You can’t control (or predict) how the stock market will move, how inflation may change from year to year or what future tax brackets will look like. But there are plenty of factors within your control that can help you build wealth.
Those factors are the premise of financial psychologist Brad Klontz’s recent book “Start Thinking Rich,” co-authored with entrepreneur Adrian Brambila. The book outlines 21 “harsh truths” that Klontz and Brambila say can help you achieve financial freedom.
Each chapter discusses how to unlearn common money beliefs to put yourself in a better financial situation and feel more confident around money. Here are three of the harsh truths Klontz and Brambila say to accept if you want to be wealthier.
1. A ‘poor mindset’ could be holding you back
How you think about money is as important, if not more important, than the amount of money in your accounts, Klontz says. “You don’t want to become a millionaire, you want to spend a million dollars,” he writes.
If someone asked what you would do with $1 million today and you start making a shopping list with items like a bigger house, a nicer car, luxury clothes or expensive flights, you probably have a “poor mindset,” Klontz writes.
“Without the right mindset, even if you suddenly became rich, you would just blow through your money and find yourself right back where you started,” he continues.
Someone with a “rich mindset,” on the other hand, would keep working, consult professional help from a financial advisor or accountant, then invest virtually all of it, Klontz says in the book. “Those with a poor mindset work for money, while those with a rich mindset know how to make their money work for them.”
2. You can’t control your past, but you can control your future
You don’t get a say in whether you’re born into a wealthy or poor family. But you can climb the economic ladder within your lifetime if you have the right mindset and are willing to do what it takes to increase your income and your net worth, Klontz says.
Brambila’s father came to the U.S. from Mexico as a teenager and worked his way up from washing cars at a Toyota dealership to being able to retire at 56, he writes. Living below their means by living in a cheaper area, not going out to eat and skipping upgrades to things like clothes and cars helped Brambila’s parents live well and eventually become millionaires, he says.
“My parents didn’t start out with any money, but they had something even more important than money,” Brambila writes. “They had a rich mindset, the mindset we are teaching you.”
The “formula” Klontz outlines for going from poor to rich is straightforward — spend below your means, invest the rest — but often much easier said than done.
3. You have to make sacrifices to build wealth
There are an endless number of pathways to wealth, from winning the lottery to working 40 hours a week for decades. But for the average person, getting rich will likely require you to make some sacrifices, Klontz says.
Here are four straightforward moves nearly anyone can take to increase their savings in a year, according to Klontz:
- Get a roommate: A roommate can help lower your living costs, freeing up more money to save and invest.
- Get on the bus: Ditching your car and relying on public transportation can save you thousands of dollars in car payments, insurance and maintenance costs.
- Get sober: Depending on your current consumption, quitting alcohol could help you save bundles of cash.
- Get a side hustle: Adding an income stream can be an excellent way to boost your net worth.
Of course, any of these items may be non-negotiables for you. But “if you want to go from poor to rich, you have to be willing to live a minimum-wage lifestyle, at least for a while,” Klontz writes.
He’s not talking about people who are struggling just to make ends meet, but rather readers who may say things like “I can’t afford to invest” while spending $100 to $500 a month on their hair or car maintenance.
“If you want an extraordinary life, you need to go to extraordinary measures to make it happen,” Klontz writes.
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