Your Attitude is More Important Than Your Paycheck
After my recent interview on the Dough Roller Podcast, a listener named Jim left this comment:
“I do not wish to diminish the success of your guest, because they have done what few are willing to do. Yet, anyone that makes $180k a year can well afford a high savings rate. Yes, they saved in their early years when they made much less, but it’s the high income, not the savings rate that is making early retirement possible. Let’s hear from families with average household income of $50 – $60k.”
I responded to the commenter directly, but this way of thinking keeps gnawing at me. It illustrates the biggest reason why most people will never build wealth and achieve financial independence. Changing this way of thinking is one of my primary motivations for sharing our story. It is why people stay wage slaves the vast majority of their lives.
The poverty mentality is not to be confused with real poverty. The poverty mentality is when you think like you are poor. It permeates very deeply to the root of who and what a person is.
The poverty mentality makes a person focus on what they don’t have rather than what they do. When you don’t appreciate the abundance of life, you feel poor. Life then becomes about always about wanting more.
The poverty mentality provides a convenient excuse for most people to not save money. The average American saves about 4% of their income. Even the top 10% of all earners save only about 12% of their income annually. As most people make more money, they still “can’t” save. When people have no money, they focus on inability to afford a house. Once a person starts making more money, they buy the house they wanted. Soon, they want a bigger or nicer house. The same goes for cars, clothes, vacations, restaurants, etc.
The poverty mentality also makes people focus on why they can’t do things because they don’t make enough money. Why not focus on making more money, which is in your control? Develop a new skill. Educate yourself. Start a business. Invest. Bring value to the world!
I also see elements of the poverty mentality in extreme frugality. It is why I have a love-hate-love relationship with the philosophy as I’ve written about before. The math behind extreme frugality is absolutely correct and valid. Live on only $10,000 a year and you can be “financially independent” on only $250,000. The philosophy has inspired us to look at what is important in life in our journey to early retirement.
However, living on $10,000 a year would mean literally watching every single penny we spend. For us, it would mean giving up things that bring us joy and fulfillment. It would mean eliminating travel, changing our hobbies and decreasing charitable giving. It would mean budgeting everything and living our lives around a budget, rather than deciding what we want and finding a way to afford it. It is not our idea of living well.
Finally, poverty mentality is characterized by fear. Many people can save money, but are afraid to invest it on a better life. After all, you could lose your money if you put it in the stock market. You could make a bad deal in real estate. Better to hide your money under the mattress or put it in a savings account where it is “safe”.
With the poverty mentality you won’t have the courage to live the life that you want because you may not have enough money. Why bother trying to retire early. “You may run out of money.” “How would you afford health care?” “Do you know how much raising a child costs?”
The opposite of the poverty mentality is the abundance mentality. It also permeates very deeply to the root of who and what a person is. Once you develop it, the building of wealth is inevitable. The abundance mentality forces you to take a step back and realize the abundance in which we live every day of our lives.
As we make more money we have little desire to go out and buy the newest iPhone, a bigger home or the expanded cable package. We recognize that the phones currently in our pockets work fine for calling and texting, take amazing pictures, play our music, and have more computing power than the Apollo space ships. We realize how ridiculous we already are with our 3 person family living in a 2,000 square foot house with a living room and a family room (what is the difference?) and a formal dining room that we use 2-3 times per year. We are looking to downsize and become more efficient. We realized that the basic cable package that we had was draining our time and brain power, so we cut the cord.
The abundance mentality allows us to focus on the infinite ability to earn more money by bringing value to others. It allows us to focus on obtaining the things that are truly important in life and finding the money to pay for them.
We are building our early retirement plans with the abundance mentality. We have never lived on a strict budget. We don’t want to live the rest of our lives worrying about living on a budget where we can spend 4% of our investments (or any other arbitrary number) in a given year. We embrace relative frugality and track what we spend on our very satisfying life. We are building a plan that will allow us to continue to live as we always have. We have built in the ability to spend more in retirement in case we didn’t budget enough for things that we value such as increased travel or paying for our own healthcare.
