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The Psychology Of Why You’re Poor

Ask most people what class they think they’re in, and they’ll tell you that they’re right in the middle. It doesn’t seem to matter what their income is, being middle class is more of an aspiration than something real. Those working menial jobs in the service sector might consider themselves middle class because one of their parents was a teacher or they grew up in a pleasant neighbourhood. And tech billionaires might call themselves middle class because they don’t want to be associated with the elite whom they imagine to be uncaring.

Wealth psychology is a funny thing. The way we think about money is often imprinted at an early age by our social circumstances, and we go through life with unconscious expectations of our relationship with it. If we’re born into a wealthy family, we might be driven into high-flying careers, even if we hate the work. On the other hand, those further down the income spectrum might feel that they can’t have a career, and will just accept whatever work that they can get because money was always short in the past.

Over time, people can develop psychological ticks that can hold them back from fulfilling their potential. For many, wealth remains elusive and causes hardship. Here are some of the things that might be holding you back.

Always Wanting The Latest Technology

Warren Buffett’s advice for those aspiring to be wealthy is to “live simple, aim higher.” Buffett himself still lives in the same Omaha house he’s been in since he was in his twenties, and drives a car from the 1990s. It’s a remarkably frugal life for one of the richest men in the world.

Buffett’s lifestyle, however, reflects a deeper aspect to his philosophy of generating wealth. For him, wealth isn’t about the stuff you have, but how high you aim. He has spent a lifetime waiting for his investments to pay off, only to reinvest the proceeds over and over again. Being rich, he claims, doesn’t provide him with a fundamentally different lifestyle to the average person, even if he were to splash out on lavish cars. He still has to take the elevator to his office, he still has to face health issues, and he still can’t buy the perfect marriage. The most significant difference, he says, is the fact that he can choose to spend his time at home, if he wants, without having to go out to work.

Being satisfied with what you have is an important principle. Buffett doesn’t need the latest phone to fill a hole in his life, especially when his old phone will do. He doesn’t see the point in trading his valuable time for something that is only slightly better than what he had before, and so he doesn’t bother. Perhaps you shouldn’t bother too?

Believing That Travel Is The Point Of Life

People like to justify their spending by saying things like “you only live once.” For many people, especially bloggers, travel has become a raison d’etre – the purpose of a twentysomething’s existence – and it is therefore justified to spend all of one’s income on it. But that’s not what rich people do. To return to Buffett, he is quite happy to spend most of the year in his hometown in Nebraska, far away from the bright lights of coastal cities, and a million miles from most popular tourist destinations. Buffett understands that travel itself is not the goal in life. The goal is to know oneself, and you don’t have to go much outside your own brain to do that.

Complaining About The Money Other People Have

Why do some people have money and others don’t? It’s not just because they took out payday loans. Instead, it’s usually because they did something that a lot of people found valuable. Mark Zuckerberg made more than $10 billion last year because people love the platform he created from his university dorm room.

Hating people who have money isn’t healthy, especially if that money was earned through legitimate means. Having money is an effect of beneficial actions towards others rather than unjust acquisition. Viewing wealth as something negative makes it harder to imagine yourself as someone with a lot of money. You don’t want to be perceived as immoral, and so you automatically switch off whenever you get an impulse to improve your material circumstances. Think carefully about how you see people with wealth. Do you despise them? Or do you admire what they’ve achieved?

You Think Rich People Are Just Lucky

Getting rich usually involves a lot of unseen hard work. But people often mistake long-term effort for overnight success. Overnight successes do occasionally happen, but only very rarely. What’s more, they’re incredibly unlikely, because it is hard to become good at anything quickly. Even YouTube pop stars like Justin Bieber spent years beforehand honing their skills before achieving success in the wider world. Most of the time, what we think are overnight successes are the product of more than a decade of hard work.

You See Your Salary As A “Treat”

Rewards make mammals feel good. We like doing something difficult and then getting a treat at the end of it. In the modern world, that treat is the monthly payslip – an opportunity to splash out on all the things we want.

Thinking of wages as a treat is a bad habit for anybody wanting to achieve wealth. Savings are the ultimate way to get rich, not income, and so spending close to what you earn denies you money in the long term.

The rich don’t see money as a treat but as a tool. It’s something that they can put to use in profitable projects that will pay off in the future. They don’t see investing as something that is dangerous, just occasionally unpredictable, because they know that ultimately, the trajectory is up.

Rather than living in the here and now, the rich live years or decades in the future, imagining how much more money they could have if they saved their pennies today.