Have you ever looked at a wealthy person and wondered just how they did it? Were they lucky, crooked or hardworking? Are they just like the rest of us, or did something set them apart? And are they happy?
Well, a series of interviews with high net-worth individuals have suggested that there is a difference in how the rich think about money compared to more normal earners.
So how do rich people think? We’ve been looking at some of the theories.
They think wealth is a right
Steve Siebold spent decades interviewing millionaires and trying to work out what made them different to everybody else, before publishing the findings in a book ‘How Rich People Think’. In fact, he claims he is now rich himself as a result of what he learned.
According to Siebold, the wealthy believe they have a right to be rich as long as they are able to create value for others. That compares to the average earners, who believe that being rich is a privilege that only a lucky few achieve.
“This distinction in thinking leads the middle class to the lottery and the world class to work…” he argues. “With this mind-set, is it any mystery why this tiny fraction of the population owns the bulk of the world’s wealth?”
They think poverty, not money, is the root of all evil
Siebold found that the average earner views wealth with suspicion and believes that money can cause problems and unhappiness. Yet the mind-set of the rich person is to fear poverty, knowing that “while having money doesn’t guarantee happiness, it does make your life easier and more enjoyable”.
He also found that average earners often thought of rich people as crooks, whereas the wealthy viewed themselves as ambitious.
They focus on earning
The wealthy are fixated on earning money rather than penny pinching.
He argues: “The masses are so focused on clipping coupons and living frugally that they miss major opportunities. Even in the midst of a cash flow crisis, the rich reject the nickel and dime thinking of the masses.”
According to Siebold, it’s important to assess whether you’re focused more on saving pennies or building an empire. No points for guessing which is the mind-set that will make you millions.
They don’t worry about keeping up with The Joneses
In The Millionaire Next Door, American researchers Thomas Stanley and William Danko interviewed and polled more than 500 US millionaires and found that a significant number lived well below their means.
Remarkably, there were three times as many millionaires living in homes worth under $300,000 as there were living in homes worth over a million dollars.
Dr Stanley explains: “The advertising industry and Hollywood have done a wonderful job conditioning us to believe that wealth and hyperconsumption go hand in hand. Yet… the large majority of the rich live well below their means.”
They believe that financial independence matters more than status
Perhaps one of the reasons that the wealthy don’t live above their means is that they are more concerned with remaining financially independent, according to Stanley and Danko.
They claim that the rich believe financial independence is more important than displaying high social status, so they drive old cars and live in smaller houses rather than stretch themselves to a point where they risk losing that independence.
They are committed to being rich
Whereas poorer people would like to be rich, rich people are committed to attaining and retaining wealth. That’s the conclusion of T. Harv Eker, best-selling author of ‘Secrets of the Millionaire Mind’.
He argues that normal people may say they would like to be wealthy, but they also make excuses as to why they won’t be. For example, they may want to be rich but worry that they’d have to sacrifice too much family and social time in order to achieve it.
Meanwhile, the rich are simply focused on the goal of attaining the outcome they most want. Eker explains: “Rich people are totally clear that they want wealth. They are unwavering in their desire. They are fully committed to wealth. As long as it’s legal, moral and ethical, they will do whatever it takes.”
Admittedly, his book encourages readers to touch their foreheads and chant ‘I have a millionaire mind’, but maybe that works for some people.
But does it make them happy?
Of course, money is not everything in life – family, friends and social wealth is what really matters to most of us. So would thinking and managing your money like a millionaire make you happier as well as wealthier?
Well, money may not buy happiness, but those millionaires living within their means have certainly found some inner peace. In their research for ‘The Millionaire Next Door’, Stanley and Danko found that 90% of millionaires living in homes valued at less than $300,000 describe themselves as being “extremely satisfied with life”.
If you agree that money can’t buy happiness, then this sunny outlook must be the result of living so comfortably within their means. Perhaps that’s the millionaires’ secret we should all try to adopt.
What do you think? Are millionaires lucky or clever? Could anyone make a fortune? Have your say using the comments below.