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5 Things About Rich People that the Middle Class Doesn’t Understand

5 Things About Rich People that the Middle Class Doesn’t Understand

Poor and middle class people often feel resentment towards the rich – after working like a beaver for several decades and finding yourself not better off than when you’ve started, it is easy to assume that those who earn a thousand times more with seemingly lesser effort are either devilishly lucky or plain dishonest. In truth, the difference between the middle class and the rich is not so much about luck or morals as about state of mind. Which means that by learning to think like the rich you can make your first step to achieving the same level of success.

1.The Wealthy Prioritize Earning over Saving

Work hard, start saving early, live below your means – it’s all the usual advice for building your financial independence. And it is exactly opposite to what rich people do. They don’t put money away for a rainy day in order to ensure their future – they put it to work. They aim at increasing their earning ability, which is very rarely limited to simply working harder. Instead of trying to ensure the safety of already earned money, they try to make this money bring them even more dividends – and we are not talking about retirement funds but full-fledged investments: in real estate, in business, in everything middle class people consider too risky.

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2. The Wealthy Live within Their Means

At the same time, the rich don’t increase their earnings just to feed their ever-growing appetites for consumption – they do it to satisfy their appetites for growing richer. When a middle-class person suddenly starts earning considerably more, he is quick to show it: by buying a more expensive car or moving to a larger house, for example. When a rich person increases his income, he looks for ways to invest it in assets, not liabilities. The richest people are indifferent to showing off their wealth – they don’t shy away from looking how to extend the life span of their old cars instead of buying new ones or living in a much smaller house than they can afford.

3.The Wealthy Are Always Ready to Change and Grow

The main feature that differentiates the rich from all the rest is their ability to change, grow and learn. They don’t feel obliged to follow the way of life they’ve chosen a decade ago just because there is so much time invested into it. If they find something better, they will immediately use the chance of improving their position. It means constantly learning new skills, reading things that inspire them to do better, drastically changing lifestyles and so on.

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4. The Wealthy Care More about Wealth than Consumption

All in all, truly wealthy people are indifferent to all the nice shiny things their wealth can buy them – they value the wealth itself. Warren Buffett, one of the richest men on the planet, still lives in a house he bought back in the fifties for $31,500. Today Mr. Buffett is worth more than $68 billion – and if you compare the place he lives in with mansions owned by people that don’t have a fraction of his wealth you will get a very important lesson: possessions have nothing to do with success.

5. The Wealthy Are not Afraid of Aiming High

Since early childhood most of us are taught to be reasonable about our dreams and desires. Set easily achievable goals, move ahead a step at a time, choose a direction and steadily move towards it, hoping to achieve something one day. Somehow, with the rich this lesson doesn’t take. They don’t suppose that the goals they set for themselves are overly ambitious, impossible or just plain crazy – and quite often they turn out to be not that impossible after all.

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The important thing to understand about wealth is all about thinking, not luck. You may win a jackpot in lottery, but if you don’t think like a rich man, you are most likely to lose everything you’ve won or stay a the same wealth level.

Featured photo credit: Rich Danbo 2/Mohd Haniff Mazlan via flickr.com

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Melissa Burns

Entrepreneur

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Published on September 17, 2018

How Being Smart With Your Money Leads to Financial Success

How Being Smart With Your Money Leads to Financial Success

Achieving financial success is not something that just happens. Maybe if you win the lottery or something, but for the average person like you or me, it comes from a series of small steps you take over a long period of time.

With each step, you form a new smart money habit. And with each smart money habit, you build towards financial independence.

So what sort of habits can you form to get on that path? Let’s take a look at smart money habits you can start today to get you closer to a financially independent future.

1. Avoid being “penny wise but pound foolish”

It’s tempting to try saving a couple cents here and there when buying small items. However, that’s not where the real money is saved. You’re putting in extra effort for something that doesn’t move the needle.

You get the most bang when you’re able to cut down on your bigger bills. For example, finding a lower interest rate for your mortgage could save you $50+ per month. And cutting your transportation bill by purchasing a cheaper car or taking public transportation can provide large gains as well.

So, look at your recurring expenses such as housing, transportation, and insurance, and see where there’s wiggle room. It’s a much better use of your time than trying to pinch pennies here and there on smaller purchases.

2. When you want something big, wait

Impulsivity can get you in trouble in most aspects of life. Finances are no different.

It’s human nature to see something and want it right then and there. It starts as a kid in the checkout line at the grocery store, and it continues on through adulthood.

We get an idea in our head of something we want, and it’s hard not to go out and get it right then.

