How the Rich Think

What I have noticed by observation is that the financially secure do things differently than middle class citizens are conditioned to think and, based on that thinking, they do things differently than middle class citizens. Having just read Harv Eckler's Millionaire Mindset, a lot of these observations crystallized for me and I wanted to share some observations:

1. The financially secure take their time: Our first reaction is to typically act on our impulses/emotion and one over-riding emotion is fear (fear, in a hunter-gatherer society sense of the word is good, it keeps us alive but when dealing with money it can be really bad). Thus, more often than not, our decisions about money are driven by fear (I must have that new gadget for fear of being left behind, I must sell that stock for fear of a market crash, I fear I will be too successfully). What I have noticed is that the financially secure deal with fear too but they take a step back, analyze the situation, sleep on it, talk to their advisers, sleep on it some more and then act. This obviously takes some time, but with the benefit of taking a step back, our decisions about money are not driven so much by emotion but by rationality and money at the end of the day should be a rational decision.
   
   
2. The financially secure have a lot of advisers: This may rub some do it yourself investors the wrong way but most financially secure people I meet have several lawyers, a few accountants, some type of "money person" (bankers or people who run their own financial institutions) and some uber advisor (usually a "grey hair" who has seen it all and lived to tell about it). These advisers are not $500/dollar advisers- they are people experienced in life who can impart specialized knowledge and also have certain distance from a particular situation to give good sound advice. As a matter of fact, Thomas Stanley and William Danko's book The Millionaire Next Door noted that most American millionaires spend more per capita on lawyers, accountants and financial advisers than non-millionaires.
   
   
3. The financially secure "stick to their knitting": This is another way of saying "keep it simple stupid" or they are focused. Most financially secure people I have met are basically one-trick ponies- they know one thing and they know it really well whether it is investing in stocks, investing in real estate, building businesses, teaching others their knowledge etc. etc. They obviously practice risk management and asset allocation with their money but how they get to be financial secure is really quite boring and simple. For example, one of the receptionists at a company I use to work at quit her job to manage her 5 rental properties full time; very slowly and quietly, she had learned about real estate investing and bought properties over 10 years until she could leave the rat race. She didn't find one house and then flip it for 200% returns in a year; she just bought places that gave her nice steady cash flow and multiplied many times over.
   
   
4. The financially secure socialize with other financially secure people: I believe this is where the myth arises that there is some "special club" where the rich bar the poor. Some financially secure people may look down on others and want to socialize with those they deem worthy but most I have met are positive and social people. However, have you ever gone to a party and met someone who was negative about everything? Didn't you want to walk away from that person as fast as possible? I feel it is the same with the financially secure- they probably don't want to hang out with someone who complains about how they aren't making enough, the world owns them something, no one gives them a break etc. They want to socialize with people who are positive about themselves and money.
   
   
5. The financially secure don't look it: They tend to drive middle of the road cars, wear modestly priced clothing and live in nice, but not outlandish, houses. This seems to confirm the observation made in the Millionaire Next Door about the life-styles of the American Millionaires they studied.

Reviewing the above list, the only theme unifying these characteristics have is the fact that they seem counter-intuitive to what society tells us. It seems to confirm my belief that if follow what the average person does in life, you'll end up average as well.