Do You Have a Rich Mindset or a Poor Mindset? (Take the Test to Find Out!!)

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Bob and Jim are identical in almost every way. They’re both tall, thin, semi-athletic, they both love the show “American Pickers”….AND they net exactly $60,000 a year from their day jobs…. But they do differ in one area: How they spend their money.

rich mindset

Do You Have a Rich Mindset or a Poor Mindset?

Bob isn’t out of control with his money – I mean, he always has enough to pay the bills and he actually saves a little bit each month too. In his mind, he’s doing quite well, but in reality he has a poor mindset and saves far less than what’s necessary to be rich.

Jim, on the other hand, has a rich mindset. He knows that simply “paying the bills” isn’t enough to get ahead financially. While Bob only saves 1% of his income each month, Jim saves 33%.

Same Income, Different Savings Plan

Most of the time, wealth has very little to do with how much you make, but has everything to do with how much you keep. –Derek Sall

As we already stated before, Bob and Jim earn identical salaries, but their mindsets differ a bit when it comes to their financial decisions in life. Bob has a poor mindset and Jim has a rich mindset.

the rich versus the poor mindset

When it comes down to it, Bob just has a little nicer  lifestyle than Jim:

  • Bob owns a 2 year old BMW. Jim owns a 7-year-old Toyota.
  • Bob’s house is 2,800 square feet. Jim’s is 1,300.
  • Bob considers low interest borrowing as smart, while Jim avoids it entirely.

…and that’s the subtle difference between the future rich, and the future poor

Are you on the path of the rich? Or the path of the poor? The rich take time to think about the affect that their today has on their tomorrow, while the poor simply figure out how to survive today.

That’s it. No science or extensive studies needed.

If you want to be rich in the future, then you’d better sacrifice something today to get there.

rich mindsetHow Much Should You Spend on That?

I wrote an incredibly popular piece last year titled, “How Much Should You Spend on That?“. It went pretty viral on Facebook and was also picked up by popular blogs, Rockstar Finance and Life Hacker.

Here’s the gist of the article. Broke people spend money on television , car loans, expensive homes, etc… and they never get ahead because….they never save any money (duh…)! Rich people (no matter their income) save a large portion of their take-home pay and invest everything they save on interest-earning assets. And that’s how they become rich!

So how do you know if you’re saving like a rich person or a broke person? Just enter your income and your spend into this well-known downloadable spreadsheet! Thousands of people have filled out the Excel sheet and immediately realized if their budget resembled the rich or the poor.

It was super helpful for many, but in reality it was only step one…

Do You Have a Rich Mindset? Or a Poor Mindset?

So let’s say the “How Much Should You Spend on That” spreadsheet told you that your spending was more comparable to the poor than the rich.

Your reaction will most likely be:

Eh, what does this guy know? I think I’m doing alright.”

…You shrug your shoulders, head to another blog, and never think about it again….because you never really realized what was at stake. And it’s because you never got a good look at what you were missing out on.

…This is where step two comes in.

It’s time to understand what you’re missing, and to fill out another spreadsheet!

The Rich versus the Poor Mindset: Downloadable Spreadsheet

As we discovered in the initial post, the rich typically:

  • Save 1/3 of their income
  • Carry zero car debt
  • Have a mortgage that’s less than 25% of their take-home pay
  • And don’t waste money on over-priced cell phones and cable packages

So what does this mean for them in the long-term?

…More money than you can imagine. Let’s take a look.

path to rich

The spreadsheet is called, “The Rich vs. Poor Mindset” and shows the outcomes of a rich mentality vs. a poor one. Put simply, this is the answer to the question:

“If someone with a rich mentality had my income, how much could they actually retire with? Would the result really be that much different from mine?”

Finally,your questions are answered.

Download the spreadsheet here, enter your take-home pay in cell G10 and your typical savings rate each month in cell J14. Then scroll down (if you dare) to see how your investments would fare vs. someone that had a rich mindset.

