How to Think Rich and Be Rich

by Krantcents · 63 comments

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You’re in your 20s or 30s, you have student debt, you’ve accumulated some credit card debt and it looks like you’ll never be able to buy a home.  There is a way to think about money that can help solve these problems.  Our thoughts precede actions and actions precede results.  So let’s start by changing your thoughts.

Let me define rich people.  These are people who have thoughts and thinking patterns that precede and allow for the accumulation of money.  Because I am defining rich people by the way they think, there are rich people that don’t have much money, yet.  A good example of a rich person without much money would be Chris Gardner, the person portrayed by Will Smith in the movie “Pursuit of Happyness.”  Gardner went from a bathroom residence in the subway to become a multimillionaire.  His thoughts and actions allowed him to do that:

  • always believing he could become rich
  • working as hard and as many hours as necessary
  • taking ridiculous personal risk and participating in arenas where he had no business being
  • not relying on an employer for a salary

Don’t whine about your level of student debt or credit card debt.  Work two jobs and pay them off. “Work two jobs'” you say “when will I have time to have fun?”  If that’s your position, don’t plan on being rich.  Rich people do what it takes.  If they can’t get a job, they create their own.

Rich People Have Smart Debt

As to debt, rich people never ever incur debt to fund the purchase of consumables.  When you do that, you consume the item (e.g. dinners out, vacation, ice hockey lessons) but you’re left with the debt and have nothing to show for it other than a pleasant memory.  Rich people only use debt to purchase an item that will maintain its value or appreciate.  They incur smart debt to buy real estate, businesses and make investments.  If you think incurring your debt was necessary just to get by, then you need to lower your standard of living no matter how uncomfortable that may be.  Time to grow up and live within your means.

Rich People Work a Lot of Hours   

Meet Sam Walton. Sam Walton is the co-creator of the renowned retail chain ‘Wal-Mart Stores Inc.’ and ‘Sam’s Club’. The farm boy turned out to be a one of the greatest entrepreneurs of our time with sheer hard work and ambition. His day began at 4:30 am and consisted of a tough routine and long hours—even after he became a billionaire.  Why?  Because he received intrinsic satisfaction from doing the work, creating jobs for tens of thousands of people and allowing his customers to stretch their dollars.  Rich people are not committed to consumption; they’re committed to building something.

Rich People are Investors, not Spenders

It’s common to hear stories of sports figures and actors who go bankrupt or die broke in spite of their having earned millions.  These are poor people (i.e. defined by the way they think) who once had a lot of money.    Poor people with a lot of money don’t become rich.  The National Endowment for Financial Education cites research estimating that 70 percent of people who suddenly receive a large sum of money (e.g. lottery winners) will lose it within a few years.  Why do they lose this money?  These riches-to-rags subjects focus on spending, the focus of poor people, rather than on investing, the focus of rich people.   Poor people buy cars, vacations and a lavish lifestyle when they have money.  Rich people buy stocks, real estate and businesses. 

Rich People are Not Concerned with Status

Do you need to get the latest iPhone, iPad or play the latest and coolest video games, frequent the hottest restaurant or club, have the most fashionable shoes or drive a Bimmer?  These are not the hallmarks of a rich person. Read a copy of Tom Stanley’s great book “The Millionaire Next Door” in which he profiles the average rich person in this country.  Half live in middle income neighborhoods and do not drive a luxury car.  They don’t fly first class because it’s wasteful.

By the way, during the years 1982 to 1988 when Forbes ranked Sam Walton the richest person in the United States, he drove a 1979 Ford F150 pickup.

Bob Richards, a rich person, is publisher of the Retirement Income Blog.


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Maureen Y. York July 11, 2013 at 4:08 am

Unfortunately, if you’re no longer benefiting from the education you borrowed so much money to fund, you can’t sell the piece of paper that serves as your college diploma; you owe the money for that education no matter what. Due to the nature of student loans and bankruptcy laws, you still won’t be able to erase your student debt even if you sell off all of your assets and claim bankruptcy. The creditors of student loans have been known to be ruthless. I remember when I got personal calls—not automated calls, but personal calls—from the bank on the same day every single month asking me why I hadn’t yet made my monthly payment on my student loan. They didn’t realize that it took my bank a day or two to clear the transaction and transfer the funds to them, so they’d call always call and hassle me about my “overdue” payment.

