Lady from Alabama wrote last week and was vehement that she couldn’t “get rich.” The idea of a “millionaire mind” wasn’t something she could wrap her mind around.
I hadn’t suggested she specifically would or could. The research is all pretty simple. Dr. Carol Dweck is the pioneer here. She’s found that the growth mindset is really where changing is at. If people believe they can experience change they will act as if they can, and then they do change. Those who are certain they can’t, don’t.
Today, of course, that almost seems intuitive. It wasn’t intuitive when Dweck began her work. Quite the opposite.
The Science of Wealth…the lady who wrote that she couldn’t get rich…oh, I do understand where you are coming from…
And I promise she is 100% correct until she changes her mind.
My Mom used to say, “it’s a woman’s prerogative to change her mind.”
And time for the very nice lady from Alabama to exercise that…
What’s the difference between people who try and build wealth vs. people who do build wealth?
When a nice lady who is a Coffee with Kevin Hogan reader sends that kind of question in…I decided I wanted to give it a slightly more detailed response instead of a short answer….
An introduction to The Science of Getting Rich
Get vs. Make
The Science of Gaining Wealth is in part answered in the paradoxical question: What’s the difference between people who try and get rich and people who get rich?
Abstract representational change is necessary. And it’s not about just how our culture phrases the question.
People who build wealth don’t “get” rich.
“Get” implies something is received and yes, that is true, but there is no causal implication. In other words, “earn money” or “make money” reveals a mindset that is different from “get rich.”
The sad thing is that if I write you are going to “make rich,” it doesn’t …sound right… does it? Words simply represent our thoughts as they are currently structured in our brain. Our culture doesn’t believe you can “make rich.” It believes you get lucky and get rich…get it?
Now let’s just think about this for a moment. Do I want to “get rich” or “make rich?” The answer, of course, has to be that you “make rich” or it won’t MAINTAIN. I can’t remember a wealthy person saying, “I got rich,” or “I want to get richer” or have a general thought process that put the words “get” and “rich” together. I think this semantic distinction has gone unnoticed and I strongly encourage people to avoid thinking or talking to their kids in terms of “get money,” “get rich” or “get a job.”
KEY: “Get” implies no personal causal element, and where there is no causal element, the brain cannot link up a result to the thought. The brain can’t show you how to “get rich” because it’s a destination-only picture. But the brain can literally show you “make money.” My first image is a printing press printing money. That my brain identifies as a PROCESS. It has a cause and an effect. That’s what the brain needs to BEGIN to put into motion actions that will lead to the result of wealth.
“Build wealth” is better because although wealth is hard to picture for a lot of people, at least you have the causal element, “build.” Better yet: “Build an empire.” Here you have a picture and an action process.
The next semantic problem in the question is wrapped up in “try.” I personally find it very difficult to “try” and do anything. I succeed at a lot. I fail in the short term at plenty…and often. And there is always effort. But “try” almost implies, “I gave it a shot.” You never hear anyone say, “I tried to go to the store for groceries but I just wasn’t motivated.” You can temporarily fail to get to the store, and you ALWAYS will fail when you first try anything significant, but you can’t fail forever! The word “try” has always bugged me.
So, our language, not the grammar, but the abstract verbal representations of what we THINK and FEEL reveals much about how and what we actually do think. It’s not that it’s “bad,” it’s just that it can reveal the inability to link cause and effect and THAT will cause ultimate failure.
The Introductory Seven “Keys”? Here they are…
I was playing blackjack at the Venetian in Vegas and the table was, unfortunately, “cold.” The cards were favoring the house in a dramatic way. As so often happens, a player got up, yelled at the dealer as if the dealer had anything to do with the losing streak, and stomped away.
The fact is, that the dealer, the cut, the position at the table, NONE of those things significantly effect the cards you are given beyond random chance. They are all face down, and even if someone makes a bad decision and “it costs you” money, the fact is that, over one million hands, it makes no difference what the guy before or after you does. That’s hard to swallow because blaming someone takes the responsibility away from SELF.
At a card table it’s easy to tell who is wealthy and who is not. Wealthy people never blame a dealer, never get angry with losing, never get too excited about winning.
Responsibility means that when you don’t make money, you only have one place to accept responsibility (which is not blame, by the way) and that is in your SELF. The sole initial cause of the person’s demise was their willingness to sit down at the table in the first place. That could also be the initial cause of victory but the wealthy person accepts responsibility for success and failure.
When someone says, “The pension fund went bankrupt”, the initial cause of responsibility is not with the company that cheated the person out of their money or mismanaged it, but the individual’s illusion that someone other than them SELF should be responsible for their life and livelihood. It’s really simple math, but people don’t want to think about it.
You can’t get paid money when there is no productivity to return for the money, or the “system” will go broke. It’s math.
I’ve never heard a wealthy person talk about “collecting” social security or a pension. Wealthy people don’t gamble on the person who runs a pension as knowing what they are doing, because they don’t. The wealthy want or demand to be responsible, at cause, for their income, passive income, wealth and legacy.
The Core Wealth Philosophy
Jesus put it best (as he often did). “To he who has much, much will be given. To he who has little, it shall be taken from.” Jesus was a pretty wise man, and in my experience people who are responsible (at cause) are given more responsibility and entrusted with more …far more than those who are not responsible (at cause).
Later Jesus also tells the story of the talents. (Talents were coins) To one man he (the master) gave 5 talents. To another 3; another 1. The first man doubled his money and Jesus applauded him for his work. The second man, given less (nothing is fair or equitable in life) also doubled his money. The third man given one, came back to Jesus with just the one talent, afraid that Jesus would be angry if he lost it. Jesus not only became angry but called the man “wicked and slothful,” for burying it in the ground. The man did NOTHING with the money Jesus gave him. There was no pension in Jesus mind. Only personal responsibility and action.
