In the world we live in today, the richest 1% of the population controls 48% of the total wealth and the top 80 richest individuals are worth as much as half the world’s population or roughly 3.5 billion people. When considering these figures, there is no doubting the fact that there is a separation between the rich and the poor. While many people assume these wealthy individuals gained their wealth by being born into wealth or winning the lottery, that simply isn’t true.
In fact, only 11 out of the 80 richest individuals were passed down their fortunes with the other 69 having made their wealth through their own hard work and determination. And one of these 69 individuals is none other than the investor mogul himself, Warren Buffett. Like the majority of these rich individuals, Warren Buffett grew up in a middle class family but found a way to amass the knowledge and skills that would eventually lead him to accumulating a wealth of over $70 billion. Undoubtedly, we have all seen people living in excess and others living with next to nothing but have you ever taken a second to think about what truly separates the rich from the poor? Sure, the obvious answer is that the rich have significantly more money than the poor but I’m talking about the reasons beyond the dollars and cents.
When you think about it, a rich and a poor person can live in the same city, have access to the same jobs and both only have 24 hours in the day yet one can be living paycheck to paycheck while the other can have more money than they could spend in an entire lifetime. So what truly makes the difference between someone who will amass billions of dollars in their lifetime and someone who will struggle financially forever? Well, using our rich friend John and our poor friend Tim to explain, I will outline exactly what separates the two so you can adopt these rich person habits and realize financial prosperity in your own life. Before we get going, you should know that both John and Tim have similar IQs, come from middle class families and live in the same city. In short, neither man has any advantage over the other however their bank accounts are at total opposite ends of the money spectrum. It’s Monday afternoon and both John and Tim commute home from work. When Tim gets home, he goes over to his couch, turns on Netflix and binge watches hours of mindless TV to numb himself from the long work day he had.
While Tim’s boss recommended that he should read more book in order to increase his chances of getting promoted this year, Tim can’t be bothered to read, especially now that a new season of his favourite show has come out. When John arrives home, he immediately logs into his computer to start studying. Hours pass as John reviews his notes for his upcoming exam. While John already has a Master’s degree and multiple designations, he continues to put in a few hours every night to work towards another accreditation which will help him scale the corporate ladder faster. In fact, John recently learned that one of his idols, Dan Lok, invests over $500,000 a year into continuous learning. John figures that if millionaires are investing that much time and money into learning new things then he should definitely do the same. Therefore, difference number 1 between the rich and the poor is that the rich never stop learning.
At work the next day, Tim’s boss begins handing out bonuses to all of the employees. As Tim opens up his envelope, he sees that he’s gotten a $100 bonus, much less than all of his peers. Tim goes up to his boss and complains saying that he’s been at the company for 10 years and this is an embarrassing bonus to have received. His boss goes on to point out that Tim never stays late to help his team and that his productivity has dropped every year since he started. Across town, John is plowing through his current project at work when his boss approaches him. His boss hands him an envelope and as he opens it, he sees in front of him a $10,000 check in his name. John is stunned and very appreciative of the generous bonus. John’s boss goes on to explain that John has been putting in a ton of hours as of late and his last project saved the company $1 million in operating expenses so to recognize his work this was the least they could do. Therefore, difference number 2 is the rich sell value and the poor sell time The following week, Tim is counting down the days until Thursday which is when he gets paid.
As soon as his boss gives him his bi-weekly check, he rushes to the bank and begins sending out payments to all of his creditors. He sends money to his landlord, to his hydro company and of course his monthly installment for income tax. As Tim gets to the end of the month, he decides to see just how much money he saved. As he opens his balance he realizes that not only did he not save any money but that his account was lower than it was a month prior. Tim has no idea where all the money could have gone. When John gets paid, $500 is automatically deducted and is funneled into a saving account that he can’t access. After making sure his savings have been funded for the month, John then makes his mortgage payment, pays his utilities company and makes his monthly installment of income taxes to the government. At month’s end, John smiles as he notices that once again, his bank balance has grown making him even richer than he already is.
Therefore, difference number 3 is the rich pay themselves first while the poor pay themselves last. One night after work, Tim is watching TV and sees an ad for a new high definition television that is being released. The TV costs $1,000 which is all that Tim can afford to spend on entertainment devices for the year. While Tim contemplates this purchase, he has also been dying to buy the new PlayStation that just came out but at a cost of $500 there is no way he can get both.
