Here's a universal law that all of us have experienced at some point. That is, our thoughts influence our reality. And in no realm is this truer than in our finances. The way we think about and approach money, shapes our financial reality in more ways than we realize.
For me, this truth hit home when convinced I wouldn't reach a certain income per month, I acted accordingly with job applications. But, when I ventured into entrepreneurship, that self-imposed limit got shattered. And the experience made me realize how limiting beliefs can act as a cage in keeping us down.
The terms "poor," "broke," and "pre-rich" generally seem to describe similar financial situations, but a deeper look will show us that they actually represent distinct mindsets and approaches to money.
A telling difference amongst the three mindsets is the level of optimism that they have in regards to their finances.
On a scale of 1 to 10, with 10 being the most optimistic, a poor mindset is on the lower end and pre-rich is on the higher end, while broke will be somewhere on the middle.
A poor mindset is characterized by a sense of lack born from having or viewing resources as scarce. With finances, focus is put on basic needs and survival, with little to no financial planning. Experientially, money often feels out of reach and control.
A few steps ahead on the ladder is broke mentality. This is a 'temporary setback' mindset. By which, we see financial struggle as a bump in the road and adopt an active attitude in seeking solutions to help us get back on track. While money is tight, there's an underlying belief that this is just a temporary situation.
Pre-rich is a good term to describe those who aren't just dreaming of wealth, but actively building the foundation for it, brick by financial brick.
Here, optimism borders on enthusiasm, as it is backed by concrete efforts towards achieving one's financial goals. Money isn't that tight and it is used strategically.
A general example of a poor mindset is an unemployed person. An employee with minimum wage can be a good example for broke mindset. And an emerging entrepreneur can exemplify a pre-rich mindset.
A good analogy to illustrate the mindset divide is of two gardeners tending their plots. One, driven by scarcity, meticulously guards his meager yield, fearing every seed lost. While the other, sows generously, knowing each sprout promises future harvests.
This analogy holds the essence of the difference between the "poor" and "pre-rich" mindsets. The former, akin to the wary gardener, puts more focus on immediate needs, trapped in a cycle of paycheck-to-paycheck survival.
Every unexpected expense can feel like a nail in the coffin, and building wealth seems like a distant dream that never gets to materialize.
The latter, however, approaches finances like the abundant gardener, with an optimistic outlook of the future backed by planning and taking action.
There might be any objective fact to back this but intuitively, the more optimistic we are, the more we tend to practice delayed gratification.
A poor mindset is always on the hunt for quick wins, which sometimes resort in getting into more debt to meet short-term needs. This is one of the ways to fall into a debt trap.
Focus is mostly on the long term with delayed gratification. Like a disciplined chess player who strategically plan moves that yield long-term dividends. The waiting game becomes an art.
These are just mindsets and are in no way fixed or permanent. The mind is a volatile place. However, objectifying these states of mind helps in awareness and identification, and an effect of that is they lose background influence on us, especially the poor and broke mindsets.
Depending on internal and external circumstances, finding ourselves immersed in these mindsets is not that uncommon.
But, having an understanding of them can equip us to not fall victim of the first two when they arise.
This means consciously shifting gears, moving from scarcity thinking to the proactive abundance that facilitates wealth creation.
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