It’s Time to Take the Challenge!

Here’s the typical. Bobarino thinks he’s doing pretty good by saving $250 a month and auto-loading it into his retirement account. After investing for 40 years and earning 8% interest, Bob acquires $872k. Not too shabby. He could comfortably live on $40,000 a year with this nest egg and never run out of money.

But…if he had the rich mindset, he could have saved up $4.6 million and lived lavishly on $184,000 a year. Caviar, cottages on the lake, and a yacht for cruising the world – all could have been comfortably on $184k a year.

On $40k a year….you could eat out at Carrabba’s once a month…and that’s about it.

So what about you? Are you ready to take the challenge to see how your future savings would compare to the rich mindset?

Do you have a rich or a poor mindset, and how much is it costing you??

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12 comments to Do You Have a Rich Mindset or a Poor Mindset? (Take the Test to Find Out!!)

  • Rich mindset 90% of the time. I did put 20% down on my house (which made for a cheapppp monthly mortgage payment), save 15-30% of my salary, harass my cable provider constantly to cut fees, and budget pretty well. I did buy a used BMW this year and have 0 regrets. Under 3% payment, $175 month and the car is in MINT condition.

    I just bought “Rich Habits” and was planning on reading it today!

  • TC

    The savings account only for liquid. I save all my bonuses plus 500 a month plus from my salary *and* 20% into my 401K with 4280 take home every month. How do you figure the 20% 401K into this?

    • “Savings” is all savings and investments. If you have $500 a month that goes toward savings and $700 (this is a total guess) that goes into your 401k, then that’s $1,200. Compare that to $4,280 take home pay and that’s pretty close to the rich mentality. Not quite there, but pretty close!!

      • TC

        Thank you! I actually thought about it after (maybe I needed more coffee) and combined the two. It’s about $1100 to 401K a month. Ideally, I should send it all to 401K but I would like something easy to access. I use an online bank so it’s not *that* easy 🙂

  • One thing I feel that we can add to the rich mindset is finding experiences that make your life enjoyable for you.

    For example, recently John Legend started his new tour – tickets were around $150. I typically don’t go to concerts, but seeing him was on my bucket list. I sacrificed by eating PBJs to pay for the concert, AND IT WAS WORTH EVERY PENNY. Such an awesome show and experience.

    We should work to save and if FIRE is goal your continue to drive towards it, I feel that we should also sometimes experience life too as it makes it worth living.

    SN – Living for experiences above your means is not part of the mindset we have at DoD – we mean to find ways to have the experiences without detracting your goals by much :).

    Thanks for posting!!

    • Love it Master Duke. There’s no point to becoming wealthy if you never do anything fun along the way. The key is to balance both.

      My wife and I love to vacation on Sanibel island once a year. It’s not cheap, but it’s worth it to us and we’re making lasting memories for ourselves and (now) our daughter. Just like your concert, it’s worth every penny.

  • That’s great!! That place looks beautiful.

  • Francis

    Anything that is excessive is bad. You cant save everything otherwise life isnt worth living or spend everything because your future depends on it. I agree on finding a balance between da 2. I actually save 50% of all my incomes (have 3 total) & save 100% of all my bonuses. I love taking trips so I take time to do it & It is worth every penny!

  • Francis

    That is awesome Derek! Great minds do really think alike ☺ One thing that I missed to mention though if by the end of the year I didnt get to spend all da money on trips or wants I transfer/add them to investments so in reality Im actually saving more than 50% on all my 3 incomes.

    There was this incident wherein our payroll was one day late. It just happened last week & my colleagues/friends were panicking. I on the other hand was more than fine & deep inside I was thinking… this is the reason why Im an advocate of saving/investing. You dont know what the future holds so the best thing to do is to PREPARE.

    • It’s pretty sad isn’t it? I experienced the same thing in my first big-boy job. Even back then I had enough of a savings to not worry, but everyone else was freaking out about “paying the rent”! Sad…

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