Krantcents July 11, 2013 at 8:27 am

That is pretty aggressive! I think I would have just informed them of the delay and tell them to change or I would report them for harassment.

Thomas | Your Daily Finance July 11, 2013 at 4:20 am

Great way to start my day Krantcents! It starts with your thinking and your goals but some education along the way. People who have accumulated wealth are doing what the majority of people are doing and I don’t understand way more people don’t understand this.

Maybe its the education/knowledge factor and seeing some people with a lot of money having the nice cars and huge homes. For them in a lot of cases its not much considering how much they earn. Smart debt and a lot of hours working are somethings I just started realizing a few years ago. Now I need to get some of that wealth thats out there. Pursuit of Happiness was a really good movie. Shows the power of believing and taking action.

Krantcents July 11, 2013 at 8:29 am

It is all in the approach! Rich people are different than other people and their approach is different too. Don’t focus on wealth as much as focusing on what will help you succeed.

Holly@ClubThrifty July 11, 2013 at 5:03 am

I think you’ve taken the best parts of Robert Kiyosaki’s “Rich Dad, Poor Dad” and summarized them well here. I especially love that you said that rich people don’t use debt for consumables. That is so very true…and it is not a “rich” way to think.

Krantcents July 11, 2013 at 8:32 am

Before Kiyosaki, I was buying income producing assets and only took on debt that allowed me to leverage my down payments. Rich people have been doing it for centuries.

CashRebel July 11, 2013 at 5:22 am

Its funny how I never would have defined rich people like that 2 yrs ago, but now it makes sense. rich people use it to build their future. Im investing a good chunk of my income now, but it will be a while before I feel “rich”

Krantcents July 11, 2013 at 8:34 am

You may never feel rich! I still don’t, but I am secure. As you start investing , it seems very slow and small, but after 10,20 or 30 years it starts to be meaningful.

Money Beagle July 11, 2013 at 5:55 am

Very few rich people I have ever known have flaunted it or made a big deal about it and I think a lot of that has to do with how they got there, which ties back to many of the things you mentioned, where they don’t do flashy things. They just do smart things, do them well, do them over and over, and build wealth.

Krantcents July 11, 2013 at 8:35 am

I grew up with rich people (in addition to my parents). They never flaunted their wealth, but were secure because they owned a lot of assets without debt.

John S @ Frugal Rules July 11, 2013 at 7:06 am

I could not agree more! The more I think about and read about it, the more I see those that are “rich” are making money work for them and not the other way around. They’re constantly looking for ways to maximize it and make it benefit them – and not consuming it like so many others do.

Krantcents July 11, 2013 at 8:38 am

I think having your money work for you is just taken for granted! It reminds me of the phrase pay yourself first. It is one of the reasons, I do not have a specific emergency fund, but I have access to cash in a variety of ways. I want my money working for me!

SavvyFinancialLatina July 11, 2013 at 11:34 am

I agree. Rich people have assets. I know a lot of people who complain about not being rich when they had plenty of money to invest but instead lived a lifestyle that did not match their income.

Krantcents July 11, 2013 at 11:37 am

A lot of people think they are rich just because they have disposable income. Rich is a mindset of make your money work for you.

Jacob | iHeartBudgets July 11, 2013 at 12:14 pm

All great points here! I’m not a fan of debt, but if necessary, only use it on an appreciating asset. PERIOD! And working hard without whining is the BEST way to get where you want to be.

Krantcents July 11, 2013 at 12:30 pm

Having your money working to make money is the message. Whining never gets you anywhere anyway!

Joshua Rodriguez July 11, 2013 at 1:14 pm

The people that I have seen flaunting their wealth are the ones that don’t maintain their wealth for long. I fully agree with your statement “Rich people are not committed to consumption; they’re committed to building something”. Great article!

Krantcents July 11, 2013 at 1:40 pm

Thanks, rich people are committed to have their money work for them.

Greg @ Thriftgenuity July 11, 2013 at 6:37 pm

The same week my wife and I started looking for our next rental property, we saw the neighbor bought a boat. I think this example fits your point nicely.

