There’s a 10-year-old book by Steve Siebold doing the rounds again. For good reason. How Rich People Think taps into the psychology of money and there’s a lot to learn from its pages.
Back in 2010, author and self-made millionaire Siebold interviewed 1500 rich Americans to try and find out what makes them different to the rest of us. He was basically looking for the difference between the One Per Cent and the rest of us.
Most people have negative limiting beliefs about wealth and money that hold them back from taking the actions needed to create massive value. What kind of mindset does a person need to get comfortable enough with risk to really go for it?
Of course, there are a myriad of other factors besides the right mindset that influence how ‘rich’ a person becomes. Siebold doesn’t stray into many of them, but he’s unapologetic about that. After all, the very premise of his book lets him off the hook.
He’s not necessarily obliged to unearth data that supports these people’s lived experience. Nor does he delve into the external environmental, sociological or even economic reasons that are behind great wealth. Like luck. Pure, simple, unplannable luck. Nope, luck isn’t mentioned, presumably because no one ever likes attributing their success down to being in the right place at the right time…
Right, with that out of the way, let’s delve into some of Siebold’s findings. How do rich people think? Or at least, how do rich people think they think?
With a bit of luck there’s a nugget or two here that will see you get a slot in Siebold’s next How Rich People Think book…
Think about earning rather than savings
Rich people focus on working harder and earning more, rather than trying to save what you already have. Consider your options to earn more money. Consistently put more money in your pocket by:
- Go for a promotion
- Ask for a pay rise
- Start your own business
- Get a second job
- Maximising your tax return
- Invest wisely
- Pay off your debts
Starting a business creates wealth
Most of us are scared to start a business because of the risks involved. The rich understand risk. Being comfortable with risk is one of the key differences between how the rich think and the rest of us.
They focus on reducing risk, but understand that building a business creates real wealth so any risk is worth it. The higher the risk, the higher the returns.
Be logical, not emotional, about money
The rich don’t get scared of money or get swept along in the emotion of making financial decisions. They take the emotion out.
Instead, they make financial decisions based on data, research, facts and past experience.
Have goals and set fixed deadlines to meet them
The rich have a clear focus on the their financial goals and a determination to achieve them by a certain deadline… and they don’t waver. Most of us set goals but we keep changing them. Or we shift the deadline to suit changing circumstances.
By contrast, the rich never waver. They do whatever is necessary to achieve their financial goals by the deadline they set.
The rich live below their means
Of course, those limits were sky-high by the time they were interviewed by Siebold for How The Rich Think, but for a lot of the uber-wealthy, that wasn’t always the case. Many extremely wealthy people have lived on a very limited budget at some stage in their life in order to make it big. In fact, the majority have.
A 2019 report by Wealth-X found that around 68 per cent of those with a net worth of $30 million or more made it themselves. A further study by Fidelity Investments found that 88 per cent of all millionaires are self-made and did not inherit their wealth.
So the majority of the rich weren’t rich at some point. In fact, they might have been just like us. Before we read these insights into how the rich think, of course. Things have changed now…