Blog | Personal Finance

How Your View of Money Impacts Your Financial Future

There are two views of money, which one do you have?

What kind of world do you see? One of abundance or one of scarcity? My rich dad and my poor dad saw the world in entirely different ways.

My poor dad saw a world of financial scarcity. Because of this, he would say things like, “Do you think money grows on trees?” or “Do you think I’m made of money?” or “I can’t afford it.”

My rich dad saw a world of abundance. He would say things like, “Don’t let money be an excuse” and “How can we afford it?”

Your view of money and two kinds of money problems

My rich dad would say, “There are two kinds of money problems. Not enough money, and too much money. Which type of money problem do you want?”

Most people come from families where the problem is not enough money. One of the advantages I had growing up with the influence of two families was that I could see both types of problems. My poor dad never seemed to be able to have enough money, even though he had a good salary. My rich dad didn’t have much to begin with but grew his fortune to the point where he faced very real problems of having too much money.

I always wondered, what was the difference?

Not enough money problems

These are the kind of money problems that most people in the world are familiar with. Living paycheck to paycheck, having constant worry and anxiety, not being able to enjoy the fine things in life, or simply having to work so much just to make ends meet that you don’t have time for your family and friends.

The problem is not enough money problems is the worry and anxiety of not having enough money compounds and creates even more money problems. In order to break out of your not enough money problems, you need to break the cycle of negativity that not having enough money in your life creates. More on that later.

Too much money problems

When it comes to money, the rich have very different problems...so good and some bad.

The more money you have, the more complex it becomes to manage it. Poor people and the middle class take a simple approach to money. They have one checking account, one savings account (maybe), and possibly a 401(k).

The rich need to find many places to put their money because it is often too much for just one place. This requires sophisticated knowledge about how money works and how to make it work for you. And it also requires having the help of advisors like a good wealth planner, lawyer, accountant, etc.

This is what we call a good problem. But interestingly, people with a poor mindset often bristle at hiring help.

Other too much money problems are not so good. You find out who your real friends are, people expect handouts from you, and if you don’t have the right mindset, you can live in anxiety of losing everything you have...as if your money is what makes you rich (hint, it doesn’t).

Scarcity attitude and the poor view of money

Rich dad pointed out that those with too much money problems see the world in a fundamentally different way. They see a world of abundance.

This is why I was able as a kid to turn comic books that were going to be thrown out into a reliable source of cash flow. This is also why my rich dad was able to turn smaller real estate investments into a hotel on the beach in Hawaii...just like Monopoly (green houses into red hotels). And why I was able to turn my financial knowledge into a business that has made me financially free.

For the rich, the world is not a place of cut-throat competition where you fight over finite wealth. It is a place of unlimited opportunity where you can literally make money out of thin air.

Abundance attitude and the rich view of money

Rich dad also pointed out to me that people with not enough money problems often have those problems because they view the world as one of scarcity.

All they know is a world where there is never enough. That is why even when they become suddenly rich, such as through the lottery or inheritance, they often squander that money and become poor again.

Rich dad truly believed that the poor remained poor because that was the only world they knew. “Whatever your reality is about money inside of you will be the reality of money outside of you,” he said. “You cannot change your outside reality until you first change the way you view the world inside you.”

Rich dad would drive this lesson home by taking a coin out of his pocket and saying, “When a person says, ‘I can’t afford it,’ that person sees only one side of the coin. The moment you say, ‘How can I afford it?’ you begin to see the other side.”

The paradox of scarcity

Rich dad connected what he saw as some of the causes of scarcity to the effect it has on people’s attitudes. The interesting thing was the very values that people thought would help them actually, and paradoxically, created scarcity in their life. Until they can shift from a scarcity to an abundance mindset, they will not be able to be rich.

Rich dad would say:

• The more security you need in your life the more scarcity there is in your life. That is why people pass up on opportunities to make their money work for them through investments and business. They are too afraid to take a risk.

• The more competitive you are the more scarcity there is in your life. That is why people compete for jobs and promotions at work and compete for grades in school.

• People who are creative, cooperative, and have good financial and business skills, on the other hand, often have lives of increasing financial abundance.

I could see this at play in my two dads. My poor dad always encouraged me to play it safe and seek security. My rich dad encouraged me to develop my skills and be creative.

Change your view of money to change your life

A big part of my success in life today was taking control of my internal reality about money. I had to constantly remind myself that there is a world of too much money, because deep down inside I often felt like a poor person.

Does that sound like a familiar sentiment to you? Do you often struggle with the feeling that the world is one of scarcity? We all do at some time.

My rich dad, when I felt this way, taught me to always remind myself that there are two kinds of money problems and to ask myself which one I wanted.

I’m not a wishful thinker and I don’t believe solely in the power of affirmation, but asking myself that question allowed me to calm down and think clearly about the problems I was facing—and the potential solutions.

As the great baseball player Yogi Berra said, “Strike out just 7 out of 10 times and you’re in the Hall of Fame.” Today, begin changing the way you view money, and you’ll be on the first step to changing your reality of money.