The Psychology of Wealth – Episode 394

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[00:02] Hello, partners. You may have heard of the book called The Millionaire Next Door. Well, we’re going to go beyond that and we’re going to be talking about the psychology of wealth. Kim, you’re fortunate that you’ve been in the industry for years and you’ve worked with an array of different people. We can hopefully go through in this conversation and take the people that you saw that had a prosperous mindset but maybe didn’t have a lot of financial capabilities and then you’ve seen where they’ve become over the years to now continue with that prosperous mindset and having a lot of financial capabilities and I’d love to be able to extract what are some of those common pieces. Well, anytime you just work with the word prosperity

[00:46] and it’s one of the reasons that I love it so much, it’s indicative of not only financial wealth but spiritual wealth, mental wealth, even physical wealth, familial wealth. I mean, there’s all kinds of aspects of prosperity that we get to be exposed to in helping our clients and while we’re fairly narrowly focused ourselves on the monetary side of it, it’s human beings that we’re dealing with. So literally every conversation that I have addresses some of these other aspects of it and what’s been fun for me to watch and it has been over 30 years that I’ve been helping people with their personal finances, first at a bank and then as many people know my story, through the typical financial planning lens and

[01:30] then now for almost 25 years, give or take, inside prosperity economics, it is so evident that the monetary side comes second and what comes first is the mental side or the psychological side or whatever is going on in your thought and so that is so cool because that means anybody, no matter what financial situation they’re in right now, can get on a more prosperous perspective because of changing their thought and then the money change can come along behind it. Now what’s interesting is that the money change is not always a lack of money and now all of a sudden people have more money. I deal with a lot of clients that have plenty of money but not a good mental framework with which to deal with that money. They’ve

[02:31] either just kind of grown it by the luck of the stock market or they’ve grown it because they’ve been good consistent savers and now all of a sudden, holy cow, it’s at an amount that we need to get a little bit more serious about what we’re doing here and it’s so cool because mental frameworks are so easy to change and the ability to add financial knowledge to your mind and your brain so that you can look at things with a different perspective is truly just a study session away. So whether it’s a podcast you listen to or some videos you watch or a book that you read, the shift of a mindset to a more prosperous one that is in a learning mode and can do good is so, so valuable and the article, The Psychology of Wealth,

[03:22] which we can include in the show notes of this particular episode, was one that we were talking about and I’m so grateful because it’s so easy to shift your psychology, to shift your mental framework around money. It’s as simple as for those that don’t feel like they have it, the Robert Kiyosaki switch of questions from I can’t afford it to how can I afford it. On the other side, for those that feel like they have plenty of money and are now in protect mode or feeling like, oh gosh, I have all these resources and I need to make the best of them. It’s a shift of thought from scarcity. Oh, I have to hold onto it all to how could I do good with this wealth that I have been entrusted and what kinds of resources can I

[04:11] turn to to learn what I need to learn about the wealth so that it becomes a resource and not an obligation. So with the experience that you’ve had and the different frameworks, the mental models of these people that you’ve seen over the years, is there a ramping up period, a time that you’ve seen you can spot early on that they have the right thinking, they have some of the right elements in place and it’s just a matter of time that everything else clicks and the same token that you’ve seen people that maybe inherited money or it came easy. And in your mind, you know, if something doesn’t get taken care of, the runway is going to end soon. That’s a great question. So my gut reaction answer is that no, there’s never like one big thing because all of life, especially because

[05:07] what we’re talking about here is 30, 40, 50, 60, 70 years of time is not ever one big thing. It’s slow, incremental, baby steps of progress, mental or financial all along the way. And yet on the same hand, when you explained it the way that you did as you elaborated on the question, yes, absolutely. Especially on the inheritance side, we have plenty of families that have inherited wealth, but sometimes it’s half a million dollars. Sometimes it’s way more than that. And it’s always so interesting to me to see them continue in the path that they already were in. Money just magnifies whatever mental framework you’re operating with. So if you’re a good saver and you prioritize in your mind building and keeping wealth and

[06:00] you get an inheritance, then you’re going to build and keep it. If you’re a spender and you don’t pay attention and you don’t treat money as the resource that it is, and you get an inheritance, it’s going to get spent. And so it is interesting to me to see that it isn’t ever one big thing that changes things and inheritance or non-inheritance or maybe somebody had money and then now all of a sudden they don’t because they lost it due to business or bad investment decisions. It’s the incremental things that we do every day, the slow and boring things which break down to two specific categories, that of your mindset and that of the habit of saving. And that habit of saving either saving as a verb,

[06:46] actively putting money away or just saving in the sense of responsibly spending what you have is there and evident and it can be switched. I don’t want our partners to feel like I’m suggesting that they can’t switch the mindset and the habits that then support those monetary decisions, but it takes some conscious thought and effort. And we’re talking about an entire lifetime here. It’s absolutely worth the thought and the effort. Absolutely. I love that. So to wrap up the episode, we’re trying to go with something action oriented because the consumption of this is wonderful and there’ll be a subconscious of what comes in and that’s a part of the psychology. But to actively apply and say, okay, I want to improve my psychology. What can you suggest on this episode?

[07:42] Well, I’m going to introduce a book that we put out in draft form about a year ago and is now going to be very soon, if not already available as our first hardback book, which is very exciting. And then of course, an audio version and a Kindle version and it’s called perpetual wealth. And so I am really going to encourage people to consume that book. We’ll also have in time a video course for it. So no matter how you learn reading, listening or watching the book will be there for you to support this psychology of wealth and please share it. It’s for you to learn, but it’s also for all your family members and your friends and your colleagues to learn as well, because we’re all well aware that in the United

[08:30] States of America, we have not done a good job with financial literacy and whatever financial literacy we have is often very short-term related. So perpetual wealth indicates the perpetuity of finances and in families, generations, three, four or five generations that can and are impacted by your decisions today and those of your family and the generations in front of you and what you’re doing to help them do a better job with their prosperity. I love it. That’s so good. You know, at the start of this episode, we talked about the book The Millionaire Next Door and The Millionaire Next Door is this thing that most of these wealthy people are driving the Ford F-150 and they’re people that we wouldn’t even think are millionaires, yet they’ve done that. What you’ve stated

[09:23] is so much more simpler saying money is a magnifier. If you’re a saver now, you’re probably going to be a saver when things come about. The Hollywood in our world wants to think that it will be a gigantic moment with balloons coming out of the sky and fireworks exploding and the truth is the psychology needs to be worked on now and constantly pick up a copy of the book and we’ll make sure to put a link inside of the show notes. If you have not seen the book and if it’s not available yet, you can get notified by joining the email newsletter which has wonderful lessons every single week that’ll help you out and you can go to partnersforprosperity.com to join that newsletter. Thank you for listening

[10:17] to the Prosperity Podcast. To take control of your money and have it work for you, visit us at partnersforprosperity.com. If you liked this episode, make sure you subscribe and leave a review.