What is a wealth mindset?
It means you live your life in a way that creates long-term abundance and security.
When you’re focused on building wealth, you don’t need everything to happen right away.
Robert Greene has a great quote we can use as a precursor to this entire post:
Always seem patient, as if you know that everything will come to you eventually.
Creating wealth requires a sense of urgency, dedication, and action, yes. But, mostly, it requires you to give yourself enough time to do the things necessary to build wealth. You’ll see the theme of patience run through all of these quotes—the patience to become skilled, the patience to understand the marketplace, the patience to take your earnings and grow them.
Patience is always the key. And when it pays off, boy does it pay off. When you have wealth, you’re in a position where you no longer have to do anything. You have time, freedom, flexibility, options. Most people would like to build wealth, sure, but it’s psychologically difficult to reach that point.
That’s where wisdom comes in. Having sources of inspiration can help you stay the course when times get hard. Learning from those who’ve walked the path before you and have the knowledge to guide you will help you maintain the long-term momentum you need to win the wealth game.
Follow the steps
“Spend each day trying to be a little wiser than you were when you woke up. Discharge your duties faithfully and well. Step by step you get ahead, but not necessarily in fast spurts. But you build discipline by preparing for fast spurts… Slug it out one inch at a time, day by day, at the end of the day—if you live long enough—most people get what they deserve.”
Building wealth takes time. The most difficult part of creating abundance in your life is having to go through all of the small and repetitive steps over and over until you have a breakthrough.
But, with time, and a bit of luck, success in life and business is pretty much inevitable. Time has a way of decreasing the negative impact of luck and increasing the positive impact of it.
Developing the skills necessary to build wealth is similar to the literal process of building wealth. Money isn’t the only thing that compounds. Your skills compound over time, too. The more diligent and consistent you are, the easier it is to stay consistent and the rewards are higher.
Most people overestimate how difficult the process will be from start to finish. They think the whole journey will be just as hard as it was in the beginning. They don’t realize that they’ll be able to get more output for the same level of effort later on.
Skills that were once very difficult become second nature to you. When you collect wisdom from different fields and disciplines, you create mental models in your mind that you can use to make important decisions, create unique ideas, and influence others to your cause.
Wisdom is the path to wealth. And it’s also something you simply can’t shortcut.
Use the right source of motivation
“When you are young, work to learn, not to earn.”
To have a wealth mindset, you have to stop thinking like an employee and start thinking like a business owner. The employee mindset teaches you to expect immediate gratification for your efforts, e.g., a paycheck. Ironically, the people who focus on money too soon end up making less money long term.
People who build a wealth mindset understand that skills come first. They work toward building expertise that can scale. Instead of focusing on simply getting a paycheck, they take the time to create or invest in something that continues to help them build wealth over and over again.
They create products, buy real estate, own intellectual property, and do other activities that have the potential to have huge payoffs down the road.
They’re dedicated to developing skills that can help build wealth like sales and marketing—both of which require sacrificing short-term progress for eventual results. Instead of taking a bunch of money upfront, they’ll often take time to intern and study under someone who knows the field well for little to no money. Why? Because they understand the things they learn in the process will be much more valuable than a big paycheck right away.
Develop a proper relationship with money
“Resenting the rich is one of the surest ways to stay broke”
—T. Harv Ecker
Money is an emotional topic. Many people have been misled to believe that “money is the root of all evil.” The full quote is actually “the love of money is the root of all evil.”
There’s nothing wrong with wanting to make more money. Money only has the context you give it. If you believe that you need to be unethical to build wealth, how could you possibly have wealth and abundance in your own life?
Money should be seen as a means to an end, not the end itself. When it comes to your attitude about making money, don’t look at the wealth in the world as a finite pie. You make money by adding value to the world.
Whether you’re providing a product, offering a service, or investing your money to help other companies grow, you get rewarded by being a positive asset in someone else’s life. Are there greedy and shady people in the world? Yes, of course. But you can build wealth in an ethical and honest way.
Once you do, you can use that wealth to continue making a positive impact on the people around you and the world as a whole.
How to think about success in business
“To be a success, you only have to be right once. One single time and you are set for life.”
Notice how these quotes and descriptions overlap a bit? When you have a wealth mindset, you understand a few simple concepts very well. You layer those concepts until you have a system you can use to get results.