We realize what is and is not important in life and focus on those things that bring true happiness and fulfillment. As we really pay attention to these things, we have found that life is a lot less expensive than focusing on all of the luxuries we have been taught that we need.
We have little fear of investing our money because we have educated ourselves on how the things we invest in work. We are doing the things with our money that fit with our lifestyle and give the best chances of financial success. However, we realize that life comes with no guarantees. We will continue to learn and grow. Even if we have it all wrong, we can simply go back to work and start over.
Why not try something different? Why stay a slave to our jobs “just in case”?
Developing an Abundance Mentality
A big key then to both building wealth and living a happier life is to shift from a poverty mentality to an abundance mentality. Here are a few things that have been key for us.
A Different Perspective
It is easy as an American in today’s society to become numb to what poverty and struggle really are. We are all “entitled” to have food, housing, healthcare and even cell phones provided for us.
Our travels have exposed us to real poverty. Pursuing high altitude mountaineering objectives has taken us to some amazing and beautiful corners of the world. However, the mountains that we’ve climbed are often located in areas (Africa, Mexico, Ecuador) of intense poverty.
It is also easy to miss what is truly important in life when watching modern “news”. There are places in the world where people continue to be enslaved and persecuted. However, our news tends to focus on stories like the newest drummed up political controversy or celebrity culture stories like Bruce Jenner’s gender identity and Tom Brady’s deflated footballs.
We’ve been humbled to visit WWII concentration camps where unspeakable atrocities were committed just two generations ago. This has made us pay more attention than most when this type of brutality continues to occur today.
Seeing true poverty and understanding true suffering can be uncomfortable. It has made us realize how ridiculous most of western society is. No matter how much we have or how good we have it, many people will manage to want more and find reasons for unhappiness.
We’ve embedded several pictures throughout the post to drive home these points and hopefully make you think. Take a look at the kids playing soccer in Africa where most have no shoes, there is no grass, no nets, and often they use some makeshift ball (yet they still all came out every day and had a blast playing). Consider that in rural Ecuador, going for groceries with the kids doesn’t involve a Whole Foods or your SUV. Imagine the brutality, filth, fear, and oppression that many people have and continue to live in simply because of their race, religion or place of origin. Then take a step back and count your blessings.
It is very hard to live in American society and not want more and more. We are constantly bombarded by images of people showing us how great their lives are and advertisers trying to sell you stuff.
Everyone posts pictures and descriptions of their awesome trip, new clothes or fancy car on Facebook and Twitter in real-time. We never see pictures of them sitting in their cubicle for 50 hours a week to afford it. Nobody posts their credit card bills coming in the mail the following month.
Advertisers are everywhere directly and subliminally telling you what you want and need. The cookies on your computer even allow the advertisers to stalk you. Look at an item on one website and watch it follow you around in the side bar of all the other sites you visit, just in case you really did want to buy it and just forgot.
Enough is enough. Just step back from your electronics and live a little bit.
Attitude of Gratitude
Finally, I will leave you with this simple and practical challenge. Start and end every day with a few minutes of gratitude. Literally say out loud three things that you are thankful for. This will refocus you to what is valuable and important and away from the many distractions and frustrations that are inevitable in any day.
This simple act of taking a few minutes has been invaluable to both wealth building and living a happier and more satisfying life (which is really the only point of building wealth anyway). This has been especially rewarding as we now do this as a family every night after reading our daughter bed time stories. (I got to play with my friends! I went to the playground with Daddy! I got to color with Mommy!)
We started doing this with her before she even understood because we wanted to teach her to be grateful. Now that she gets it, listening to her is actually a huge reminder to us of what is important in our abundant lives.
How important do you think attitude is to building wealth and achieving financial independence? Are we right or is it really just about how much money you make? Share your thoughts below.