7 psychological tricks that will make you rich.
What most people don’t realize is that becoming rich isn’t as straightforward as you would
imagine.
Sure, some people will inherit millions of dollars or will gain their wealth through
winning the lottery but a 2017 survey found that 88 percent of millionaires are self-made.
Only 12 percent inherited their wealth which means that the majority of people that become
rich are putting in the work to do so.
But it’s more than hard work that drives their success.
What most millionaires won’t tell you is that they employ secret psychological tricks
to both earn and save more money and in today’s video, I will share with you the 7 psychological
tricks that will make you rich!
Trick #1.
Making small choices The rich know that small choices, when compounded
over time, can result in a large financial impact.
The simple act of saving money, no matter the amount, can empower and motivate you in
ways you might not expect.
For example, saving just five dollars a day with 10 percent compound interest would allow
you to save $1,885 after just one year which doesn’t seem like that much.
But if you did this over 40 years, you would end up with $948,611 which is a significant
amount of cash to have on hand.
Besides being able to accrue a large financial nest egg by stringing together these small
but positive choices, this daily commitment to saving gives the rich a sense of control
which many people lack in their financial lives.
You see, there are many aspects of life that are out of your control.
For example, you don’t have much control over the economy or the job market and because
of this, it can be easy to get discouraged when things aren’t going your way.
To avoid feeling defeated, give yourself the opportunity to make a choice about something
you do have control over.
Choosing to save is one small way you can have some say in your financial life.
Just ask Charles Duhigg, author of The Power of Habit.
In his latest book, Smarter, Faster, Better, Duhigg writes, “Motivation is triggered
by making choices that demonstrate to ourselves that we are in control.
The specific choice we make matters less than the assertion of control.”
In other words, it’s not really about the five bucks you save or the extra $25 you decide
to throw at your debt.
It’s the fact that you’re making the decision in the first place that makes this psychological
trick incredibly powerful.
Trick #2: Don’t trust yourself What the rich know that the poor don’t is
that no one is perfect.
Put another way, the rich tend to be more self-aware than their not so well-off counterparts
which is why is they employ tactics that will reduce their tendency to self-sabotage.
One of the ways they do this is through the use of automatic deductions.
You see, for the rich, the generation of income is often not a problem but what holds people
back from turning this significant income into a significant net worth is their ability
to save.
When posed with the opportunity to spend, it can be hard for even the most responsible
of individuals to shy away from shelling out cash which is why they like to make this saving
process automatic.
If you are unfamiliar with automatic deductions, they work in the following way: whenever you
get paid, a portion of your pay is withheld from going into your main bank account.
Typically, people will set up a savings account that the money is routed into.
Many wealthy individuals take this practice a step further by restricting their access
to this savings account to ensure that the money that is allocated to this reserve can’t
be spent no matter what which ensures that their pool of savings increases over time.
Trick #3: Imagine Your Future Rich Self What do great athletes, famous actors and
successful entrepreneurs all have in common?
Other than being rich, the one thing that ties them together is their use of visualization.
Just about anyone who becomes successful will tell you that you need to envision yourself
achieving your goals before you can accomplish them in real life but unfortunately, some
people cannot see past their current day-to-day state.
For instance, spending $5 on a Starbucks coffee doesn’t seem like a big deal and every day,
millions of people give away their change to fuel their caffeine addiction.
However, for those who aim to become rich, that $5 can have a more significant meaning.
A rich individual faced with the decision to spend $5 on a premium coffee would probably
consider the future cost of making this purchase.
You see that $5 today will grow to $100 by the time you retire.
If you thought of that purchase in this way you might change your mind, right?
What the rich do that the poor don’t is continuously ask themselves what the future
cost of their spending decisions are and whether or not they align to the realization of their
future rich lifestyle.
And if you think this visualization technique is something new, think again!
Napoleon Hill's classic Think and Grow Rich, first published in 1937, lays out a step-by-step
approach to pairing visualization with action and millions of people have successfully employed
this technique.
Hill suggested in the book that the first step is to fix your mind on the exact amount
of money you desire and be clear about when you expect to receive this amount.
Jim Carrey famously tried this technique in 1990 when he wrote himself a mock cheque for
$10-million for "acting services rendered" and post-dated it for 1995.
He gave himself five years to become one of the most successful working actors in Hollywood
and was able to cash that check that he had written to himself a half-decade earlier.
Besides just visualizing the amount you want to make, Hill also advised that you determine
exactly what you intend to give in return for the money you desire.
After making these declarations, Hill suggested that you close your eyes and envision living
this rich lifestyle every single day until it comes to fruition.
This technique is said to program our unconscious mind to find solutions to our financial problems
and allow us to better see resources, people, and events that will help us reach our goal.
