuses and extenuating circumstances for fear of failure.
Instead of telling yourself that you have a good reason for never being able to get rich (fixed mindset) and worrying about all the obstacles or failures that could happen, tell yourself: "I'm happy with what I'm making, but I think I could make more. I can grow more, challenge myself and build real wealth in the future."
Instead of going through life on a low salary, successful people devote their efforts to finding side activities that will grow their income: starting their own business (part-time alongside your job or full-time), negotiating their salary or changing companies for a better paycheck, starting to invest their money as soon as possible, and taking advantage of compound interest over time.
The key to getting rich? Frequently look for ways to earn more.
If you truly believe you can control your future, you will take steps to get where you want to go. If not, you'll continue to believe that you're just a victim of your situation, and changing things will remain impossible.
Every month, you tell yourself that you'll try to set aside a portion of your paycheck for savings. But then the paycheck comes in, and your hard-earned paycheck quickly gets spent on unanticipated bills, impulse spending, fast food and shopping sprees... until you have nothing left to save. Maybe next month?
Yet the cycle repeats itself, and your savings never really grow. The reason is that you pay yourself last... often when you have nothing left. You only put money aside for your future self after all other expenses are taken care of. Those who have succeeded in becoming rich have done so because they have made saving a priority. That is, they paid themselves before they paid others.
If you find it difficult to save regularly, set up an automatic transfer from your bank's website to set aside a portion of your paycheck in a savings account right after you receive your paycheck. That way, you'll make sure you can't spend that money unnecessarily.
I don't think it's a surprise to anyone: your material possessions will never make you truly happy. So why do we enjoy shopping so much? The reason why our heart flutters when we see those 30% off shoes has nothing to do with a need to "enjoy life". It's really all about the nervous system...
Like everything else, the chemical responsible for our "pleasure" to buy and consume is dopamine. When you consider buying something new, this neurotransmitter gets excited in anticipation of the reward. That is, your brain anticipates the pleasurable sensation of buying an object of desire before you've even bought it... not the purchase itself.
Because you all know what happens next: a few days or weeks later, once the dopamine rush has passed, the object becomes commonplace for you and the excitement dies down like a soufflé.
Buying certainly gives you a temporary joy and excitement. But it never lasts. In any case, you are wasting money when you spend impulsively.
That doesn't mean you should never treat yourself. It just means that every purchase you make should be thoughtful - outside the influence of dopamine. And those who have succeeded in becoming rich have understood this.
Contrary to popular belief, most rich people do not spend their money on luxury cars or exuberant villas. On the contrary: it is precisely this thrifty mentality that allowed them to become rich.
The reason the wealthy actually spend little money is because they know what the spending they do today could have been worth if they had saved that money instead - and invested it at a 10% rate of return over the next few years.
Because of compound interest, you not only keep the money you didn't spend, but it also earns you even more money over the long term by working for you!
The best thing you can invest your money in? Yourself.
Once most people leave the school system, they tend to stop trying to learn new things. But those who have succeeded in becoming wealthy continue to learn and educate themselves all the time. And this is not only in the field of personal finance.
American billionaire Warren Buffet attributes much of his financial success to all the books on investing he has read in his life.
Reading books on personal development or money management is actually far from being a chore. Books are one of the cheapest and easiest ways to start investing in your financial education. There are plenty of great books out there that make it easy for anyone to understand financial topics, even if you didn't know anything about them to begin with.
Online courses are also a goldmine - and there are now courses on almost every specific topic imaginable.
Learning new skills is also critical to your success both personally and professionally. Millionaires know very well that learning doesn't stop at the end of school. The more money you spend on financial knowledge, the more money you will make.
