Do you think there is a Rich and Poor Mindset?

[Brogues]

I only came across this theory (Rich dad Poor dad) a couple of weeks ago and I’m not sure or maybe we’ll never be able to not think ‘poor’?

Me and DH were brought up ‘poor’ - comfortable but in council housing, with working parents but worried about unexpected bills. We both went to university are now professionals in our work and are high earners (not top 1% of Mumsnetters by any means admittedly) so ‘rich’ but we still buy stuff like TVs rather than focusing on investments. Can we get out of our ‘poor’ mindset or isn’t there one in the first place?

Nicked from google:

Unfashionable,

You have an isa though? Not a stocks and shares isa?

Jack bogle, vanguard... Hated by Wall Street and financials.

Why look for the needle in the hay when you can buy the hay stack.
But index funds with low costs somewhere like vanguard, rough returns are 10% each year over a decade.

Indedx are self cleaning. If a company isn't cutting the mustard, it falls out and is replaced.

• past returns not a guide to future returns.

Here's an actual quote by the author:

One of the reasons the rich get richer, the poor get poorer, and the middle class struggles in debt is because the subject of money is taught at home, not in school. Most of us learn about money from our parents. So what can a poor parent tell their child about money? They simply say "Stay in school and study hard." The child may graduate with excellent grades but with a poor person's financial programming and mind-set. It was learned while the child was young"

He's trying to break open some of the 'mystery' around money and teach the principles.

I'd recommend a read of the actual book.

I grew up poor. I think there is a mindset but I don’t recognise it in that graphic at all. I would say that my mindset is more about not wasting money on frivolities - big holidays and the like. And being conscious and frugal about things like food shopping. I don’t spend money on clothes or hair or makeup. I still live like I did when I was poor, but because of that am able to make large mortgage overpayments. I’m also very hard working and don’t take anything for granted.

Nay day I agree and I also agree that that it's not taught in school.

It's maddening.

I think maybe the chart is being taken out of context. Imagine two people starting at the same status. It is saying that the one with the poor mindset will become poor and the one with rich mindset will become rich. I have seen plenty of people from rich backgrounds become poor because they spend their money too fast, don't work hard and study, invest for the future etc. In reverse, plenty of people from poor backgrounds study hard, invest for the future and become doctors, accountants and lawyers, entreprenneurs, etc.

I agree that if you are poor it is much more difficult to get rich and if you are rich it is easy to get richer, but that is not the point that is being made here. If you start somewhere in the middle then it really can come down to mindset, ie positive thinking and hard work in the right direction, with a handful of luck along the way.

A zillion..
Do you also invest?

Personally with our small income I'd rather secure our house but for people with more coming there are arguments agaisnt paying it off and investing it instead whilst mortgages are so low..

Poor people spend money and rich people invest money? Ah well, anyone with any real intelligence would see through that to the truth.

And in case any stupid rich people are reading this (and I expect there are a lot of you), then I shall explain in simple terms:

Poor people can't invest money because they don't earn enough.

'Why don't they earn enough?', I hear the stupid rich person ask. It's simple. Rich people are in control of what poor people get paid. The less they pay their employees, the more they can keep for themselves.

Rich people need poor people to stay poor, so they themselves can stay rich. Capitalism, innit?

I could pour scorn on each and every one of the other points in that list, but I'm not going to. It's not hard to work it out for yourself.

Nope. That’s the “just world” fallacy.
Sometimes you’re poor just because your circumstances are shitty, and sometimes you’re rich because you had advantages others didn’t, even if you’re blind to them.

I’m pretty broke myself, and it’s not because I’m lazy or irresponsible, and fuck anyone who thinks that.

Well richer people get told about investing an they have less pressure to spend everything because they have more.

And probably very comfortable from their parents and friends eg if someone's can't afford a meal there is usually someone to plug that gap somewhere

@blacksax

Poor people spend money and rich people invest money? Ah well, anyone with any real intelligence would see through that to the truth.

And in case any stupid rich people are reading this (and I expect there are a lot of you), then I shall explain in simple terms:

Poor people can't invest money because they don't earn enough.