Makes me think that he will get to know the future tenants of my current house very well while we are on to the next one.

Krantcents July 11, 2013 at 7:40 pm

I heard the happiest days for a boat owner are the day they buy and sell it! A rental may not give as much pleasure until much later, but it will be worth it. I used to enjoy the search and negotiation the most. Good luck.

Daisy @ Prairie Eco Thrifter July 11, 2013 at 8:11 pm

I knew a woman who made well, well over $130,000/year and lived in a really low cost place. To some people she may have been considered rich, but I never thought of her that way because I knew she had a ton of BAD debt. Some good debt is a whole other story and I think lots of people don’t give it enough credit.

Krantcents July 11, 2013 at 9:40 pm

A lot of people think rich people in terms of earnings, but rich is really net worth. It doesn’t mean they are debt free, but instead have equity. Many people confuse lack of debt with wealth. July 12, 2013 at 3:57 am

Great article.

I agree with what you have written…but I also would add that rich people don’t necessarily work longer hours. They work smarter and are a lot more productive. The focus on the key tasks that will bring them success, rather than the other tasks that fill up the day.

This in itself seems to be the major difference rather than hours worked.

Keep up the great articles!


Krantcents July 12, 2013 at 7:56 am

When I was in business, I worked almost every waking hour! Not in the traditional sense, but you are always thinking about various things. After all, it is your business and you want to make it better.

DC @ Young Adult Money July 12, 2013 at 6:00 am

I wrote earlier in the week about how owning things – income-producing assets in particular – is key to wealth. The hardest part of going about that for young adults is the fact that most have debt and don’t necessarily have a lot left over to purchase things. That’s why working longer hours through a second job or side income, or just straight-up killing it at your full-time job and getting raises and promotions, is so important to ‘getting ahead.’ The extra income will help in attaining those assets and eventually, wealth.

Krantcents July 12, 2013 at 7:59 am

Absolutely! Although REITS do not have the returns of actually owning real estate, it is a start to own assets.

AverageJoe July 12, 2013 at 1:07 pm

We were just talking about this today at lunch! Sometimes being wealthy isn’t worth the huge cost of time that you have to invest. My Friday lunch always includes a banker friend, and he and I agreed: many of our most wealthy clients were absolutely miserable in their personal lives.

Krantcents July 12, 2013 at 2:00 pm

Money should not have anything to do with it though. It is hard to balance your work and personal life and not let one of them slide. When I worked in industry, I worker 50-60 hours a week. I went in early to still have a life after work. I always made sure to have dinner with the family even if I had to do a little work after dinner. It is important to have balance in your life.

BARBARA FRIEDBERG July 12, 2013 at 1:43 pm

I love the underpinnings of this article. Points out the importance of how we think. Actions follow directly from thoughts!! Well put!

Krantcents July 12, 2013 at 2:02 pm

If hard work alone was enough, there would be a lot of rich people! Your thinking and approach to problems and opportunities make a huge difference.

The First Million is the Hardest July 12, 2013 at 2:09 pm

Great point about “smart debt”. Too often all debt it looked upon as an evil scourge, but when used in the right ways it can be a very powerful tool to help build wealth.

Krantcents July 12, 2013 at 3:28 pm

I agree, I used mortgages to build a very lucrative income property business. Too often, people are in a rush to pay off debt rather than invest those dollars which can earn more money.

Terry @Fix em Up Rent em Out July 14, 2013 at 12:46 pm

Great article.

Along the lines of having “smart debt”, according to “The Millionaire Next Door,” one thing that millionaires do that most people don’t do, is that they own their principle residence and they own at least one rental property.

Krantcents July 14, 2013 at 5:15 pm

Real estate is characteristic of wealth. I learned from my parents that you invest in real estate. I invested in income property and turned it into a business which led to financial independence.

Buck Inspire July 14, 2013 at 3:18 pm

Great advice KC! Interesting that rich people don’t spend their riches while poor spend beyond their means. Love your point about doing whatever it takes while poor people choose fun over work. Thanks for the pep talk!

Krantcents July 14, 2013 at 5:19 pm

You’re welcome mental attitude regarding money reflects what you are and what you will become.

