The No. 1 Mistake That Keeps Poor People Poor
One of the most startling differences between my rich dad and poor dad was the kind of world they saw.
My poor dad saw a world of financial scarcity. Because of this, he would say things like, “Do you think money grows on trees?” or “Do you think I’m made of money?” or “I can’t afford it.”
My rich dad saw a world of abundance. He would say things like, “Don’t let money be an excuse” and “How can we afford it?”
When I spent time with my rich dad, I began to realize that he saw a completely different world. He could see a world of too much money. That view was reflected when he said, “Don’t worry about money. If we do the right things, there will always be plenty of money. Don’t let not having money be an excuse for not getting what you want.”
My rich dad would say, “There are two kinds of money problems. Not enough money, and too much money. Which type of money problem do you want?”
Most people come from families where the problem is not enough money. Since money is only an idea, if your idea is that there is not enough money, then that is what your reality will be.
One of the advantages I had growing up with the influence of two families was that I could see both types of problems. My poor dad never seemed to be able to have enough money, even though he had a good salary. My rich dad didn’t have much, to begin with, but grew his fortune to the point where he faced very real problems of having too much money.
I always wondered, what was the difference?
My challenge for you: Remind yourself every day of the answer below. You’ll avoid the number one mistake that keeps poor people poor… and open your mind — and with it your reality — to endless opportunities.
“Not Enough Money” Problems
These are the kind of money problems that most people in the world are familiar with. Living paycheck to paycheck, having constant worry and anxiety, not being able to enjoy the fine things in life, or simply having to work so much just to make ends meet that you don’t have time for your family and friends.
Rich dad had a comment on that strange phenomenon. He said, “People who suddenly become rich — by things such as inheritance, a big jackpot from Las Vegas, or the lottery — suddenly become poor again because psychologically, all they know is a world of not enough money. So they lose all their suddenly found wealth and go back to the only world of money they know — a world of not enough money.”
Rich dad truly believed that poor people remained poor simply because that was the only world they knew. He’d say, “Whatever your reality is about money inside of you is the reality of money outside of you. You cannot change your outside reality until you first change your inside reality about money.”
“Too Much Money” Problems
When it comes to money, the rich have very different problems, some good and some bad.
The more money you have, the more complex it becomes to manage it. Poor people and the middle class take a simple approach to money. They have one checking account, one savings account (maybe) and possibly a 401(k).
The rich need to find many places to put their money because it’s often too much for just one place. This requires sophisticated knowledge about how money works and how to make it work for you. And it also requires having the help of advisors like a good wealth planner, lawyer, accountant, etc.
This is what we call a good problem.
Scarcity Attitude and the Poor View of Money
During our discussions about scarcity, my rich dad would take a coin out of his pocket and say, “When a person says, ‘I can’t afford it,’ that person sees only one side of the coin. The moment you say, ‘How can I afford it?’ you begin to see the other side.
The problem is that even when people see the other side, they see it with only their eyes. That’s why poor people see rich people doing what rich people do on the surface, but they fail to see what rich people are doing inside their minds. If you want to see the other side of the coin, you have to see what is going on inside a very rich person’s mind.”
I asked rich dad why lottery winners usually go broke. His reply was, “When a person who suddenly comes into a lot of money and goes broke, it’s because they still see only one side of the coin. They handle the money in the same way they always did, which is the reason they were poor or struggled in the first place.
“They see only a world of not enough money.”
“The safest thing that person can do is just put money in the bank and live off the interest only. People who can see the other side of the coin would take that money and multiply it rapidly and safely. They can do that because they see the other side of the coin where there is a world of too much money. They use their money to get to the other side faster while everyone else uses money to become poorer faster.”
Abundance Attitude and the Rich View of Money
Those with too much money problems see the world in a fundamentally different way. They see a world of abundance.
This is why I was able as a kid to turn comic books that were going to be thrown out into a reliable source of cash flow. It’s also why my rich dad was able to turn smaller real estate investments into a hotel on the beach in Hawaii… just like Monopoly (green houses into red hotels). And why I was able to turn my financial knowledge into a business that has made me financially free.
For the rich, the world is not a place of cut-throat competition where you fight over finite wealth. It is a place of unlimited opportunity where you can make money out of thin air.
The Paradox of Scarcity
Rich dad connected what he saw as some of the causes of scarcity to the effect it has on people’s attitudes. The interesting thing was the very values that people thought would help them paradoxically created scarcity in their life. Until they can shift from a scarcity to an abundance mindset, they won’t be able to be rich.
“The more security you need in your life the more scarcity there is in your life. That is why people pass up on opportunities to make their money work for them through investments and business. They are too afraid to take a risk,” he’d say.
The more competitive you are the more scarcity there is in your life. That is why people compete for jobs and promotions at work and compete for grades in school.
People who are creative, cooperative, and have good financial and business skills, on the other hand, often have lives of increasing financial abundance.
I could see this at play in my two dads. My poor dad always encouraged me to play it safe and seek security. My rich dad encouraged me to develop my skills and be creative.
Change Your View of Money to Change Your Life
A big part of my success in life today was taking control of my internal reality about money. I had to constantly remind myself that there is a world of too much money because deep down inside I often felt like a poor person.
Does that sound like a familiar sentiment to you? Do you often struggle with the feeling that the world is one of scarcity? We all do at some time.
When I felt this way, my rich dad taught me to always remind myself that there are two kinds of money problems and to ask myself which one I wanted.
I’m not a wishful thinker and I don’t believe solely in the power of affirmation, but asking myself that question allowed me to calm down and think clearly about the problems I was facing — and the potential solutions.
Editor, Rich Dad Poor Dad Daily