'Why don't they earn enough?', I hear the stupid rich person ask. It's simple. Rich people are in control of what poor people get paid. The less they pay their employees, the more they can keep for themselves.

Rich people need poor people to stay poor, so they themselves can stay rich. Capitalism, innit?

I could pour scorn on each and every one of the other points in that list, but I'm not going to. It's not hard to work it out for yourself.

All Of This

I had that book years ago. I hated the notion that being savvy and having a high net worth somehow made you a better person.
That list above is a load of crap.

@CheeseyMcCheeseface

From my experience people who are bought up with a lot of money don’t really talk about it, especially people like farmers who are millionaires but you would never know, my friends who have come from privileged backgrounds are not showy at all.

Absolutely this. We though our neighbour was the gardener, for some time as well,as he came to do our lawns on his ride on lawn mower, we could not have been more wrong ! As with others he was not showy, never mentioned his assets, holiday and his mrs never talked about handbags

It is saying that the one with the poor mindset will become poor and the one with rich mindset will become rich. I have seen plenty of people from rich backgrounds become poor because they spend their money too fast, don't work hard and study, invest for the future etc. In reverse, plenty of people from poor backgrounds study hard, invest for the future and become doctors, accountants and lawyers, entreprenneurs, etc.

Plenty? that's statistically unlikely

I find that list an absolute disgrace.
It's amazing and saddening that even one person would accept it,

Yes. Dh came from a very poor family and many things he says, does and feels, I can't relate to.

I think people underestimate who badly it affects a child growing up.

Investing early is a good key to financial stability, unfortunately they don't teach it at school or college.

But realistically how can young people even if they understand the concept have spare funds to invest whilst paying high rent, saving for a house & a pension? Against the backdrop of wage stagnation.

That really takes away from people who spent years at university studying difficult degrees and amassing ridiculous debt. Or those that pulled themselves up by the boot straps and started their own businesses. I know lots of working class lads who set up their own electric, plumbing and building companies after 15/20 years of hard graft as employees.

How does it take it away from anyone. Do you really think family background makes no difference. Look at statistics on social mobility?

I went to uni & worked hard & work hard in all my jobs. But my background definitely helped.

@bananamushy

That really takes away from people who spent years at university studying difficult degrees and amassing ridiculous debt. Or those that pulled themselves up by the boot straps and started their own businesses. I know lots of working class lads who set up their own electric, plumbing and building companies after 15/20 years of hard graft as employees.

How does it take it away from anyone. Do you really think family background makes no difference. Look at statistics on social mobility?

I went to uni & worked hard & work hard in all my jobs. But my background definitely helped.

Because you've literally stated that "99%" of rich people became rich through family wealth or luck! That is just ridiculous and untrue.

The list is offensive, there is something to the basic idea. I have some friends who come from quite wealthy backgrounds, and as we've got older, its been really interesting watching the subtle changes in how they approach certain things. So: two couples we're friends with for years and years, both now in very high earning jobs, one where both are from I guess you'd say upper middle class/old money backgrounds, without much of the money left (so not given huge handouts, but raised with a certain attitude) other couple both parents did well but first in families to go to uni and raised kids with a 'study hard and you'll do well' attitude but no talking about money.

Couple A: bought crumbling but do-up-able house in very established 'fancy' neighbourhood, have slowly been doing it up, it has massively appreciated in value since they bought it. Couple B: bought new build that was well insulated in 'newish' suburban neighbourhood that would be convenient for their work at the time, were in negative equity for a bit, traded up to a similar house when they were out of negative equity, have quite a bit more housing debt than couple A now but similar value houses.

Couple A: drive an ageing 15-year-old car, very focused on spending disposable income on investments, building some kind of share portfolio (they're not awful people who talk about this all the time, but we're v close to both of them so this came up at some point). Couple B: had a car loan for a new 4x4 which they probably needed more than couple A because their new build wasn't as well connected, had a kitchen loan to do up their kitchen, have pretty decent pensions at a guess but nothing beyond that and do enjoy their money on holidays etc etc.

Now, neither of these is necessarily the 'right' way to approach anything, but I think its interesting that both couples have probably similar household income, both have specialist jobs and are very hard working, but I would be surprised if by retirement couple A don't have significantly greater net worth.