These two stories from the Bible are the core of my philosophy in wealth building. People who do not find these stories in their belief structure are simply going to fail.
Beyond a certain point, the more you give to a person, the less they can do for them SELF.
If you don’t teach your kids how to cook, they will eat pizza and burgers for the rest of their lives. Teach them how to cook, and they will eat well and look good for a long time.
Self responsibility is a crucial differentiating factor in wealth and barely squeaking by.
The next six..
Continuing Education for Life
The second element that differentiates people who have vs. have not, is education. There are two kinds of education, both are important, and you need to have a lot of at least one to live well.
You must have the real-life education if you are going to get to six or seven digits annually.
Almost every wealthy person – those people who have earned and MAINTAINED – they all have an ENORMOUS personal library.
One of my favorite personal libraries I’ve ever seen is Jeffrey Gitomer’s. He doesn’t just have a lot of books and an incredible system for finding them instantly, he has autographed copies of crucial books. That says something. He puts emotion onto and into his knowledge base. Where there is emotion, there is retention and action follows.
I don’t think Jeffrey will mind me telling you that he has a library of what appeared to me to be in excess of 10,000 volumes and frankly, everyone who earns six figures or more annually that I know, has a huge library.
I’ve gone to Barnes and Noble many times with my dear friend Elsom Eldridge, author of The Obvious Expert. He typically walks out of the store with two armfuls of books…no exaggeration. I usually leave with 4-6 books. I like to visit BN at least weekly.
On my table right now is a book about the self illusion, one about the psychology of love, another about happiness, another about selling, yet another about about investing, commodities, and those are just the non-fiction books on the coffee table. Over to my right on the floor… here are books about Stanley Milgram, 5 books about cognitive and neuropsychology, neural organization and function, 4 books about religion and spirituality, 6 books about asset protection and wealth structuring, and a total of seven books about women and how they buy both planned and unplanned items. There are also CDs and DVDs…and well…you get the picture.
Implement New Ideas Constantly
I want ONE idea or strategy from each book. If it’s there, I’ll find it and I will definitely implement and test it. I always do. That book will be worth at least $1000 to me if I get ONE idea. If I get five ideas, that’s going to be worth at least $5000. Some ideas and strategies aren’t measurable in dollars but in …love points…giving or receiving…or in emotional gratification of some kind.
There are exceptions, but if I can look at your education library, I can tell you about what you are worth or will be worth shortly.
Books that have bibliographies in business and personal development programs from people who have DONE IT will make you a lot more money than those without. Why? Because there is a level of thought and dedication that happens when you write and incorporate others’ ideas who you want to credit.
Understanding one man’s isolated experience, while interesting, is not that useful when it comes to building wealth. I will sometimes buy a book without a bibliography, but if it’s not fiction, I won’t hold my breath…because it might just be! Sometimes the ideas I get are about what NOT to do when I write a book, or what NOT to do in life. What NOT to do in business or raising kids.
Focused Action Orientation
The next of the elements that differentiate the wealthy and those who are not is focused-action-orientation. People who say they want to be wealthy want to have all the lights green. I just want the first one green…and sometimes I’ll wait at the red light for it to turn green. That’s what wealthy people do. It’s terrifying to people who have not been taught to have a focused-action-orientation. Literally fear-provoking. That’s understandable, but not forgivable.
Once someone experiences the fear of moving to the next step, that is when they MUST move or they will forever be paralyzed. There’s so much to say about this I couldn’t fit it all into one brief article.
People who don’t become wealthy find other things to do with their “down time” than building a mini-empire. I can’t remember having been bored once in 15 years. There are times I wish would have been…maybe…but when I hear someone say they were bored, had “down time”, there is one thing you know for sure about that person…..
The power of….
You cannot delay gratification in your real life education.
You can’t delay it in investing.
You can’t delay it in starting your small coffee table business and making it GO, but you must delay gratification elsewhere.
As a rule of thumb, if you can write it off on your taxes, you can spend money for it. If you can’t, wait until you can enjoy it without the guilt and shame that comes with needless debt. Debt for knowledge is the single best investment on the planet if you get the right information. Debt for buying real estate is sometimes OK if you get the right properties. Of course, everyone thinks they’re getting the “right property” don’t they?
Debt for most other things is not so good….
Living Under Your Means
The other way you can tell how much a person will have in five years is by comparing the automobile they drive with their annual income. If the retail cost of the car is more than 50% of the annual income, and the annual income is lower than $100,000 per year, the person for all intents and purposes won’t ever become wealthy. In the United States an automobile is directly tied to status for most people. It’s such an easy comparison.
Wealth is inhibited by status seeking.
The Automobile Formula is one of the easiest to see in your mind. Most wealthy people don’t drive the most expensive car they can find. Annual take home income divided by 10 is the maximum a car should cost you including maintenance and fuel. If someone spends more than 10% of their income on transportation…and they don’t fix that problem…they are making it very, very difficult to become wealthy. Almost impossible. I know a lot of people who make $40,000 annually only to have a $25,000 car. That math precludes wealth. It’s simply…not…possible. The worst case scenario is that the person earning $40,000 after taxes annually must spend no more than $4,000 per year on their payment, insurance, fuel and upkeep. Exceed that and it becomes very difficult to enjoy life, be happy and become wealthy.
I know this has gone quite long but I had barely begun when I realized how much was here. This is a start to the Factors of Wealth Building. The complete system is in the brand new 7 Week E Course that begins in September.
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