121: If You Want to Be Poor, Keep Doing This
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“Perception is a mirror, not a fact. We cannot trust our perceptions to tell us the truth about the world.” – Alain de Botton.
Have you ever wondered what sets the wealthy apart from the rest of us?
What’s their secret sauce?
Are they smarter, do they work harder, are they more connected, or are they just simply luckier? 👀
“Perception is not only the gateway to understanding, it is also the gateway to misunderstanding.” – Robert J. Sternberg.
➡️ Are you ready to discover the secret that could change your financial future forever?
The answer holds the key to unlocking a fulfilled and adventurous life and is also the secret to understanding money from a wealth-enhanced perspective.
No matter how you look at it, the fact is that money is perceived differently by the lower classes, the middle class, and the wealthy, which shapes their relationship with it. This distinction plays a crucial role in determining whether someone struggles to make ends meet or someone else seemingly drifts through life with an overabundance of ease and peace.
So, what’s your perception of money, and is it currently holding you back? 🤔🤔
We will be diving deeper and exploring these distinctions and providing tangible ways you can change your perception of money 💰 today!
The two quotes referenced earlier are so powerful because they both explain that our thoughts can be a distortion of reality, they can bend our will towards our life of fulfillment, or a life of fear and uncertainty that undermines our well-being, our health, and our finances.
The mind is a powerful thing.
Before we get more into money and the perception of it from different classes, please keep in mind that these are generalities, and of course don’t represent the view of every individual belonging to an income class, etc. We are simply using broad terms for the sake of simplicity and discussion.
The Low Income Money Perception
So let’s first explore money from the perspective of those with lower income.
It’s fair to say that the perception of those with low income is often one of scarcity and lack.
Think about it; this is rooted in a belief that the primary purpose of money is to pay bills.
This mindset is often portrayed in popular cultures, such as in the movie “The Pursuit of Happiness” where Will Smith’s character Chris Gardner, a struggling salesman, is constantly struggling to make ends meet and pay his bills.
He is trapped in a cycle of poverty because he believes that the only reason to acquire money is to pay bills, so he can never acquire more money than what is needed to pay his bills.
This makes sense when you consider Maslow’s hierarchy of needs.
We’ve talked about this in previous episodes, but basically, Maslow said that the lowest tier of need fulfillment is physiological 〰️ things like water, food, shelter, and clothing.
If you’re spending all your time, money, and energy on this lowest level of fulfillment, it’s hard to branch out to get your other needs met. How exhausting and stressful! 😨😨
This idea is reinforced by the common phrase that you are “making enough money to get by” which suggests that as long as one can make enough money to pay their bills, they are content and satisfied with their financial situation.
However, this mentality is limiting and prevents individuals from striving for more financial success, in turn reinforcing the culture of perpetual poverty.
Any sociology book will tell you that it’s not their work ethic, knowledge, or skills that are keeping them poor.
Instead, it’s a lack of awareness of access. All that is separating them from wealth is a lack of awareness of access.
And this is because they are stuck believing that money’s sole purpose is to pay the bills. 😔😔
The Middle Class’s Money Perception
When it comes to the middle class, their perception of money often revolves around maintaining an affluent lifestyle, which can lead to a lifestyle that appears to be more financially stable than it actually is.
This is often achieved by purchasing items that cost more than they can afford to pay for in full and relying on credit to make these purchases.
You know that Model Y or Gucci 👝 purse? Can you really afford it? 👗💍👠
It’s such a vicious cycle, and this lifestyle is often portrayed in popular culture as the American Dream ☁️, where people strive to have the latest gadgets, cars, and designer clothes to fit in and keep up with the Joneses, or the Kardashians, or whoever it is that you glamorize.
The sad thing is that this mindset can be detrimental as it leads to an overreliance on bad debt and a false sense of financial stability.
There’s almost nothing worse than credit card debt and high-interest rates that place you in a worse financial situation than you would be if you saved up and bought and purchased an item when you could actually afford it. 😢😢
The reality of this lifestyle of trying to look richer than they are can keep people stuck in their current financial situation, leaving them unable to save or invest, and eventually leading to financial strain.
This lifestyle is often accompanied by a lack of financial literacy, which often leads to poor financial decision-making and an inability to plan for the future.
It’s actually really crazy that the middle class falls victim to this so frequently because they do have access to resources and tools to help them be more educated and increase any gaps in financial literacy.
Let’s take a step back and examine some data 📉. Studies have shown that people who lack financial literacy tend to have lower savings, and higher levels of debt, and are more likely to experience financial difficulties.
In fact, Forbes recently found that most middle-class Americans who fall into that income category are in debt, or worse, living paycheck to paycheck.
Beyond their overspending and other lifestyle choices, they are also underestimating their future expenses while living beyond their means. This is such an awful combination! Even with high incomers, they are still living too close to the edge, regardless of how much they make, and will find it difficult to achieve financial security.
The Wealthy’s Money Perception
Last, but not least, the perception of money 💵 among the wealthy is often that it is a tool to create more wealth, rather than just a means of covering expenses.
Wealthy individuals often view money as a means to an end, and they are always thinking of ways they can create what we call the Multiplier Effect with their money. 😘😘
This is why the wealthy often place a higher emphasis on creating passive income streams that can generate wealth on their behalf.
This mindset is rooted in the idea that money can be used to create more money without the need for constant active involvement.
Sound too good to be true?
It’s not! You can achieve this through investments in assets that generate passive income such as dividend-paying stocks, businesses, and…our favorite mode, 🏢 multifamily apartment investing, which can be operated without the investor’s constant involvement. 🤩🤩
Assets such as multifamily apartments can generate additional income and will appreciate in value instead of depreciating.
Beyond the Multiplier Effect, the wealthy also want their money to make more money FAST! 🚀
The reason why they believe wealth has a need for speed is that if they don’t focus on having their existing money make more money fast, their wealth will be eroded by inflation and taxation faster than they can earn them.
Multifamily investments truly check off all the boxes when it comes to dynastic wealth creation.
It’s passive, it’s the best inflation hedge, and is one of the most tax-advantageous asset classes.
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