Hey Friends,
The blog today, I borrowed off of Robert Kioyasaki from the great series of Rich Dad Poor Dad book! It puts a lot into perspective on Why some folks make more money than others.
Enjoy your read!
Why Some People Are Richer Than Others
by Robert Kiyosaki
I was speaking on financial intelligence a while back to a group of university professors in Singapore. At the end of the talk, one of the professors asked me:
"Where did you learn about business and why do some people make more money than others?"
Responding to the first half of his question, I referred to my book Rich Dad Poor Dad and explained to him that I had a father who was just like him, a respected and highly intelligent career educator. My other dad, my best friend's father, who also spent many years raising me, was a school dropout, but was a natural financial genius. My business education came from him.
Thinking rationally vs. thinking emotionally
To the second half of this question I replied: "The best business school I attended was Vietnam. In Vietnam I learned what I believe to be my most important life skill."
"And what is that?" the professor asked.
"To know if I am thinking rationally or emotionally," I replied. "While in combat, l learned to be a master of my emotions and to think clearly, even under extreme pressure."
I went on to tell him of a day in 1972 when the engine of my helicopter gun ship suddenly quit. There was a loud bang and then deathly silence followed by the most horrible of sinking feelings. We were falling out of the sky like a huge rock. Every part of me was screaming, "Pull back on the stick and add power." But my three years of pilot training had taught me to think rationally and override my emotions. Instead of pulling the nose of the aircraft up, I pushed the nose of the aircraft down and dove the aircraft straight for the ocean below me.
To this day, my mind is burned with the vision of the deep green ocean coming up at me at blinding speed. As we faced what appeared to be our certain death. If I had done what I felt like doing, which was pull the nose up, I would have died that day, taking four other people with me.
Most people live in fear of losing money "And how has being the master of your emotions been important to your success?" the professor inquired with even greater curiosity.
Wanting to stay in his world, I replied using his frame of reality, "Have you ever had very smart students with great grades go out into the world and not do well financially or professionally?"
The professor nodded.
"When it comes to money," I replied, "it is the emotion of fear that keeps most people poor. Most people live in fear of losing money or risking money so they say things like 'play it safe' or 'don't take risks.'"
The professor immediately interjected, "Are you saying be careless? Live dangerously?"
"No," I replied. "all I am saying is that you need to know when you are thinking emotionally and when you are thinking rationally. When you are emotional, thinking rationally is often the hardest thing to do.
"Money, sex, religion, and politics are emotional subjects. So when it comes to those subjects, most people are not thinking rationally. When it comes to money most people are so afraid of losing that they wind up losing. That is not too intelligent."
The professor was beginning to nod his head.
I continued on, "Another example of emotional thinking versus rational thinking is when someone says, 'I don't feel like doing it.' Many people are not successful because they let their feelings do the thinking for them. "
For example, every morning I get up and say, 'I feel like going to the gym,' but hopefully my rational mind overrides my emotional mind and sags. 'Come on, one hour, and it's over.' If my rational mind wins I ride my bicycle to the gym, and if my emotional mind wins, I snuggle up in bed for another hour."
How you respond to fear makes the difference "And to you, that is the primary difference between successful people and unsuccessful people?" asked the professor.
I nodded my head.
"When it comes to money, I am often going in when most people are getting out. Or I take risks, while the masses are playing it safe.
"I feel the same fears they do, I just use my mind differently. That ability to do what is necessary, in spite of my feelings screaming at me to do otherwise, is the single most important life skill I have learned."
"But aren't you afraid?" asked the professor.
"Yes." I replied strongly. "I have the same fear as everyone else. It's how we respond to that fear that makes the difference. As I said, most people would have pulled back on the stick when the engine died, and l was trained to push the nose forward.
"The same thing happens financially. People pull back, play it safe, terrified of making a mistake, while life's opportunities pass them by."
The professor seemed to be understanding so I kept going.
"There is another aspect of fear that also causes people to lose money, and that is the fear of ostracism, reportedly the number one fear of most humans."
"Why the fear of ostracism?" asked the professor.
"Ostracism is the fear of being different, or standing alone, or being ridiculed by peers. That fear causes people to conform rather than risk being different. In Australia it's called the 'Tall Poppy Syndrome.' In investor language, the fear of ostracism leads to the 'thundering herd' mentality.
"The fear of being different causes people to band together, so they wait for social proof that what they are doing is right. It is also called the 'madness of the crowd.'
"So they enter markets late, buy what their friends are buying, and get slaughtered. After an experience like that, they spend the rest of their lives living in perpetual fear, continuing to go along with the rest of the crowd that is not going anywhere financially."
"So how does that affect financial intelligence?" asked the professor.
"Financial intelligence is a 50/50 proposition." I began to summarize slowly. "50% of financial intelligence is what you learn in business school, or in my case what I learned from my rich dad. It is the so-called technical knowledge about money, accounting, finance, investing, and business.
"The other 50% of financial intelligence is knowing when you are thinking rationally and when you are thinking emotionally. To simply say, 'play it safe' is not a rational thought because it is a thought that is generated out of emotion. To say, 'play it smart' is a thought coming from the rational brain. It is that 50/50 relationship that is the basis of financial intelligence, and to answer your original question, why some people make more money than others."
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