How The Wealthy Think

Linda is a marketing manager at a multinational manufacturing company. She takes home Shs 100, 000 per month.  She is married with a child in school. She manages to save Shs 25, 000 per month. She has some shares on the stock market but feels she needs to invest more.

Kerubo runs a kindergarten. She left employment as an accountant to start this business four years ago. It is only this year that she has managed to take home a net of Shs 100,000 per month.She is also married with two children and most of this money goes to meeting her living expenses. Her major investment is the school. She however now wants to build up on her personal investments that are separate from the school.

Linda and Kerubo attend an investment briefing on a very lucrative real estate project.  The developers are looking for funding to put up a commercial building in a very lucrative area. The returns in the next three years when the project is complete are expected to be every attractive.

Each investor is required to come up with a minimum of 500, 000 shillings in the next 6 months.  Both Linda and Kerubo are very interested in the project and are convinced that the financial rationale works. For Linda this is definitely an investment that enables her to scale up her portfolio, as she wanted to.  For Kerubo it is great way to jumpstart building up of her personal investments.

Neither of them have the 500, 000 shillings lying around. Linda concludes that there is no way her monthly saving will be adequate by that time. Linda does what many people do when confronted with this situation.  She gives up.  She decides to look for smaller investments.  “If they could only have reduced the minimum investment to Shs 100, 000”, she mumbles silently to herself.  She leaves the briefing.  Kerubo on the other hand indicates her interest in the project and leaves her contact details.

But Kerubo also doesn’t have the money. Why would she be signing up?  This is what starts to differentiate those who create wealth from those who simply earn an income.  Kerubo first figures she has a 6-month lead time to come up with Shs 500, 000.  There is no harm in indicating her interest and committing to figuring out how to come up with the money in 6 months.  Her first point of action is to speak to her husband about it. His funds are held up but he says he can contribute Shs 100, 000 within those 6 months. She knows it may not be wise to directly remove money from the school but this experience has taught her that her personal income needs to grow. For the school to pay her more she needs to increase the intake at the school.

She therefore starts to pursue some advertising initiatives in the school to attract new students. She expects in the next three months she will be able to pay herself an extra Shs 50, 000 from this.  Together with what her husband will give her she is already at half way there with Shs 250, 000. Next Kerubo decides to put her accounting to good use and do some work for small businesses over the weekend, which in the six months can earn her some income. She doesn’t know if all this will work but she will try.  She may earn more than anticipated.  She may earn less. She will go to the developers with what she has in six months. If she has less than needed she will try to convince them to give her an extension to raise funds.

I have used an employment versus business scenario for the simple reason that people who are in business get pushed out of a comfort zone in a way that people who are employed in many cases find it hard to do.  They have no choice but to adopt the mentality that asks “how to make it happen” rather than looking at why it cannot happen. It does not mean that if you are in employment you can’t adopt it. You should. The comfort of a regular income unfortunately at times stops people from thinking outside the box of that salary. So what did Kerubo do different from Linda?  In other words what do wealthy people do different?

Firstly Kerubo signed up. She understands that the time she has been given is her biggest resource, not the money.  Linda doesn’t see that.  You do not have to know exactly how it is going to work out to commit to it. Once you commit you have no choice but to think of ways to make it happen. You don’t have a way out.  By not signing up, Linda gave herself a way out.  You learn how to play the game as you are playing, not when you are observing or have walked away. Even if it doesn’t work out as planned, have faith that it is in playing the game, you will be able to deal with that eventuality at the time.

Kerubo is aware she may have to negotiate if she doesn’t have all the money.  But they are more likely to trust her to raise the funds once they see her commitment with what she does have.  Very importantly, Kerubo did not limit herself to her regular income. Linda did. Do not let your salary to dictate what you can do.  It usually represents the minimum you can do comfortably.  With the least effort Linda could save Shs 25, 000 but she mistook it for the maximum she could do. She did not question or analyze how a different action could change that income. Kerubo worked backwards to understand what her business should do to be able to pay her an increased income.

Linda could also have analyzed what performance levels she needed to achieve to justify a bonus or income increase. She could also have done other things outside her regular job to create income i.e. used a skill or hobby she may have. Lastly Kerubo immediately went to seek partnerships.  She asked her husband. People who create wealth never try to do it alone. Who can you partner with to make your goals a reality?  Solitude is not a wealth creation principle. Linda could have decided to look for 5 people with the same amount of money as her. The main difference between you and the person you know who is wealthy is simply the way you think!