Tim sulks wishing that his boss didn’t suck and had given him a bigger bonus so that he could afford to buy both. After passing his exam, John wants to treat himself for his hard work and decides that he wants to buy himself a new gaming system and TV. John too only has a budget of $1,000 for his purchase but really wants both the new state of the art TV and PlayStation console. Instead of deciding between the two, John asks himself how he can get both. John figures that he can take on a side consulting project to earn the extra $500 he needs to cover the cost of the PlayStation and build himself the perfect gaming set up to celebrate his big accomplishment.
Therefore, difference number 4 is that the rich have a growth mindset while the poor have a fixed mindset. Because Tim dreads going into work every day, he has made grabbing a Frappuccino from Starbucks a staple in his morning routine. Without his sugar-filled latte, Tim knows he couldn’t even make it through just a few hours at work which makes him more than happy to trade $5 a day for his morning jolt of caffeine. John on the other hand, walks right by Starbucks every day and instead of getting an expensive latte, he drinks the free coffee that’s served at work. Sure, the coffee isn’t as good as a Starbucks drink but being able to save $5 a day on coffee is well worth it in his eyes.
You see, John has been saving up that $5 a day for a year and now has $1,500 which he is going to use to go on an all-inclusive trip to Mexico with his friends. John also knows that this delaying of gratification helps him embody the traits of his fellow rich peers as he learned while reading a Temple University study. The study ranked the most important factors in determining affluence.
Occupation, education, location and gender topped the list, but delaying instant gratification beat out many of the more traditional signals, including age, race, ethnicity and height. Researchers believe that a person’s ability to envision larger future rewards makes them much less likely to succumb to short-term pleasures which is why turning down a daily latte was easy when envisioning all the fun he would have on the beach in Mexico with his friends. Therefore, difference number 5 is that the rich understand the power of delaying gratification whereas the poor seek short-term pleasure.
As the economy starts to fall on hard times many companies begin to lay people off as a cost cutting tactic. As Tim is sitting at his desk one afternoon scrolling through Facebook and doing the bare minimum to keep his job, he gets a note from his boss. The message says, “please hand in your laptop and badge at the front desk – we are letting you go”. Tim begins to freak out wondering how he will pay his rent and bills now that his sole source of income is gone! Tim always believed that being an employee meant having job security and after getting fired he began to wonder if this impression was wrong to have held for so many years. Unfortunately for John, he too is let go by his boss. In an exit interview, John’s boss talks for an hour about how great of a worker he is and how he had let go of all other employees before finally letting John go.
John graciously accepted his fate and thanked his boss for the opportunity and reassured him that he would be fine financially. You see, John knew that no job is secure which is why as soon as he entered the workforce he began building an online business and contributed to a dividend-stock portfolio which are now established enough to keep him afloat until he finds another job. Therefore, difference number 6 is that the rich build several streams of income while the poor rely on only one. About a week after getting let go, Tim is at home moping with his other loser friends about how much the economy sucks and how it will be nearly impossible to find another job. They go on about how unfair life has been to them and how they would be rich if they had gotten the same lucky breaks as others. The evening after getting let go, John invites his close friends over to his house for dinner. As the group are eating, John explains that due to the hard economic times, he has been let go by his company but reassures his friends that his other sources of income will more than support his current lifestyle.
One friend excitedly says that this is the perfect time for John to join his construction company and offers him an executive position. Another friend chimes in and asks John if he wants to start a consulting company with her as the two have worked so well together in the past and could become one of the leading firms in the city in no time! Therefore, difference number 7 is that the rich surround themselves with other rich people whereas the poor surround themselves with other broke individuals. To summarize, the differences that separate the rich from the poor is that the rich never stop learning, they sell value not time, they pay themselves first, they have a growth mindset not a fixed mindset, they harness the power of delaying gratification, they build multiple streams of income and finally they surround themselves with other rich individuals! Thank you guys so much for watching! Please like, subscribe, share and I will see you in the next one.
Jeff Bezos, Bill Gates, Warren Buffet, Amancio Ortega, Mark Zuckerberg, Bernard Arnault, Carlos Slim, Larry Ellison, and Larry Page are the nine richest men in the world. Their combined wealth, according to Forbes in January 2018 was 687.6 billion. This figure is equivalent to the total wealth of; get this, 4 billion of the poorest people in the world. This is to mean, in terms of wealth, if you put these 9 gentlemen on one side of the scale (or see-saw if you prefer), you would need a good 4 billion of the world’s poorest on the other side in order to balance it out..