In this article, you would learn the difference between rich people and poor people. The mindset of the rich and the poor has total distinct differences, and because of the habits and behavior coming from these mindsets set these two types of people on the path of being wealthy or being poor.
So let me explain some of the things that makes the difference between the rich people and the poor people, what they often do, and why those things make them who they are.
COMMON DIFFERENCES BETWEEN RICH PEOPLE AND POOR PEOPLE
- Rich people invest money, poor people save money
- Rich men and women work for the future, poor people work for now
- The Rich get paid by how good they are, the poor get paid by how much time they work.
- Rich people spend their time reading books and investing in themselves, poor people spend all the time watching TV and playing games and doing nothing to improve their skill set or business
- The Rich and wealthy people have financial plans, poor people don’t have any financial plan
- Rich people buy assets, while poor people buy Liabilities
- Rich and successful people usually have multiple streams of income while poor people do not
- The rich are decision makers, the poor avoid making decisions
- Rich people leverage their money, while the poor work for money
All these habits are very distinctive, and most people fall on the category of the rich or the poor, the average is just an excuse for not wanting to admit being poor or rich.
In my opinion, the average individual that has the habits of the poor is still poor.
So let’s go into more detail about the differences between rich people and poor people:
Rich people invest money, poor people save money
This is something a lot of people find difficulty in doing. That’s which the rich are always different and stay different from the poor. Because when poor people save money, the money is in the bank or hiding somewhere without increasing in value, when inflation or recession set in, the money saved for months becomes less valuable, most times the money will get spent on very important needs, but once the saving is spent there is little or nothing left, therefore the person will have to start saving all over again.
The rich on the other hand also save money but they do better than saving, instead of letting the money lie in the bank, they invest the money for in other to increase the value of the money and also for the money to yield more money in the nearest future, therefore the value of the money will ever increase whether there is inflation in the economy or even recession.
So they will not need to lack savings at all.
Rich people invest in ideas that can yield more money, business opportunities, economic opportunities, valuable assets that can yield a 10% increase or a 20% or 30% and so on in a short period of time.
This is why the stay rich even if the spend big on luxury.
2. Rich men and women work for the future, poor people work for now
Another big difference is results. Poor people always want it now. They want to make money now, they want to live the life of their dreams now, they want to become wealthy and famous, and respected and attractive in the blink of an eye. Everything they do is for the immediate outcome. That’s why they stay poor because they don’t think about getting the results in the future.
That saves money for now, and not for the future. That’s why they work very hard for now and not for the future.
The rich on the other hand work towards future results. They take bigger decisions, they calculate the outcome for the future. They work to get the best result, not for the immediate result.
That’s why they invest for the future and not for now. They the reason why the future is important is that the goals are very big to accomplish and its impossible to achieve it in a short period of time, but if they can break it down to bits, they can achieve the goal if the time is spread wide.
For example 100% increase of N200,000 is N400,000. If they were to yield such profits from an investment that gives 10% monthly they will have to spread the time to achieve 100% to about 10 months.
Therefore in the next 10 months, the investment will be double the amount.
The goal is to be achieved in 10 months and not in 10 weeks.
Therefore the rich work towards long-term results which has lower risks involved.
The happens to all aspect of their accomplishments.
The Rich get paid by how good they are, the poor get paid by how much time they work.
This is one aspect people don’t even notice. If you work in a 5 days a week job you will get paid on a fixed salary. But if you work as a freelancer or a service provider or a product owner, you get paid based on how good your service is or based on how much effort will be required. This means you will get paid on how good you are.
If you provide one of the best services in the world, you will be paid at premium prices for your services. It means you make money on your own terms, you set the prices. The better you become and the more the demand the higher the price.
But if you work in a job, you only get paid for the time you spent, per hour or per week or per month. Even when you are the most efficient in office, that doesn’t mean you get an increase in salary, only occasionally might you get a promotion. Which doesn’t happen on your own terms?
So you see, the rich men own the company and they set the prices for their clients and customers because of how good and value the company tends to be. But on the other hand, they also set the price for the people that will work for them in their company. So, therefore, no matter how hard you work on a job, you will still get paid based on the time you spent doing that job.
Rich people spend their time reading books and investing in themselves, poor people spend time watching TV and playing games e.t.c
Another major difference between rich people and poor people is self-improvement and development. When you watch a lot of TV, you admire the actors in those movies or TV show, you spend a lot of time watch sweet and interesting shows. You watch a lot of movies, you play video games, you spend a lot of time on social media, you make comments because you always have an opinion about someone that doesn’t even give a sh**t about you. You do a lot of unproductive things every day. But you still desire to become rich, Now I ask you, how do you want to get rich? Have you developed yourself for such a desire? Do you have what it takes?
