Poor vs. Rich Mentality

“The hatred of money is generally a subconscious attempt to alleviate the pain of being broke or poor.”  ― Mokokoma Mokhonoana

Amongst many of the books I have read, the one to single-handedly change my perspective about money is Rich Dad, Poor Dad by Robert Kiyosaki. His viewpoint and teachings on the new way to look at money, finance, business and investments has changed millions of people’s lives. I am going to recap some of his philosophies that have driven me directly into the path of being an entrepreneur, while focusing on getting to complete financial freedom from passive income.

What exactly is considered “poor”?

Learning from the Rich Dad, Poor Dad Quadrant— Poor is basically someone who works as an employee or is self-employed. (Yes, I’m currently self-employed, and I am currently in the “poor” bracket.) Poor is someone who has to continue to work paycheck to paycheck in order to pay their bills and have just enough and maybe a little more in the bank. They may be renters or have a mortgage, car loan, some credit card debt. The poor frequently splurge on extras that they feel the deserve because they have worked so hard. A poor person may not have the money to go to that concert or ball game they desperately want to go to, so they put it on the credit card. They go to nice dinners on the weekends and slide that card again. When the bill comes, they have just enough in the bank to make the minimum payment. Are you confused? Wouldn’t you say that is the middle class? Yes. Poor is equivalent to both the low AND middle class brackets.

Why is this?! Well guys and gals, it’s because both the poor and middle class are working to live and not living to work!  Both will work their life away doing something they are so-so about just to get money in the bank, pay the bills, take care of the family, and put money into their 401k for retirement. By the time they get to retirement, they realize there is barely enough to live off of for 5-10 years. Most don’t even have a backup plan for extreme health issues. These people will never experience what financial freedom really entails. No matter how hard they work or how many hours are put in, they will always have to look at the budget and make sure it’s affordable and the mandatory monthly bills get paid first.

My thoughts on this was, “Hold on a second! Isn’t this the famous American dream? A good steady job, spouse, 2.1 kids, dog and mortgage.” As I thought about this, I realized we have evolved so much over the past 50 years with technology, wages, feminine rights, non-discrimination, corporations,  pensions to 401k’s…..but why in the heck are we still holding onto the 1950’s American dream??? This doesn’t make any sense. Everything around us and how we live on a day-to-day basis has changed. Why hasn’t society evolved the American dream to go with it? This is where the light-bulb turned on for me in Rich Dad, Poor Dad. Middle class is no longer what we want to strive after. We want to be RICH! Now, I know personally why my focus in corporate never got me the satisfaction I wanted, even though I had a steady paycheck. It was never going to be enough to truly live.

What is “Rich”?

The Rich Dad, Poor Dad Quadrant explains it as a Business Owner or Investor. Now, a Business Owner is different from Self-employed. An Owner, owns a company and everyone else does the job to get put money in the bank. A Self-employed person is the one doing all the work to bring the money in. If the self-employed person was to leave, there wouldn’t be anymore income. If a Business owner was to leave, the money would continue flow in. An Investor, is someone who invests wisely into opportunities in stocks, real estate, oil and gas, farming, etc. where they receive reoccurring paychecks and they watch their money grow. These two segments that place you into the “Rich” category vs. “Poor”, is the stream of building passive income.

Passive income defined: When someone has earnings from their investments or business that continually come in, but they are not actively involved.

Count me IN!

The Rich have deliberately saved a percentage of their money early on to build up enough to invest in their desired passive income portfolio. They do this again and again. They save before spending on their wants and needs, to buy the next passive income investment.

Even needs, like paying a credit card bill? YES. Even that.

Even having a half empty fridge full of food? Yes. Even that, too.

The rich mentality is about the long-term, not about the present moment.  They do not spend what they do not have. They invest, receive the passive income, and then buy the things they desire. If they do not have enough money from the passive income they’re currently receiving, they do not go out and purchase the next desired item. The rich go and invest in something else that will then pay for the next desired item. This creates an infinite stream of income that continues to pay for the grand vacations, extravagant vehicles, mansions, and beautiful clothing all while continuing to increase their net worth.

Rich is a mindset. If you want that type of freedom badly enough, you have to know what you can live off of and what you have to save in order to get where you want to be. Every single day. No excuses. This is where the few hustle and start at the Self-employed or Employee quadrant and gradually move over to the Business Owner or Investor quadrant. It’s called motivation, drive, desire, and never ever letting go of the big picture. They do not let their current desires swerve them off-course. They are laser focused on the end-game, day after day after day.

Rich isn’t something to hate. In fact, it’s something to admire. They have achieved what the majority of us cannot. They don’t let their wants and desires take over. They don’t let procrastination and laziness ensue. They get their butts up every morning, take care of themselves and work for NOT having to ever work again. Once you start your passive income investments, they tend to quickly extrapolate and before you know it you are light-years ahead of everyone else watching the money fall magically into your checking account.

Now, that’s what I call the American Dream.