{"id":93330,"date":"2023-02-26T16:52:00","date_gmt":"2023-02-26T20:52:00","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=93330"},"modified":"2023-02-27T16:54:09","modified_gmt":"2023-02-27T20:54:09","slug":"poverty-mindset","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/poverty-mindset\/","title":{"rendered":"How to Transcend a Poverty Mindset"},"content":{"rendered":"\n

How does your mindset influence your financial success<\/a>? How can you shed your self-sabotaging beliefs about money<\/a> and adopt a rich mindset<\/a>?<\/p>\n\n\n\n

The beliefs you hold about money greatly affect your financial outcomes. If you have a poverty mindset, you\u2019ll end up poor even if a large sum of money lands in your lap (e.g. through inheritance or winning a lottery). <\/p>\n\n\n\n

Here\u2019s how you can transcend the beliefs and ideas about money that keep you stuck in poverty<\/a>.<\/p>\n\n\n\n\n\n\n\n

Your Mindset About Money Is the Result of Childhood Conditioning <\/strong><\/h2>\n\n\n\n

According to self-made millionaire T. Harv Eker, the author of The Secrets of the Millionaire Mind<\/em><\/a>, your mindset about money is the single most important factor that determines the state of your finances. If you’re not happy with the state of your finances, it\u2019s because you have a poverty mindset\u2014unproductive thoughts and beliefs about money that hold you back financially. <\/p>\n\n\n\n

Eker claims that your current money mindset<\/a> is a result of childhood conditioning<\/a>. As a child, you unconsciously absorbed thoughts, emotions, and beliefs about money from your role models<\/a> and your environment. Everything you heard, saw, and experienced about money influenced your beliefs about how to manage your finances<\/a>, and conditioned you to behave in specific ways. These thoughts and opinions now make up your mindset and determine what you believe about money. These beliefs then unconsciously dictate how you think, feel, and behave when you manage your finances. <\/p>\n\n\n\n

For example, if your role models worked hard but never had enough money to enjoy themselves, you may have the belief: \u201cThere is never enough money, no matter how hard I work.\u201d This belief creates an uncomfortable feeling every time you think about going to work or managing your finances, and it leads you to act in unproductive ways such as frivolously spending your money instead of saving it. Your discomfort may also cause you to resent people who do have enough money. In contrast, if you grew up in an environment where money was not a cause for concern because there was always enough, you\u2019re less likely to feel discomfort or resentment around the subject of work and money.<\/p>\n\n\n\n

While your money mindset is a result of childhood conditioning, it doesn\u2019t always mean that you\u2019ll replicate your role models when it comes to managing your money. You may end up producing entirely different results depending on how you originally chose to interpret what was going on and whether you chose to conform or rebel against your upbringing<\/a>. In either case, your interpretation of your upbringing defined the beliefs in your money mindset.<\/p>\n\n\n\n

For example, if your parents spent a lot of money on friends and family, you may have positively interpreted money as a way to be generous to others (leading to conformity with your upbringing), or you may have negatively interpreted it as a way for others to take advantage of your parents (leading to rebellion against your upbringing.)<\/p>\n\n\n\n

\nTITLE: Secrets of the Millionaire Mind
\nAUTHOR: T. Harv Eker
\nTIME: 32
\nREADS: 66.1
\nIMG_URL: https:\/\/www.shortform.com\/blog\/wp-content\/uploads\/2021\/11\/secrets-of-the-millionaire-mind-cover.png
\nBOOK_SUMMARYURL: secrets-of-the-millionaire-mind-summary-t-harv-eker
\nAMZN_ID: XYZ
\n<\/p>\n\n\n\n

Reprogramming Your Mindset About Money <\/strong><\/h2>\n\n\n\n

While your childhood has a powerful influence on the way you view and handle money, your money mindset is not set in stone for life. It\u2019s possible to reprogram a poverty mindset by changing your attitude and beliefs about money. <\/p>\n\n\n\n

Let Go of the Belief That You Have to Trade Your Time for Money<\/strong><\/h3>\n\n\n\n

Most people work 40+ hours a week to earn salaries. Many then take their earnings to 1) buy stuff they think will make them happy (but this is short-lived), 2) save the remainder in a conservative way. If this sounds like you, then you have a poverty mindset. You\u2019ll never get rich if you keep thinking this way. At most, you\u2019ll earn yourself some degree of stability and a comfortable retirement (although that is not guaranteed because there is always a risk that pensions won\u2019t be funded decades from now, when you need it). <\/p>\n\n\n\n