A good example is wanting a new car. Perhaps you’ve had your car for several years. It’s crossed the 100k mile mark. Maybe maintenance is due, and you’re annoyed that you need to replace the timing belt or purchase new tires.

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So, you get the itch.

You start digging around online, and you realize you could trade in your current car for something newer and more exciting… all for a few hundred bucks a month. Then you get obsessed.

Here’s where you have to take a step back.

Your newfound obsession is clouding your judgement. Rather than giving into the impulse, wait it out.

Set a timeframe for yourself. Maybe you come back to the decision three months down the road. See if the obsession lasts.

It might, but often, a funny thing happens. Often, you forget about it. And often, you find that the new car wasn’t a need at all.

The impulse faded. And you just saved yourself a ton of money.

3. Live smaller than you can afford

You finally get that big raise. And you want to celebrate – and why not?

You’ve been looking forward to this forever. And after all, it was all due to your hard work.

That’s fine, splurge a little. However, make it a one-time deal and be done.

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Don’t get caught in the trap that just because you’re now making more money, you should spend more.

Too often, people get more money and feel like they that gives them the means to buy a bigger house, a bigger car… you know the drill. Resist.

The fact is that living smaller than what you can afford is one of the fastest ways to build savings.

But if you constantly upgrade as you begin to make more, then you’ll never get ahead. You’ll just build up more debt along the way and have just as little wiggle room as before.

4. Practice smart grocery shopping

Food… it’s one of the biggest portions of any budget. And if you’re not careful, it can be one of the biggest drains on your wallet.

But luckily, there are a few things you can do to ensure that you stay smart with your money when buying groceries.

Create a grocery budget

Set a strict weekly grocery budget. When you know how much you can spend on groceries, you can then plan your weekly menu around it.

Once you know what all you need, you can go shopping and keep a running tally as you shop to ensure you’re on track.

I tend to do this in my head, rounding for each item. However, writing it down as you go would probably work best for most people.

Make a list… and never deviate

Never go to the grocery store without a list. If you go to the store with a ballpark idea in mind, you don’t have a true ide of what you need.

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You’re not well-researched. You don’t know what the sales are. As a result, you’re going to make decisions on the fly.

These impulse decisions will lead to overspending, which will derail your grocery budget.

Eat before going grocery shopping

It’s also important to eat prior to going to the grocery store. Hunger is a powerful force.

If you’re shopping on an empty stomach, everything is going to look good. In particular, you may find a lot of ready-made, processed snacks will look enticing.

After all, you’re hungry now and that food is easily available. So subconsciously, you may lean towards those items.

Unfortunately, not only are those items typically less healthy, but they’re likely more expensive. You pay for convenience.

However, when you eat prior to shopping, then you’ll shop with a clear mind. Your hunger won’t cloud your judgement, influencing you to make poor decisions like a cartoon devil resting on your shoulder whispering in your ear.

This makes it much easier to stick to your grocery plan.

5. Cancel your gym membership

Now that you’re all set on your food, it’s time to get smart about managing your budget in terms of physical fitness. And let’s begin by avoiding the gym. The gym bill, that is.

The average gym membership costs around $60 per month. That’s $720 a year.

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Yet, two out of three gym memberships go unused. That means two-thirds of people who have a gym membership are literally giving away almost a thousand bucks a year. It’s crazy!

I recommend seeking an alternative. One good alternative is to look into fitness streaming services.

Streaming services allow you to stream hundreds of workouts like Insanity and p90x, right in your own home for around $10-20 a month. That’s $40-50 less a month than the average gym membership.

Of course, then there’s the free option. The internet is full of free workouts that you can do on your own with minimal or no equipment.

For example, there’s the Couch to 5K program, that I personally used a decade ago to ease myself from couch potato to running my first 5K race. If I could do it, anyone could.

Then there are free resources like reddit that have limitless information on workouts. The Fitness subreddit has done all the research for you, populating workout tips and detailed workout routines for anyone to use in their wiki.

There are several routines that require no equipment. And you can join in on the subreddit to become part of the community, making it easier for those seeking comraderie and encouragement in their fitness goals. All for free.

It’s baby steps… And baby steps can start now!

I’ve never met anyone that can’t stand to be a bit smarter with their money. And on the flip side, anyone can get smarter with their money. But remember, it doesn’t happen all at once.

Begin by fighting your impulses. Prepare for the week and be smart at the store. And cut monthly expenses like gym memberships that are overpriced and you probably aren’t getting your money’s worth out of anyway.

The devil is in the details. And the details can change your lifestyle and prep you for a financially independent future.

Featured photo credit: Unsplash via unsplash.com

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