WEALTH MINDSET: ARE YOU ASKING THE RIGHT QUESTIONS?
This month we are focusing on Wealth Mindset. So before I jump in, I have some questions for you. After all this topic is about you, so knowing where you stand now on the topic of wealth is important.
- What do you believe about wealth?
- Do you think there is a difference between being wealthy and being rich?
- What does it mean “You know your level of wealth when all the money is gone”?
- Do you believe that wealthy people are selfish?
- Do you believe that it is the job of the government to take money from the rich and distribute it to the poor? What does that mean for those in the middle? In fact – what is the middle?
The wealth gap today is creating an angry and volatile dialogue that is being enflamed in the media. As I watch the conversation I realize that the reason the gap is growing is not because the rich are selfish and evil, but rather, it is because the majority of the population has very little understanding of money and how it works.
Rather than become educated about the economic systems at play, it is easier to fall into the trap of envy, jealousy and fear. These emotional base instincts allow a person to be manipulated easily and directed toward a scapegoat. They encouraging people to accept a simple excuse and not look deeper into the situation, to understand the actual mechanics that have created the wealth gap. Headlines intended to shock, draw emotional reactions. Then repeated over and over in different ways create the belief that they are somehow true – whether they are or not.
I’m not choosing a side or trying to convince you one way or the other. All I want to encourage you to do is ask the question.
“Who benefits from this story?”
“What do I believe and why?”
Our belief systems are not genetic. They are a reflection of the circumstances we were born into. We pick up our beliefs from our parents, then our community, the accidental experiences that we endure, and how we learn and respond to both the positive and negative aspects of those experiences.
Nothing is written in stone. A child in the foster care system is just as likely to become a millionaire as to become a criminal or anywhere in between. A family with wealth is just as likely to believe they are poor as a family with minimal means believes they are rich.
Our nature does come into play by helping us establish the priorities we put on things.
For example, individuals who are very people-focused may see wealth as it applies to the communities they are part of or they take care of and the money is irrelevant because their relationships, time and effort are all the wealth they need or they feel forever frustrated because they don’t have the resources they need to make the impact they want.
Individuals who feel the most important thing is justice may have very little interest in money and resources as long as everyone has an equal opportunity, or alternatively they may feel that resources and money should be distributed equally among everyone and if they don’t have their equal share then they feel they have been abused.
Creative individuals can also run the gamut, from artists in the hippy generation loving their bohemian lifestyle and independence, even in poverty; to the young people today who are utilizing technology and their creativity to generate massive sums of income.
The generation, the economy of our times, the stories that become the conversation of our formative years - these are what creates the collective beliefs that we acquire over our life and creates our wealth mindset.
But is our mindset correct? Have we assessed what we believe to be true and why we believe it?
Psychological studies have shown that our brain creates shortcuts to reduce the amount of work it needs to do with the onslaught of inputs it receives constantly. These shortcuts are primacy and recency biases.
Primacy bias is the tendency to believe what you heard first about a topic or situation. It establishes the initial belief and then looks for proof to support that belief.
Recency bias is the tendency to remember those things that you heard most recently. Applying the most current information that proved the primacy bias, builds a complex narrative around a belief that makes it hard to change their mind and accept a different belief.
Today, social media and artificial intelligence technology have been combined to enforce this natural tendency of the brain, by curating content that further supports your own primacy bias. This creates a social dialogue of conflict as each person gets only the proof that supports their belief, and they don’t understand how others can’t see it.
Conflict, like envy, jealousy and fear are emotional aspects of the human condition. So, before you become frustrated and angry with someone who doesn’t agree with your position. Ask yourself, why do you feel it is so important that they agree with you, and why do you think they feel it is so important that you believe them? I think it is because we all come from a place of caring. We want to help others to see the truth so that they can avoid potential pitfalls. When we are blinded to the other side of an argument and are not willing to open our mind to what the other has to say, conflict increases, we move further away from understanding even why we are being insistent, and we give our power away to those who would use that emotion against us.
Throughout this month as we discuss wealth mindset, it is important to challenge your beliefs, assess why you believe what you believe, then assess whether those reasons are a result of primacy bias and recency bias.
Why is this so important? Well, as an investor, there are at least two critical pitfalls when you cannot face and assess your own beliefs and the full breadth of information that’s provided.
- You will only see the potential upside in an opportunity, and not the downside, resulting in some unhappy surprises.
- You will sabotage your success if you don’t believe that financial wealth is something that you deserve.
Now it’s time to do the work. Take some time to think about what you believe about wealth and why you believe it?
Next week we’ll dig deeper into some of the questions posed at the beginning. Take some time to think through them and see if what I have to share resonates with your thoughts on these questions.
Until then, remember your future is what you create.