According to Robert Kiyosaki, the author of Rich Dad, Poor Dad<\/em><\/a>, you must let go of the idea that you have to trade your time for a salary. The rich don\u2019t get rich merely by being paid increasingly higher salaries (though this is a great help). They get rich by owning things. No one on the Forbes billionaire list got there purely with a salary.<\/strong><\/p>\n\n\n\n

As tech investor Sam Altman says<\/a>, \u201cYou get truly rich by owning things that increase rapidly in value. This can be a piece of a business, real estate, natural resource, intellectual property, or other similar things. But somehow or other, you need to own equity in something, instead of just selling your time. Time only scales linearly.\u201d<\/p>\n\n\n\n

When you work for an employer, you get paid only a fraction of the value that you generate for the employer (otherwise, if the business would go bankrupt). Say your salary is $50k a year. Your work may allow your employer to earn $100k in sales that year, yielding a clean profit after deducting your salary. Even further, if your work isn\u2019t just a pure service but also builds <\/em>value in the company\u2014say in R&D or product improvement\u2014the value may be many multiples of your salary.<\/p>\n\n\n\n

Therefore, you have to stop relying on salary to make money. While you may have to work for a salary initially, in the long run, you must aim to reach a point where you don\u2019t have to trade your time for money anymore. <\/p>\n\n\n\n

\r\nTITLE: Rich Dad Poor Dad
\r\nAUTHOR: Robert T. Kiyosaki
\r\nTIME: 18
\r\nREADS: 34.6
\r\nIMG_URL: https:\/\/www.shortform.com\/blog\/wp-content\/uploads\/2020\/01\/richdadpoordad_cover.jpg
\r\nBOOK_SUMMARYURL: rich-dad-poor-dad-summary-robert-kiyosaki
\r\nAMZN_ID: B07C7M8SX9
\r\n<\/p>\n\n\n\n

Let Go of the Need for Social Approval<\/strong><\/h3>\n\n\n\n

Many people desire the respect and admiration that rich people enjoy. So they try to emulate these feelings by creating the illusion of wealth <\/em>by spending money on luxury items and experiences instead of saving. If this sounds like you, you have a poverty mindset. <\/p>\n\n\n\n

Rich people don\u2019t care about social approval, or rather, they care more<\/em> about their long-term financial security. Professor Tom Stanley studied the lifestyles of millionaires in the 1990s. He writes in The Millionaire Next Door<\/em><\/a> that, contrary to what most people think, the typical millionaire lives modestly in a middle-class home, drives a used car paid for with cash, and buys clothing from discount stores.<\/p>\n\n\n\n

If you\u2019re doing anything with money in order to project wealth in order to win respect or admiration, you have to give up the drive for approval and undergo a change of heart about how you view spending.<\/strong> For example, it might require that you stand up to your family and reject the tradition of going into debt to buy a Christmas gift for each extended family member. <\/p>\n\n\n\n

Instead, put your leftover money into a savings account and create a plan<\/a> on how to invest it to improve your long-term financial prospects (perhaps start your own business<\/a> or invest it into an appreciating asset). <\/p>\n\n\n\n

\nTITLE: The Millionaire Next Door<\/a>
\nAUTHOR: Thomas J. Stanley and William D. Danko
\nTIME: 22
\nREADS: 119.6
\nIMG_URL: https:\/\/www.shortform.com\/blog\/wp-content\/uploads\/2020\/11\/the-millionaire-next-door-cover.png
\nBOOK_SUMMARYURL: the-millionaire-next-door-summary-thomas-stanley-william-danko
\nAMZN_ID: XYZ
\n<\/p>\n\n\n\n

Stop Blaming the System<\/strong><\/h3>\n\n\n\n

There\u2019s no denying that we\u2019re living in a deeply unequal economic climate in which people who are born into privilege have an unfair advantage over everyone else. While those issues are real and important, they\u2019re outside of anyone\u2019s individual control. As such, blaming the system is a sign you have a poverty mindset.<\/em> It\u2019s nothing but an excuse. <\/p>\n\n\n\n

It\u2019s much more productive to focus on what you can control<\/a> than to fall back on blaming the system. In I Will Teach You to Be Rich<\/em><\/a>, Ramit Sethi lists common excuses people with a poverty mindset use for giving up on trying to improve their financial lives: <\/p>\n\n\n\n