If you are doing these things its one of the reasons why you aren’t getting rich. Cos its what the poor people do.
How long do you watch TV and movies? As long as you don’t make any money from doing those, you will never achieve anything meaningful or significant financially.
You can watch TV there is nothing bad in watching TV, but that should never more than the time you read books on finance, business, entrepreneurship, success. It should never supersede time for mentorship, improving your skills, increasing your net worth, working on achieving multiple streams if income. Because that’s what rich people do.
They watch TV only when they have to. But they don’t waste time watching what other people are using to make money, they create their own money. They create their very own economy.
If you watch TV during exams it means you are prepared for the exam on a scale of 100%. But if you aren’t prepared for the exam and you aren’t studying but instead, you are watching TV and movies, you can’t expect you will do well on the exam day.
That’s exactly how you should take financial status.
5. The Rich and wealthy people have financial plans, poor people don’t have any financial plan.
A plan is an idea that is followed and focused on to get a specific result. Therefore a financial plan is a financial idea that is followed and focused on in order to achieve financial stability.
In order words, financial planning is having a plan for controlling your spending, savings and investing in other to increase your net worth and financial status.
Poor people don’t have a plan for the money they earn, that why just earn and spend. They might plan on how much they save in the bank but that is nowhere near having s financial plan. The years go by without a financial plan and then there is no way to go in terms of increasing your overall income. So poor people tend to get broke from time to time.
On the other hand, rich people have a working plan for their money. How much they spend, how much is saved and how much is spent. They make sure they are disciplined with the plan and they always have a target in increasing their wealth. They are rich and they stay rich. It’s easier to become rich than to stay reach.
To know how to create a financial plan read my post on >>How to get out of Financial Scarcity<<
The Rich buy assets, while poor people buy Liabilities
Certain assets are highly valuable and also increase in value annually. This is what the rich people hunt for. So what they do is they convert part of their savings into certain assets that are qualified to increase in value over a period of time. This allows the rich not just stay rich but technically increase in wealth.
Example of such assets
Real estate properties
While the poor people save money for buying
Fashion and so on.
Buying all of the above isn’t the problem, the problem for poor people is that they buy these things at the wrong time and for the wrong reasons.
Cars, fashion, gadgets are all accessories for a short period of time, the serve their purpose but they never increase in value
The more you use them the more they devalue. Therefore, in the long run, you will end up needed to buy them all over again because they might become damaged, outdated, too old to maintain or can’t no longer serve it purpose. Therefore you will either have to spend the same amount of money to get a new one or to spend more money to buy the latest version.
So if you all your money goes into accessories it means your net worth will always devalue.
Rich people have multiple streams of income while poor people do not
There is no doubt that rich people earn more than they can spend and this can’t happen from having one simple job, this can only happen if there is another source that pumps up the bank account.
Rich people invest and leverage a lot and this gives them the opportunity to reap dividends from their investments in most cases. So, therefore, they have more than income stream, but not only that, they have created these sources of income in such a way that it will always them cash flow. There have created a system where they can turn $1 one dollar in $2 two dollars. Therefore the rich have a consistent cash flow from at more than one source of income.
Unlike poor people who only depend on one job, some even have multiple jobs, some also try to do business plus their jobs but the problem is that the sources can give consistent and scalable cash flow. So poor people definitely don’t know how to make more money so they make less and spend more.
So there is one thing to have multiple sources of income there is another thing of having them to produce consistent cash flow.
The rich are decision makers, the poor avoid making decisions
Poor people remain because of lack of decision making, lack of seizing opportunities. They always have an excuse for not taking action at the right moment. This attribute is what the rich men don’t have. And one of the major reasons that affect decision making is lack of money. because poor people will always give an excuse of not having money to invest. They can make more money because they can make investment decisions and they keep looking for something that will make them rich, they keep looking, when they finally find something they will ignore it.
Another factor that affects decision making is the mindset. The rich have the mentally of calculated risk and future results, while the poor always thing of immediate profits with zero risks.
Rich people leverage their money, while the poor work for money
Finally, this is another major difference between rich people and poor people. And will continue to exist in this fashion. The poor work for the rich, therefore rich people use poor people to make more money and stay rich. Its a very simple factor to comprehend.
Therefore the richer the rich get the poorer the poor also get, or we can agree they stay that way. unless there is a change of mindset and behavior on either of these two types of people.
Hope this was helpful and you enjoyed it, please leave a comment, questions or contributions are allowed.
Thanks for reading.