Wealth vs. Poverty Part 3: Risk Assessment
Intelligent Risk Assessment is the path to growth.
Poverty Mindset: Life is short so why plan for tomorrow? You never know if you’ll live through today.
Wealth Mindset: Life is short so I need to take appropriate risks to maximize wealth potential.
Risk assessment is an important key to achieving wealth. The wealthy know they need to think outside of the box and take risks in order to have great things. By playing it safe and taking zero risks you end up just living a more mediocre life like everyone else. However risk assessment needs to be managed carefully or else you can destroy your life.
Different Approaches To Risk.
The difference is the type of risks the wealthy and poor take and how they assess it. The poverty mindset is “You only live once.” They believing on gambling it all on the big die and living paycheck to paycheck or relying on others to bail them out afterwards with no real thought behind their own method. This lifestyle ends up leading to ruins in the first incident or the first time life problems happen. The car needs to be fixed, they get injured and have to take time off work, they lose their job, etc. This mindset and lifestyle is extremely unstable and has no future behind it.
The wealthy mindset is,” Life is short and I want to make the most of it by doing things that give me the most freedom.” Note that both parties want the most out of life, but the wealthy assess risk in a way where t hey mitigate as much of it as possible first and take actions that lead to the highest probability of reward. This is important because they plan in case of emergency and unforeseen circumstances so they aren’t just “blindsided” by unexpected things. You must expect the unexpected.
Short Term vs Long Term Gratification
Those of the poverty mindset take extreme risks with the promise of immediate short term gain. Constant gambling, buying lottery tickets, indulging in things they can’t afford, racking up debt, eating poorly, and having unprotected sex are many of the ways they indulge in this. They “just do it” and think about the consequences later. This also plays into how they see success because they ultimately feel they have no control over their lives. They just do whatever feels good at the moment and hope for the best.
The wealth mindset is about taking intelligent risks and maximizing the chances of success by being “out there” and taking swings at the bat. They know that the more they expose themselves while creating an effective process, the chances of them succeeding grow exponentially. They mitigate the possibility of failure while maximizing and leveraging time and labor to suit their own ends.
Society Teaches Risk Avoidance.
Society teaches us to avoid taking risks and making mistakes because if you’re wrong then you get a bad grade and are seen as incompetent. The poverty mindset eventually just give up on hope and live for the moment while the wealth mindset learns to effectively manage risk. The Millionaire Fastlane is a great book that talks about this in detail. Rich Dad Poor Dad also talks about how society trains people to avoid making mistakes when growing up. This has a profound effect on their productivity when they get older.
Spend your time managing risk effectively vs avoiding it or engaging in it recklessly.
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