You’re developing skills you know will pay off in the long run. You’re not too concerned with exactly when you’ll become wealthy because you know that with enough time, ideas, and ability to execute those ideas, something will work.
There’s no such thing as someone who builds a successful business or becomes wealthy without some level of failure or mistakes in life. But those mistakes and failures don’t matter because you realize that you only have to make a few smart decisions to be really successful.
This runs counter to the way our education system teaches us to look at success and failure. A 50 percent grade in school means you’re a failure. But if you’re correct 50 percent of the time as an entrepreneur, you’d be filthy rich.
If you want to switch to a wealth mindset, you have to reframe the way you look at success. Success and perfection don’t belong in the same sentence.
How to think in a way that creates abundance
“Fortunes require leverage. Business leverage comes from capital, people, and products with no marginal cost of replication (code and media)”
I mentioned focusing on developing skills that scale for a reason. You only have 24 hours a day. You have to sleep and live your life, too. Continually trading your time for money, with no leverage, will make it impossible for you to build wealth. Focus on creating assets and don’t worry about the lifestyle others live.
Again from Naval:
“Seek wealth, not money or status. Wealth is having assets that earn while you sleep. Money is how we transfer time and wealth. Status is your place in the social hierarchy.”
Focus on creating one, or all three, of these levers:
- Capital: You can use your money to create more money by investing.
- People: Creating a business with employees allows you to create an income without having to physically be at your business all the time, or even at all.
- Code: The power of the internet has made it possible for you to reach people across the globe, 24 hours a day. Think of something like an e-commerce store that can make sales around the clock, social media channels that can spread your reach, or search engine optimization to get your ideas and products in front of the people who want them.
To build a wealth mindset, stop thinking in terms of hard work or even smart work. Think in terms of work that scales.
Don’t try to be smart, do this instead
“Investing is not the study of finance. It’s the study of how people behave with money. And behavior is hard to teach, even to really smart people. You can’t sum up behavior with formulas to memorize or spreadsheet models to follow. Behavior is inborn, varies by person, is hard to measure, changes over time, and people are prone to deny its existence, especially when describing themselves.”
You don’t have to be a genius to build wealth. But you do have to learn to keep your emotions in check long enough to build wealth. In many ways, your brain is biased against the skills it requires to build wealth long-term, e.g, the inability to delay gratification.
And when it comes to different paths to wealth like building a business and investing, you have to get an emotional grasp on important concepts. You can logically understand them, but logic means nothing if you can’t bring yourself to make the right decisions when it matters most.
Here are a few basic, but hard to emotionally deal with, concepts that are important in investing, which is a key to building wealth regardless of your main source of income:
- Risk — More risk equals the potential for more reward, but it also increases your odds of going bust.
- Fear — It’s all fun and games when the stock market is going up, but will you panic-sell when your investments suddenly drop 30% or will you hold?
- Greed — Your brain can trick you into thinking stocks are just going to go up, which can lead to you making FOMO trades and continuing to chase gains. Again, remember the risk.
- Time in the market — Time and compounding are your friends when it comes to investing. The earlier you invest, the easier it is to grow your money down the road.
- Luck — Much success in business and finance can be attributed to luck. Sometimes you’re just in the right or wrong place at the right or wrong time. But like I said earlier, time and solid decisions tend to reduce bad luck.
- Quitting while you’re ahead — If you can grow your wealth without continuing to level up your lifestyle, you’ll be free.
Tying it all together
“As long as you are alive, you will either live to accomplish your own goals and dreams or be used as a resource to accomplish someone else’s.”
That’s what it all comes down to. Why spend so much time and effort trying to build wealth when you can just coast along and get by? You build wealth because it’s the vehicle to help you build your dreams, do what you want to do, and bear the fruits of your own effort.
Wealth gives you control over your own life. Regardless of how much you might love a job, you’re always beholden to that job if you don’t have your own vehicles to build wealth. You’re, by definition, getting less of a reward for your effort than it’s really worth. Is everybody meant to be an entrepreneur? Maybe not.
But this isn’t about everybody, it’s about you. Whose dream do you want to build—yours or someone else’s? Whose hands do you want on the steering wheel when it comes to your livelihood?