The Rich Get Richer and the Poor Get Poorer

Why the Rich Get Richer and the Poor Can’t Get Out of Their Slump?

It’s an age-old question that usually ends up in claims of unfairness and feelings of oppression. Why do the rich get richer? Is it because the rich can buy opportunities with their money that will further enlarge their wealth? Is being poor a life sentence unless you have exceptional luck and hit the jackpot on some gamble?

I’m here to tell you that the path to wealth doesn’t depend entirely on where you start. Rather, it largely depends on how you think about your situation and how you respond to it.

Mr. White vs. Mr. Blue

Let’s take these two people as examples. Mr. White comes from an upper middle-class family, went to one of the top universities, and is working in the IT field earning ₱70,000/month. He lives with his family – his parents own the house – but he gives his share for household expenses, which leaves him with around ₱30,000 to use as he wants after taxes.

Mr. Blue, on the other hand, came from a family that could only afford him a high school education. He’s working as Mr. White’s family driver earning ₱10,000/month. He’s supporting his younger sibling through college and his parents in the province. That leaves him ₱1,500 to use as he wants.

Automatically, you’d assume that it would be easier for Mr. White to continue being “rich” because he has more disposable income while Mr. Blue is “poor” because he earns a little less than minimum wage.

But what if I tell you that Mr. Blue is also rich? Not because of money, but because of how he views himself.

Nurture an Abundant Mindset

This is the first and most important thing to develop if you want to be rich. An abundant mindset is related to a “glass half full” mindset. With an abundant mindset, you view that limited amount of water as enough for everyone because after all, that water came from a tap or dispenser somewhere.

Thinking that you’re limited from the get-go is what makes you feel “poor”. It makes you think that there’s not enough out there for you, that the “rich” already got everything so nothing’s left for you.

I’m telling you, this isn’t true. All the riches in the world is fair game – for anyone’s taking. You simply need to think you can take them and follow these tips to build wealth from very little.

Every Little Savings Count

Mr. Blue only has ₱375/week of disposable income compared to Mr. White’s ₱7,500/week. But then Mr. Blue is a stay-in driver. Free food, free lodging, free utilities. If he saves at least ₱300/week and splurges the ₱75/week on some luxuries, he’ll be able to save ₱15,600/year.

Earn While You Sleep

If Mr. Blue keeps those yearly savings in a bank account, the interest-earning would amount to around ₱100 per year. However, if he chooses to invest ₱10,000 from his first year of savings in a fund offered by any local bank, he can earn better returns of at least 3-5% p.a rate. If he does this every year, he’d have earned an extra month of savings by the 2nd year without doing anything!

Set Your Sights on the Horizon

Building up wealth takes time. Mr. Blue is well on his way to freedom, but only if he keeps his eyes on the end goal well beyond a few months ahead.

Goal-setting

Saving for the future is too broad, vague, or daunting for many. That’s why you should set goals. This doesn’t mean increasing the things you’re saving for. Rather, it’s creating achievable milestones that serve as proof of your progress. The more milestones you conquer, the more motivated you will be. Without these small goals, you’ll feel like you’re just floating freely and not getting anywhere, which will derail you at some point.

Going Over and Beyond

Most people save for something specific like a gadget or a house. While these are fine, it’s better to see beyond those concrete things into what “the rest of your life” looks like. Think about the period after you buy a house. Will you have to spend more years working and paying that off? Or will you be able to kick back and actually enjoy that house?

If you focus on a specific thing when building wealth, there’s a risk of only building enough for that thing. So, go beyond and think of life after. Otherwise, once you achieve that goal, you’d risk going back to square one chasing after paychecks.

Invest in/Pay Yourself

The only reason why Mr. Blue could save and invest is because he didn’t totally neglect himself.

It’s a common problem of Filipinos both working locally and abroad. They’re sacrificing to earn for their families, but forget to care for themselves along the way. That’s why many end up struggling when they come back home or lose their job.

Yes, it may be your duty to provide for your family, but in the end, it’s your life on the line. Don’t forget to keep some for yourself to build the life that you want. This way, even your family can benefit from the wealth that you build when the future comes.