I have family members who didn't think it was worth doing courses or taking entry level positions that involved internships/putting off earning for a few years in their early twenties, when actually they would have then been earning much more. It wasn't that they couldn't afford it, it was that they didn't grow up with the 'knowledge' that sacrificing income at the start can help you get into professions that will earn more in the long run.

I think PPs are right: if you're dealing with actual poverty none of this advise works, and if you want to address societal inequality then structural changes are needed. But I definitely think its true that for the small number of people who do manage to earn a lot more than their parents, there's this additional cultural barrier they face of things people don't talk about but learnt from their parents that enables them to solidify their wealth and earnings.

Because you've literally stated that "99%" of rich people became rich through family wealth or luck! That is just ridiculous and untrue.

Where did I say that? I quoted another poster & said pretty much. Why don't you provide figures on how many poor people become rich?

The UK has one of the poorest rates of social mobility in the developed world. This means that people born into low-income families, regardless of their talent, or their hard work, do not have the same access to opportunities as those born into more privileged circumstances.

@opaleyes2 you need to educate yourself

From the social mobility report

Key Findings
• Occupational mobility: Those from better-off backgrounds are almost 80 per cent more likely to be in a professional job than their working class peers. This immobility has remained stagnant over the past four years, despite government interventions.
• The class pay gap: Due to this gap in access to professional jobs, people from working class backgrounds earn 24 per cent less a year than those from professional backgrounds. Even when those from working class backgrounds are successful in entering professional occupations, they earn on average 17 per cent less than their more privileged colleagues.
• Migration: Moving regions is often an enabler of social mobility, however those from working class backgrounds move regions less, and are less likely to move to London, where the most opportunities are.
• Double disadvantage – class, disability, ethnicity and gender: Just
21 per cent of people with disabilities from working class backgrounds enter the highest occupations versus 43 per cent of people with disabilities from professional backgrounds. Women and those from ethnic minority backgrounds are more likely to experience downward social mobility than their male or white counterparts.
• Unemployment and economic inactivity: People from working class backgrounds still face the highest levels of unemployment, despite overall increases in employment.
Living standards and wellbeing have important indirect impacts on social mobility – they enable people to take more risks and have more options. We have therefore looked at their interactions with social mobility:
• Living standards: There are now 500,000 more children in poverty than in 2012. Those from working class backgrounds are less likely to own a home than those from more privileged backgrounds. Young people are less likely to own a home, and typically earn less than those of previous generations. All of these indicate lower living standards which could jeopardise current and future social mobility.
• Wellbeing: Individuals from more disadvantaged areas are more likely to suffer from lower levels of wellbeing, showing this is an area that needs more research and attention.

Total nonsense. By virtue of marrying a man who went on to be very financially successful, I’ve been around a ton of wealthy people, and about 0.5 percent didn’t go to private school/have wealthy parents/no influential contacts. It’s still about who you know.

My parents come from very different backgrounds. One parent came from a family where money and ‘family silver’ was passed down from generation to generation (not landed gentry or anything, but enough to make each generation comfortable, always professional jobs - barristers, doctors, etc.). The other parent’s family were very low income, lived day-to-day, never ate in a restaurant in their lives, outdoor toilet and no heating well into the 1970s, etc. Both parents well-educated (grammar school and local polytechnic for the low income parent, private school and university for the other). Both ended up in managerial positions earning very good salaries. ‘Poor’ parent would typically buy the best they could afford when something was wanted, ‘rich’ parent would buy the best value/on offer item, if it was needed. I think this came from their families - there wasn’t ever any point in saving up if you only had a little left at the end of the week. You might as well just buy something to make you happy there and then, albeit something small. But for the family where there was always plenty but a sense of responsibility to future generations of passing wealth (opportunities) down, then investing and ‘making do’/not wasting money was seen as important. Of course, this could have nothing to do with anything and might just be chance. It does seem to fit with results of studies though.

I think that table in your picture is mostly bollocks though!

What do we consider rich here btw? Just so I know because I found out I may have different limkts to UK🙈