Episode Details

We've been hit by a health crisis that has led us into the most serious global recession in almost a century.

Despite living in one of the richest countries in the world, many Australians are currently struggling financially, and if history repeats itself, the gap between the wealthy and the average Australian will only get wider.

But there's still good news. Though recent events have left many feeling uncertain, the same events will also be responsible for some of the best opportunities of our lifetimes. It may give you the opportunity to realize your own financial independence.

We're moving into a time of change.

Most people don't like change; we'd prefer a more predictable environment. But if you can get past that, you'll be able to take advantage of the opportunities that are going to arise, and that's what I'm going to talk about today.

How the Rich think differently

There is a classic book by Napoleon Hill that I recommend you read called Think and Grow Rich.

While it was written almost 100 years ago, you will find it on the bookshelf of almost every successful investor.

Now there is a good reason why the book is called Think and Grow Rich and not Get a Job and Work Hard and Grow Rich. It's because the rich think differently to most people and those who work hard at a job don't end up rich.

So let's look at the difference between wealth-generating thoughts and impoverished ones.

The Rich think Big Picture, while the Poor get lost in Detail.

I frequently see the rich do well by recognizing opportunities, while the poor get bogged down and distracted by all of the finer points. This often means that all they end up seeing in a given situation are obstacles or problems.

The Poor trade their time for money, while the Rich work their money.

The only way the average Australian knows how to get more money is by working harder; by trading hours for dollars - they either work more hours or get a second job.

The rich invest in assets like property that increases in value and brings in money whether the owner works or not.

The Poor think Cash Flow, the Rich think Assets.

The poor build their cash flow while the rich build their asset base (like their investment property portfolio).

The poor spend their cash flow (the money they earn after paying tax), while the rich spend their capital or money generated by their assets.

The Poor save their Money.

The poor save their money thinking it is a way to become wealthy.

On the other hand, the rich are comfortable borrowing and using leverage to buy appreciating assets.

The Poor decrease their Debt while the Rich increase their Debt.

The average Australian is scared of debt.

The rich realize that they become even more wealthy by owning assets that increase in value, such as well-located investment properties.

The Poor try to pay off their Home.

Your home is an appreciating asset and the only way most of us can ever buy a home is by taking out a mortgage, so even though your home loan is not tax-deductible, it is not bad debt - it is "necessary debt."

The rich recognize this and don't strive to pay off their home loans.

The Poor like to Trade.

The poor try to make money through trading - through buying and selling.

Whereas the rich understand that they make more money by holding onto their assets and never (or rarely) selling. They realize that they can refinance against the appreciating value of their properties.

The Poor think Scarcity while the Rich think Abundance.

The truth is that money is just energy, an exchange for value.

If you make the mental shift that money is limitless, that it can be invented and generated on demand, in line with the value you provide, it will open up all sorts of possibilities.