Untemplater July 14, 2013 at 11:11 pm

Being rich can mean a lot of things and we each define it differently. Believing that you can achieve financial goals, get out of debt, and sticking to a budget is one way to become rich.

Krantcents July 15, 2013 at 8:40 am

Absolutely! Being or becoming rich is all about the choices you make. Focus on acquiring assets that appreciate.

Holly@ClubThrifty July 15, 2013 at 5:09 am

I also believe in visualizing success. Surprisingly, I have found that it works. Maybe it’s just having a positive attitude or a willingness to put the hard work in…Regardless, I always try to imagine a successful future.

Krantcents July 15, 2013 at 8:42 am

Very true! I visualize the outcome and then figure out what it takes to make it happen.

Kent @ Caffeinated Money July 15, 2013 at 4:40 pm

Great take on what it takes to be rich. I’m currently in school, and I’m always surprised at the number of people I come in contact with who live without giving the future any thought. College is a great time to start earning and saving while expenses and responsibilities are low. I have a lot of friends with student loans, credit card debt, and no job, but they don’t seem to understand that eventually that all has to be paid off.

Krantcents July 15, 2013 at 5:03 pm

You are absolutely right! I find most young people are just thinking about today or the weekend. That kind of thinking does affect your future. My college degree was in business with an emphasis in accounting. I have always been a planner in how I approach my future and it has worked very well for me.

Michael @ The Student Loan Sherpa July 15, 2013 at 4:59 pm

This is an awesome article. Rich is definitely a state of mind, not a figure in a bank account.

Krantcents July 15, 2013 at 5:05 pm

I agree! I was always rich in how I think and plan. I always thought I thought differently, but now realize I have a lot of company of the right people.

Thomas July 16, 2013 at 3:42 am

Great article, really made me think. Thanks!

Krantcents July 16, 2013 at 7:34 am

Thanks, I am glad because being rich is thinking you are rich.

Derek @ July 16, 2013 at 5:38 am

Awesome article!

So many gems here it’s hard to pick just one to like the most.

I think there is something awesome in having a ton of money and not using it. Almost like being a black belt in Karate or something…

Krantcents July 16, 2013 at 7:38 am

I wouldn’t say I have a ton of money, but I have it working for me all the time.

Anton Ivanov July 17, 2013 at 5:58 pm

Going along with your point that rich people are investors, instead of spenders, I would add that they are also producers instead of consumers. Instead of working for money and then spending that money of useless stuff, they sell goods or services to other people and then invest the profits.

Krantcents July 17, 2013 at 9:26 pm

They generally invest in their own businesses. My parents were business owners and their excess cas went into their businesses and then real estate.

Gerry Walsh July 18, 2013 at 7:01 pm

Using leverage in real estates is a great way to build wealth over time. However I don’t recommend use it on stock investment because like you said leverage is a double edged sword and the stock market is very volatile compare to real estates. If another bear market occur like the last one with had you could be in deep trouble. Also there are many other ways to use leverage in stock market.

Krantcents July 19, 2013 at 7:43 am

There are various forms of leverage in investing. You can use options for example. I am not suggesting leveraging everything, but sometimes it is using your skills.

Frank@WallStCollege July 20, 2013 at 9:50 pm

Great article, I couldn’t agree more, this is what separates us from the competition. Everybody can be lazy and unaccomplished, but only the 1% has what it takes to create and impact the world.
I found the story of the Walmart Founder to be touching, nothing comes easy in this world I agree.
Another good thing to point out is that:
Average people have a lottery mentality. Rich people have an action mentality.

Krantcents July 21, 2013 at 7:37 am

Thanks, but I will disagree with lottery mentalities. It has nothing to do with being average. It has everything to do with the way they think!

Kathrine O. Rosales July 23, 2013 at 8:03 pm

Should You Pay Off Credit Card Debt or Build an Emergency Fund First? What do you think? Tell other readers by posting your own opinion about paying off credit card debt versus saving money for emergency funds.

Krantcents July 24, 2013 at 7:48 am

Why does it have to be an either or question? I think you need to do both! You can lose a lot of time by only paying down debt. You should be investing in your future by saving and investing. In fact I wrote an article called, Why You Should Think Twice about Paying Off Debt!

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