So what is the rich mindset? It is simply put, a way to think about your financial actions that the rich usually have. I know you want to get a simple answer, a fast trick to turn your life around and become rich tomorrow. Well, the trick is in part to be patient. Rich people don't usually become rich by accident. At least, if they aren't born rich or they don't win the lottery. Patience with financial actions is the number one part of the rich mindset. But it is only the start.
The next step is knowing what you can afford and what not. This isn't rocket science, but it involves math! Oh god no, right? Thankfully this is also easy, let me show you.
John has 1 job. He gets paid $2000 a month. How much can he spend per month?
Job = x
Monthly available money = y
Maximum amount to spend = z
x = 1
y = $2000
z = x * y
z = 1 * $2000
z = $2000
Simple? Yeah, I know, putting it like this makes it a lot harder than it actually is...
Anyway, lets continue:
John spends $500 on rent per month. He spends $250 on food each month. And he spends $500 dollars on other stuff each month, because he really likes living to fullest. How much money does he have at the end of the month.
rent = $500
food = $250
other things = $500
I'll speed this up this time:
Left after month = $2000 - $500 - $250 - $500
Left after month = $750
So John has $750 left after a month and he can save that. If he puts it in an index fund, he will start to grow his money. John also knows, that despite having $750 left, he doesn't have to use it for something he doesn't need it. Good job John.
The rich are always looking for income streams. This appears to be one of the most shocking things to many people. They do not seem to realize that to become rich, you have to get money. Many poor people say that they don't actually care about money that much and how much they have isn't such a big thing for them. At the same time they are struggling with everything related with finance and they wish they didn't have to bother with it. So the real question usually is, do you want to have negative or positive problems with money? Negative being, not enough money. Positive being, what to do with all the money you have? The rich therefore usually figure out how to make their money make money for them. They create what is called passive income.
Passive income is income which generates money weather you sleep or work. Many start from having a passive income of only a few dollars here and there. But when they invest that few dollars back into their passive income generator, the passive income generator generates more next time. Enter, compound interest.
This is awesome. Imagine your money getting babies. Yes that is what it does! Your money makes more money, and the more money you have, the more money it makes! And it just keeps going.
