A 63 year old man knocked on my garage door at 9:30am. I let him in because he was one of my contractor’s helpers. His task for the day was to install baseboards in my downstairs hallway and put up crown moldings in my master bedroom and master closet.
For a couple months I deliberated whether to put crown moldings in my downstairs rooms to match the upstairs rooms. I was so tired from sanding and painting all the walls that I thought “good enough is good enough.” But as I went to view several nice open houses for design inspiration, I realized that what differentiated the truly nice houses from the average houses were the detail, i.e. crown moldings, wainscoting, draperies, wood panels, furniture, and electrical covers.
The total cost for the baseboards and crown moldings, including materials was $780. If Bed, Bath & Beyond can force me to buy $1,300 worth of curtains (ridiculous!), I figured I could spend $780 on some woodwork.
The older gentleman greeted me with a smile and told me in Mandarin, “Son, great job on choosing crown moldings. You will be elevating the feel and stature of your home! And when you turn around and sell it, you will be able to sell the house for much more.”
I thanked him and wished him good luck in the walk-in closet where the space was extra tight because I had built in some shelves the day before. The man and his helper were supposed to come a week before to install the baseboards and crown moldings, but their boss changed the schedule last minute as is commonly the case when dealing with contractors.
He proceeded to ask, “What about the lower level part of the house? Do you plan to develop it so you can rent it out in order to pay off your mortgage sooner? I’d definitely do that!”
I wasn’t evening thinking about developing the storage area downstairs. All I wanted to do was get the existing footprint squared away. “No plans, sir. I’ve had enough of remodeling and I just want to keep things simple,” I responded.
When I came back home from work at 6pm he was filling in the staple holes with silicon. He was proud of his work, and I was impressed with his work ethic. The crown moldings definitely made both rooms look much more luxurious.
Now all I have left to do with my remodel is blow a hole in the closet wall to install a window, install sliding glass doors in the bedroom, build a 250 square foot deck, create a new bathroom and I’ll be done!
THE MONEY MINDSET
All the work I’ve done to my house got me thinking. The older man has the money mindset. He approached installing the crown moldings as an investment, not as a feel-good aesthetic like I was originally thinking. He also immediately recognized developable space downstairs in order for me to bring in rental income.
His boss also has the money mindset. His boss never even bothered to show up for the day. All he did was call in, tell his guys over the phone what to do and had them take pictures of their work once they were done. He probably paid out $50 an hour for two people ($400), spent $150 on materials, and collected $220 while he worked elsewhere on one of his many other jobs.
But the person who is really raking it in is my neighbor’s father. It turns out that my neighbor’s father owns over 30 homes and apartments in San Francisco. No wonder he can afford to buy his son and daughter a million dollar plus home with cash, each. The remarkable thing about the father is that he immigrated to San Francisco from Hong Kong as a 20-something year old and began working at a restaurant. He then bought a gas station and parlayed his proceeds into real assets with a property purchase almost every single year.
WHAT IS THE MONEY MINDSET?
I’ve noticed over the past 30 years that some people just seem to have a knack for making more money than others. Does anybody remember Alex Keaton from Family Ties (1982-1989)? He was an affable kid, played by Michael J. Fox, who just loved money, money, money. I also loved money as a kid because I witnessed how wealthy local businessmen and their families lived.
Several of my friends had chauffeurs to take them to school. They belonged to the Royal Selangor Golf Club in Kuala Lumpur where they’d roll up in their Mercedes, get a table for lunch, and order whatever their hearts desired without ever having to pull out any cash! “Put it on the account 8832, thank you.” It was always a treat when they invited me to go eat with them.
Clearly the kids were born rich, which is not an impressive feat itself. But what I was impressed with were their parents. They were always looking to build relationships with everyone they encountered. They were master negotiators who had a way with words.
My money mindset has somewhat faded over the past five years partly because I reached my financial goals I set out in college and partly because I recognize there’s an endless amount of money to be made. At some point, you’ve got to figure out how much is enough for you, otherwise you’ll be miserable and likely burn out. But let me share with you the points that make up the money mindset.
