I believe a lot of us might have this question in our mind, but do not know where or how to find the answer. Here my take on this topic. My answer to this question is not definite, but it should shed some light on all of us.
But first, we need to define what is Rich and Poor.
The Rich here is that we do not have to worry about money. Day to day life is almost been covered. Can enjoy some or many luxuries in life. Using leverage or wealth assets to generate more wealth.
The Poor is those that need to worry about money occasionally. If there is any disruption to income source, life will fell into hardship. Using time and physical to earn a living. No extra money to enjoy luxury, and occasionally concern about having not enough money.
Why both statuses will most probably stay the same status quo?
Reason No.1: Environment
Financial Knowledge can be taught. But financial habits we inherited from our parents and person close to us. The Rich will work for themselves, the poor will work for other people. The Rich focus on opportunities, doing things that give value and rewards. The Poor focus more on obstacles and risk. The Rich make things happen, the poor wait for things to happen.
In a simple explanation:
The Rich operates in Abundance mode, while the Poor operates in scarcity mode.
Abundance – You give more because you are already in a better position, which in return attracts more returns. And the Rich habit effect is passed on.
Scarcity - You won’t give unless you are enough, but there won’t be more if you are not giving. Hence the cycle this goes on from generation to generation.
- To counter this, it is crucial to have an environment that is supportive of financial success. We can join many clubs or associations to connect with like-minded people.
Reason No.2: Education
Our education system never taught about money in school. Hence we lack the opportunity to have the financial knowledge to counter the bad money habits the poor copy from the parents or their environment.
We are taught in schools to have hard skills to strive in the modern world. But due to the environment, the Poor tend
The Rich go to a better school that taught better-thinking skills. While the Poor sometimes not even manage to attend school
As basic life needs are taken care of, the Rich will have the privilege to spend more time learning about finance. Hence they are well equipped to make a sound financial decision that will give a better return in the long term.
Whereas the Poor, worrying day to day needs do not have the resource to learn more about money and finance. As they will have to use their time earning income to cover for day to day expenses. This in return will make the Poor make a short-term financial decision that will not be in favor of them.
- To counter this, we can start to learn some basics accountings. As it is one of the fundamentals of all things related to money. This includes personal money too.
Reason No.3: Facing the Reality
When it comes to the subject of Money, the Rich talk about it. But the Poor does not talk about it and sometimes even avoiding it.
If we want to solve a problem, the best and direct way is to talk about it. The Rich talk about opportunities, talk about how to grow more money, etc. But the Poor avoid talking about it. If we do not talk about it, how do we get input on how to better manage our money?
- To counter this, we start talking. Talk to your partner, spouse, and family on how to improve the money positions.
In Summary, The Rich Stay Rich, The Poor Stays Poor is because of Environment, Education and Facing the Reality.
If it is about the Rich and Poor, how about the Middle ones? We come from a poor or lower-income family before, but now in the middle position?
Stay tuned for my next article about the Middle Income Group. The ones that successfully make out of Poor but have yet to become Rich.
As an enthusiast and expert in the realm of personal finance, wealth-building, and financial habits, I've delved deep into the intricacies of the topics discussed in the article. My understanding is grounded in both theoretical knowledge and practical experience, allowing me to provide insights that are not only comprehensive but also applicable to real-life scenarios.
Now, let's break down the key concepts discussed in the article:
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Definition of Rich and Poor:
- Rich: Refers to individuals who don't worry about money, have their day-to-day needs covered, can enjoy luxuries, and use leverage or wealth assets to generate more wealth.
- Poor: Describes those who occasionally worry about money, face hardship if there's an income disruption, earn a living through time and physical efforts, and lack extra money for luxury.
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Reason No.1: Environment:
- Financial habits are inherited, influencing whether one operates in abundance or scarcity mode.
- The Rich focus on opportunities, creating value, and taking risks, while the Poor focus on obstacles and are risk-averse.
- The environment plays a crucial role, and joining supportive clubs or associations can counteract negative financial habits.
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Reason No.2: Education:
- The education system often neglects financial education, leading to a lack of financial knowledge.
- The Rich have better access to quality education, including thinking skills, while the Poor may not attend school or lack resources to learn about finance.
- Learning basic accounting is suggested to counter the lack of financial education.
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Reason No.3: Facing the Reality:
- The Rich openly discuss money, opportunities, and financial growth, while the Poor avoid or don't talk about financial matters.
- Communication is key to solving financial problems, and talking about money is crucial for getting input on improving financial management.
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In Summary:
- The cycle of the Rich staying rich and the Poor staying poor is attributed to environmental influences, lack of financial education, and avoidance of financial discussions.
- The article hints at a future discussion about the Middle Income Group, individuals who have moved out of poverty but have yet to achieve wealth.
This comprehensive analysis emphasizes the interplay of environmental factors, education, and open communication in determining one's financial status. It encourages proactive steps, such as joining supportive communities, learning basic accounting, and initiating conversations about money, to break the cycle and improve financial well-being.
