The differences between the poor and the rich are innumerable. On a broad spectrum, it is a huge split in mentality and actions.
Here are five specific differences between someone who has financial worry and trouble, and someone who has fun thinking about money.
1. Poor people make active income. Rich people make passive income.
Imagine having to work 9 a.m. – 5 p.m. five days a week, only to make $40k a year.
This is a reality for a huge portion of Americans.
Now imagine being able to wake up when you wanted to, spend time with your family, and travel every day for a whole year and still make $13.5 billion.
That’s a reality for Warren Buffett. He makes passive income, which is income that requires little or no time to maintain.
George Soros and Carl Ichan share immense wealth from the same profession: investing.
They make their fortune by working with the stock market.
These investors are great examples of the risk-taking involved in becoming rich. They choose to make passive income, an unreliable source of income. Yet, poor people tend to play it safe and apply for a job.
If you want to become rich, learn to take risks and look for passive income.
2. Poor people spend their money on liabilities. Rich people invest their money into assets.
“Most people…will find a disorientating mismatch between the long-term nature of their liabilities and the increasingly short-term nature of their assets.”
– Howard Davies
Great Cardone, a self-made millionaire, recalls buying a house at the age of 30.
Now, with a wiser perspective, he claims that he would never buy one if he could do it all over again.
This is because a house is a liability. There is no reason to spend money on a house when you can live cheaper in an apartment.
Instead, rich people like Great Cardone focus on using their money to create more money.
Instead of buying a car for $70,000, buy a house and rent it out. A car takes money from you and loses value. Real estate takes money from you, but then becomes profitable after a certain amount of time.
3. Poor people follow the crowd. Rich people go against the grain.
“It’s lonely at the top. Ninety-nine percent of people in the world are convinced they are incapable of achieving great things, so they aim for the mediocre. The level of competition is thus fiercest for ‘realistic’ goals, paradoxically making them the most time and energy-consuming.”
– Tim Ferriss
Rich people aren’t afraid of challenging the status quo.
Whether they didn’t go to college while everyone pressured them to, or they didn’t buy a house even though everyone had one, they are not afraid to be true themselves.
A lot of this comes from self-esteem. If you have a low self-esteem, you might occupy yourself with fitting into everyone’s standards.
If you have a high self-esteem, being mocked or clowned won’t change your behavior. It might bother you, but it’s not enough to make you act in a different way.
A majority of people choose the easy way out. Poor people have a huge pressure to choose the easy way out just like their friends.
This might be happening to you. Once you eliminate the pressure and focus on your goals, a clear path will be paved for you, and you will succeed.
4. Poor people don’t value their own time. Rich people take advantage of it.
In one of his YouTube videos, GaryVee talks about time. He discusses how valuable time is to an entrepreneur.
He claims that even a lunch break is NOT and excuse to “chill.” During his lunch breaks, he goes on social media to engage with his audience, or he emails his team.
This goes to show how a successful person takes advantage of every minute to be productive.
5. Poor people wait for “the right time.” Rich people create it.
“Do not wait: the time will never be ‘just right’. Start where you stand, and work whatever tools you may have at your command and better tools will be found as you go along.”
– Napoleon Hill
It’s not practical to wait around until college graduation. It’s not practical to wait until you move out, pay off your loans, or the right idea comes.
A big reason why people stay mediocre is because they believe one day they will accomplish their goals.
They don’t worry today because they think they’ll be rich tomorrow.
These people tend to fail. The people who succeed and live up to their dreams are the ones who take action, and avoid excuses.
No matter how bad their situation is, entrepreneurs will make time for their goals.