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The secret behind why the rich get richer... and how YOU can too? Part 2

  07/06/10 10:17, by Len, Categories: Announcements, Financial Management, Personal Financial Management, Investment Management, Retirement Planning, Risk Management, Saving, Happiness

Article by Gary Wilde: CEO Wilde Insights™ in Credit Health

This month’s newsletter is the second in a 3-part article written by Gary Wilde - behavioural specialist and turnaround expert. Enjoy.

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About the Author: Gary is renowned for his ability to get to the root of problems and produce exceptional results through his unorthodox approach to business and personal challenges. He is a Corporate Turnaround Specialist and Behavioural Adaptation Strategist. Gary is also a certified NLP Coach, a practitioner in Timeline™ Paradigm Techniques and Ericksonian Hypnotherapy as well as a Demartini Method Facilitator. More of his articles can be found here.

"In Part 1 of this article, I shared one of the key reasons as to why the rich get richer, the poor get poorer and the middle class get deeper into debt; Wherever you are in life at this very moment... however much wealth or debt you have accumulated, is a direct result of the thoughts and actions you’ve chosen throughout your life! The key here of course is choice and when we TRULY take responsibility for the fact that it is our choices and actions that have led to our successes and disappointments, we begin to realise just how much power we have to shape our future.

To many this may sound bizarre, but being rich, poor or middle class isn’t a blessing or curse, each is in fact a skill that is mastered over time. A rich person that hasn’t experienced poverty will not have developed the skills to survive in the world of the poor. All they know is how to be rich and how to survive and thrive in the world of the rich. For this reason, it is quite common for the rich who have lost all their wealth, to soon find themselves back in the money. Donald Trump is a great example of this, as are the many millionaires who have been bankrupt once or many times and quickly bounced back.

By the same token, someone that is poor or middle class has not developed the skills to survive and thrive in the world of the rich, which is why 75% of lottery winners loose all their winnings within three years... ending up back where they started or slightly better off, at best. Once again this gives credence to Aristotle’s assertion that success [or failure, or mediocrity] is a habit. So where does this leave the poor or middle class people that really want to improve their financial status? Are they doomed to their respective prisons of scarcity or debt, or is there a way to defy the trend and become the exception to the rule? Yes, of course there is, but... and this is a big, hairy and audacious BUT... are they willing to do what it takes?

The rich think, make decisions and act very differently to the middle class, as do the middle class when compared to the poor. Anyone that wants to elevate their financial status to the next tier can only do so if they are willing to make these critical changes. Below are a few examples of the differences identified between the habitual thoughts, decisions and actions of the rich and middle class:

Rich:
* Spend less than they earn
* Sacrifice short term pleasures for long term gains
* Save money first and think carefully before spending it
* Obsessed with being rich
* Borrow money to buy assets that make more money
* If they can’t pay cash for non-essentials or luxuries, they don’t buy them
* Put money into their credit cards and only use short term credit facilities in emergencies
* Seek out opportunities that build wealth steadily and reliably over an extended period of time
* Take responsibility for their mistakes or failures and learn from the
* Focus on finding the opportunities presented by challenges and trials
* Get informed and take calculated risks with their money
* When they see an opportunity, they take it

Middle class:
* Spend more than they earn
* Sacrifice long term gains for short term pleasures
* Spend money first and wonder why they have no savings
* Obsessed with appearing rich
* Borrow money to buy assets that generate little or no return
* If they can’t pay cash for non-essentials or luxuries, they buy them on credit
* Spend as much credit as the bank will extend them on their credit card
* Seek out opportunities that will make them rich overnight
* Blame external factors for their mistakes and failures and repeat them
* Focus on analysing the problems presented by challenges and trials
* Are either risk averse or make rash decisions based upon hope rather than quality information
* When they see an opportunity, they talk about it

This is by no means an exhaustive list, but when you consider the above differences between the thinking and behaviour of the rich and middle class, it already becomes fairly obvious as to why the rich get richer.

The first step in bringing about change in our lives is to acknowledge and accept that we need to change. Many people find this too daunting a prospect, because it means admitting to their shortcomings. This requires courage, honesty and the commitment to follow through and do what it takes to form and integrate these new habits into their blueprint.

People only change when their desire to change exceeds their fear of change. For those that muster the courage to face the truth and commit to doing what it takes, the rewards they receive will be rewards for life!

In the final chapter of this article, I will reveal the single, most mind blowing secret behind why the rich get richer, the poor get poorer and the middle class get deeper into debt. It is a surprisingly simple yet deeply profound insight that will fundamentally alter the way you think about money forever. I have not seen this secret revealed in any literature on the subject of wealth creation... in fact, it is so secret that most of the ‘rich’ won’t even know that that it’s the secret to their success!

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