Understanding how money works

This is really interesting. Rich people openly discuss money with their kids, teaching them how value translates into money and how money is earned and works. Poor people hide how much they earn and what they spend on their kids. Kids only hear about money when parents complain or argue over not having enough of it, usually developing a negative mindset about money. ‘It’s hard to make; I can never have enough of it; 1000 cedis is such a big amount; I can’t earn that much. This negative money mindset unconsciously or consciously affects them throughout their lives and may cause them to repeat poverty.

The difference between an asset and a liablility

An asset makes you money; a liability costs you money. A fundamental thing poor people don’t understand is that the rich man’s assets pay for his luxuries. Returns on investments pay off the fancy cars, the mansions, the vacations.

Poor people spend what they earn without saving or investing, basically living from paycheque to paycheque. The car you drive, a house you live in, large flat screen tv, all the fancy clothes, the groceries are all liabilities. They don’t earn you revenue; however, keep spending on different. When you make money, focus on buying assets instead of spending them. This is a key mistake I have made in my first 18 months of business. I ‘reinvested in the business, gave money out, and spoilt myself instead of acquiring assets. This was a key mistake that I thankfully caught early.

They are not entitled to anything.

Rich people understand that you need to work to make and keep what you have, but poor people expect someone to give to them or help them make what they have. This is why it is usually the third generation of rich families that destroy wealth. The first generation creates the wealth from their hunger and hard work; the second generation understands that you have to work to keep wealth; the third generation is entitled, spends the wealth, and may ultimately squander it.

How to be sociable and connect with other people

Rich people teach their children to socialize as early as the age of 4. There are so many benefits to early socializing; it has a snowball effect. A child that can carry a pleasant conversation and others like to be around will be presented with great opportunities from that young age through their whole life.

Stop expecting immediate results and avoid magical thinking

Rich people teach their kids to play the long game and promote long-term thinking. Poor people expect things to change for them magically. This is interesting if you apply to Ghanaians and faith; many people expect God to bless them with wealth when they don’t put in the work for it.

How to create daily habits that on the long run, give them incredible advantages.

Children learn from what you do, not what you teach them to do. The rich teach their children wealth creation habits, whereas the poor pass on negative routines. A poor man comes home from work and spends all his time drinking in front of the tv; his kids see this and think, I want to grow up, get home from work, drink and relax in front of the tv just like daddy, versus healthy habits like reading.

Money is a tool and a good thing

Stop taking money so personal and use it for what it was intended for. The rich see money as a tool, paper, plastic, and metal exchanged for services. The poor see it as bad because they don’t know how to manage it even when they make enough of it.

Increase income instead of lowering expenses

Work smarter, not harder, the rich teach their kids how to generate wealth. The knowledge and the approach behind the effort create the results. Poor people teach their kids to lower their expenses, making life look scrimpy, cut this out here, cut this out there (this is me, lol) versus a rich man teaching his kid to create more income flowing in so that at the end of the daily expenses are the least of their worries because there is always excess income leftover.

Knowledge is more valuable than money on the long run

Invest in yourself; it pays the best dividends. The world rewards valuable people because they bring value to the world. The poor do not teach their kids the value of being valuable people. It’s not just in having a degree or reading books; it’s in what you offer the world. Knowledge, Skill, Inventions, these values and such generate money for you. This is why the rich engage their children in so many activities from such young ages so they can quickly reach the 10,000 hours it takes to master anything or discover interests or talents that can be developed to become valuable.

Don’t work for money, have it work for you

Poor people exchange their time for money and then spend it; the rich use the money they get to create more money. The rich understand the concept of passive income and letting your money work for you, whereas the poor think that you need large amounts of money to invest.

Solving problems is the quickest way to get rich

People will pay money to you to solve their problems. Rich people teach their kids this; poor people get paid to solve a specific problem for someone. The rich find a key problem and solve it; the bigger the problem, the richer you get.

Don’t waste time on things that do not correlate to the real world

The educational system is churning out graduates with skills that are no longer necessary in the marketplace, creating unemployment. We spend so much on education that is not practical for jobs that no longer exist and are irrelevant for present-day society.

How to use good debt instead of bad debt

The poor borrow money to buy liabilities such as cars, phones but the rich borrow money to invest in projects that will generate more money. Prove that it’s a solid project, how you will generate money, and that you have successfully done this before, and the bank or lender is willing to share the risk with you, leaving your own money safe, good debt.

80% of results come from 20% of effort

Rich people don’t expect their children to be first in class because the effort it takes to get 5% to 10% higher to top a class isn’t worth the time spent studying all the time when you could be using some of the time to develop real-world skills.

Having money does not make you a better person, it just solves some of the problems

Humility and respect for others are some of the first lessons rich people teach their kids because they know where they have come from, how hard they have worked, and what it feels like to be on the other side.

Raise their expectations

A lot of people settle for mediocrity; they don’t take big risks for big wins. Would you rather set low expectations and meet them or set the highest expectations and fall short. You are likely to still surpass the low expectations by far with the latter.