1) You are mindful about the long-term. There are plenty of people out there looking to make the quick buck. They seldom ever make the big bucks due to greed. Their first mindset is to think “what’s in it for me?” Instead, they should be thinking how they can add as much value as possible to someone else first. Think about building credits with someone or some organization over the long term. You might never need to use your credits, but if you do, help will be returned in abundance. Don’t let short-term greed kill long-term wealth.
2) You deserve only what you’ve earned. In other words, there is no attitude of entitlement for someone with the money mindset. Don’t expect to reach the corner office without paying your dues. At 63 years old, the man who put up my crown moldings is a great example of someone who doesn’t expect a thing. He comes in with a good attitude, does his job well, cleans up, and leaves.
3) You believe you deserve to be rich. Money is out there for everyone to grab. Once you start believing you deserve to be rich, you’ll change your actions to make it happen. I used to feel guilty about earning six figures until my father told me about business executives who earn seven figures and drive their companies into the ground! My mindset aggressively changed from “why me?” to “why not me too?” With the belief that I also deserve to be rich, my income soared.
4) You ask yourself what is the value of the product or service before spending a dollar. People with the money mindset are incredibly value conscious. Given they realize how difficult it is to make money, they are much more careful with spending their money than the average person. They need to ask whether one dollar spent might return more than a dollar in the future. They shop around for the best deals and tend not to feel buyers remorse because they buy things that are much more valuable than what they’ve paid.
5) You’re always looking for synergies and leverage. Whenever I go play doubles with a new member at my club, I’m always excited to get to know his or her background because there could be synergies involved. Not only are we having a good time playing tennis, but we could easily parlay our relationship into a great business opportunity. A website is a good example of leveraging your assets to earn more.
6) You realize a dollar spent today could have grown into much more in the future. People with the money mindset are naturally frugal. They abhor spending too much money because they’ve already done the calculations on what their spending today could have turned into if they saved and invested at a 10% rate of return over the next 5-30 years. Compound growth always anchors those with a strong money mindset into spending less than they earn. With aggressive savings, you’ll be surprised how much you can accumulate in your 401k in 10 years.
7) You are all about tax optimization. It’s important to think about how much you need to earn before purchasing a particular item due to taxes. A $21,000 car actually requires one to earn $30,000 in gross income, for example. In terms of making money, someone with a money mindset looks to reduce taxes by figuring out the most tax friendly way to make money e.g. passively, dividends, etc. They also look to synergize their expenses if they have a small business or are a freelancer. There’s no reason to do a company offsite in North Dakota if you can do one in Kauai, for example. Figuring out how to pay little or no taxes becomes a hobby.
8) You believe excuses are for losers. You’re either going to make it happen, or you’re going to fail. Failure is fine, just don’t make excuses. Figure out the reasons why you failed and try again. Because you believe you deserve only what you’ve earned (#2), you take ownership for your failures and move on. Excuses are for people who blame the world for their shortcomings, instead of themselves. The more excuses you make, the less you believe you can make things happen on your own.
9) You will never fail due to a lack of effort. You can fail due to incredibly talented competition, bad timing, or Al Qaeda, but you will never fail due to a lack of trying your best. I cannot tell you how many times people have told me they want to quit their jobs and write online for a living. I tell them to send me a draft of their work so I can provide some feedback. They say “OK,” but 95% of them never follow through. I’m writing this 2,000 word post at 5am in order to get it done by 7:15am so I can get to work by 8am. I am never going to miss a post just because I’m too busy doing something else.
10) You are all about executing solutions. Recognizing a problem or coming up with an idea is one thing. Coming up with a solution is much more important. There are so many people who like to point out injustices or complain, but do nothing about their situation. Someone with the money mindset will find a way to get things done and make things better.
THE MONEY MINDSET CAN BE DEVELOPED BY ANYONE
I firmly believe that anybody can develop the money mindset. The first step starts with knowing your worth and believing that you deserve to be wealthy. If you put in the effort, there’s no reason why you can’t be rich as well.
The absolute worst are the people who complain about others making so much money, yet do little-to-nothing to improve their own situation. If you don’t want to be rich, fantastic! Enjoy what you have and be happy for others. If you do want to be rich, then please, take action. If you’ve got all your limbs and normal mental capacity, there’s no reason why you can’t achieve financial freedom as well.
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Updated for 2020 and beyond.