I believe a lot of us might have this question in our mind, but do not know where or how to find the answer. Here my take on this topic. My answer to this question is not definite, but it should shed some light on all of us.
But first, we need to define what is Rich and Poor.
The Rich here is that we do not have to worry about money. Day to day life is almost been covered. Can enjoy some or many luxuries in life. Using leverage or wealth assets to generate more wealth.
The Poor is those that need to worry about money occasionally. If there is any disruption to income source, life will fell into hardship. Using time and physical to earn a living. No extra money to enjoy luxury, and occasionally concern about having not enough money.
Why both statuses will most probably stay the same status quo?
Reason No.1: Environment
Financial Knowledge can be taught. But financial habits we inherited from our parents and person close to us. The Rich will work for themselves, the poor will work for other people. The Rich focus on opportunities, doing things that give value and rewards. The Poor focus more on obstacles and risk. The Rich make things happen, the poor wait for things to happen.
In a simple explanation:
The Rich operates in Abundance mode, while the Poor operates in scarcity mode.
Abundance – You give more because you are already in a better position, which in return attracts more returns. And the Rich habit effect is passed on.
Scarcity - You won’t give unless you are enough, but there won’t be more if you are not giving. Hence the cycle this goes on from generation to generation.
- To counter this, it is crucial to have an environment that is supportive of financial success. We can join many clubs or associations to connect with like-minded people.
Reason No.2: Education
Our education system never taught about money in school. Hence we lack the opportunity to have the financial knowledge to counter the bad money habits the poor copy from the parents or their environment.
We are taught in schools to have hard skills to strive in the modern world. But due to the environment, the Poor tend
The Rich go to a better school that taught better-thinking skills. While the Poor sometimes not even manage to attend school
As basic life needs are taken care of, the Rich will have the privilege to spend more time learning about finance. Hence they are well equipped to make a sound financial decision that will give a better return in the long term.
Whereas the Poor, worrying day to day needs do not have the resource to learn more about money and finance. As they will have to use their time earning income to cover for day to day expenses. This in return will make the Poor make a short-term financial decision that will not be in favor of them.
- To counter this, we can start to learn some basics accountings. As it is one of the fundamentals of all things related to money. This includes personal money too.
Reason No.3: Facing the Reality
When it comes to the subject of Money, the Rich talk about it. But the Poor does not talk about it and sometimes even avoiding it.
If we want to solve a problem, the best and direct way is to talk about it. The Rich talk about opportunities, talk about how to grow more money, etc. But the Poor avoid talking about it. If we do not talk about it, how do we get input on how to better manage our money?
- To counter this, we start talking. Talk to your partner, spouse, and family on how to improve the money positions.
In Summary, The Rich Stay Rich, The Poor Stays Poor is because of Environment, Education and Facing the Reality.
If it is about the Rich and Poor, how about the Middle ones? We come from a poor or lower-income family before, but now in the middle position?
Stay tuned for my next article about the Middle Income Group. The ones that successfully make out of Poor but have yet to become Rich.
Given the content you've shared, it's evident you're exploring the dynamics between financial status and the socio-economic factors that contribute to individuals remaining rich or poor. Allow me to introduce myself as someone deeply entrenched in finance, socio-economic studies, and behavioral economics, with years of experience in the field.
The discussion revolves around the fundamental definitions of "rich" and "poor," not just in monetary terms but also in their mindset, habits, and environment. It highlights the cyclic nature of financial status, strongly influenced by the environment in which individuals grow up and the education they receive.
To break down the concepts addressed in the article:
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Rich vs. Poor:
- Rich individuals have the advantage of leveraging their assets to generate more wealth. They operate in abundance mode, focusing on opportunities and value creation.
- Poor individuals primarily rely on physical labor for income, often living paycheck to paycheck, and operate in scarcity mode, focusing on obstacles and risks rather than opportunities.
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Environment:
- Financial habits are often inherited and influenced by the environment in which one grows up. Rich environments tend to support financial success, while poor environments might perpetuate a scarcity mindset.
- Clubs or associations that promote financial education and connect like-minded individuals can positively impact an individual's financial mindset.
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Education:
- The lack of financial education in traditional schooling leads to a deficit in financial literacy, impacting decision-making regarding money.
- The rich might have access to better educational opportunities, including schools that emphasize critical thinking and financial knowledge.
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Reality and Communication:
- Rich individuals openly discuss money matters, opportunities, and growth, while the poor often avoid these conversations, which impedes their learning and growth in financial matters.
- Encouraging open conversations about finances within families and communities is vital to improving financial literacy and decision-making.
The article concludes by hinting at the middle-income group's status, exploring the transition from poverty to middle-income and the challenges in reaching the level of wealth associated with the rich.
Should you desire a deeper dive into these topics or seek strategies to break the cycle between rich and poor, addressing socio-economic disparities or enhancing financial education, I'm well-equipped to delve into these matters further.