Trick #4: Sleep on big purchases While sleep can reduce stress, improve your
memory and elevate your mood, what most people don’t realize is that it can also help you
make wise financial decisions.
In fact, sleep can be an important tool in your toolkit when it comes to saving money.
First, without proper sleep, your decision-making capabilities diminish, and the chance of riskier
monetary behavior rises.
So that car you would not normally consider buying may end up in your driveway.
Secondly, sleep allows you the time to contemplate big purchases.
Taking the evening to sleep on large expenditures allows your unconscious mind to process the
information related to the purchase and analyze it while you’re dreaming.
Trick #5: Only spend cash The next psychological trick that wealthy
individuals use to become rich is to only spend cash.
I’m sure you’ve been out before and have seen someone pay for an expensive item or
a fancy dinner with a wad of cash and while your first impression may have been that this
individual was just trying to show off, there may actually have been a calculated reason
for this behaviour.
You see, whether you are buying groceries or a new phone, spending cash makes us notice
the monetary effect of our actions.
This is because as we are paying, we are physically handing over money and we see the depletion
in our wallet whereas when you use a credit or debit card, the potential to spend sees
almost endless.
Part of this pain we feel when we spend cash is due to what researchers call coupling.
When someone buys an item with cash, they immediately know how much that item cost,
which can be painful.
However, when someone pays with a credit card, there is a time period between when they purchase
the item and when they have to pay for it, which makes the cost seem less important.
So just how much more will it cost you to pay on credit versus cash?
In 2001, MIT published the results of a study analyzing spending behaviour when spending
cash versus credit.
The results highlighted that shoppers spend up to 100% more when using their credit card
to pay instead of cash.
Therefore, if you want to curb your spending and employ this psychological trick then cut
up your credit cards and start carrying around more cash!
Trick #6 Calculate the cost in hours The second last psychological trick that the
rich use to grow their wealth is to convert the cost of their purchases into work hours.
For example, if you make $20 an hour at your job then buying that new $100 t-shirt is really
5 hours of your time.
Unlike the poor, the rich habitually ask themselves if the item they are obtaining is worth the
time it took to earn the money to pay for it, or in this example, is that shirt really
worth 5 hours of work time?
When you begin to see your purchases in this light, it will dramatically change how you
perceive the value of not only your money but your time as well.
The interesting part is that this way of thinking not only benefits you when considering a purchase
but it also can be used to assess how you spend your free time.
In general, time you are working at your job or on your business are productive hours but
what about free time?
Have you ever evaluated how much money you are forgoing by mindlessly scrolling through
Instagram or Facebook news feeds?
As of 2018, the average social media user spent 136 minutes or over two hours a day
on social network sites.
Let’s say you make $80,000 a year at your job or roughly $40 an hour.
Is scrolling through Facebook for two hours a night really worth $80 to you?
In short, whether you are buying an item or determining how to spend your time, keep in
mind that there is a cost to everything and that one thing that separates the rich from
the poor is how they value these precious resources.
Trick #7: Use the Stranger Test You walk into a store and see a shirt that
you think would look great on you.
While you now know that you should assess how much time you are exchanging for that
$50 t-shirt, you still feel inclined to buy it.
Well, before pulling out your wallet and completing the transaction you should be running yourself
through the Stranger test.
If you’ve never heard of the Stranger test before, let me explain.
Imagine a stranger standing in front of you; in one hand, they have the t-shirt, and in
the other hand, they have $50.
Which would you rather have?
In most cases, the cash is probably more appealing.
When taking this approach on a regular basis, you will start to see yourself continuously
picking the money over the item which solidifies your position in not splurging and instead
keeping that money in hand.
Now, here on the Practical Wisdom channel, we are about providing value so before we
wrap up this video I want to share with you a bonus trick that is critical to your financial
success.
Bonus Trick: Believe in Yourself While all the previous tricks will either
help you earn or save money from a practical sense, the wealthy not only believe getting
rich is natural, but they believe it’s a right and this self-belief is the backbone
of becoming rich.
Steven Siebold, author of the book “How Rich People Think” studied hundreds of self-made
millionaires and notes that “World-class thinkers know in a capitalist country they
have the right to be rich if they’re willing to create massive value for others,”.
After conducting hundreds of interviews, Siebold concluded that “it wasn’t the lack of
desire that held the masses back from getting wealthy, but the lack of belief in their own
ability to make it happen.”
In short, none of these psychological tricks will help you become rich if you don’t believe
you deserve to be living your dream rich lifestyle.
So before implementing these 7 psychological tricks into your day to day life, first make
sure that your self-belief is aligned to the lofty financial goals you have set out for
yourself!
Thanks for watching!