How rich people think differently
14 October 2016
You can also listen to these podcasts directly from the Old Mutual app, which is available here.
On mobile, on digital, on demand, this is Old Mutual Live Money Coach. Hello and welcome, my name is Chris Gibbons. Is your thinking keeping you poor? That’s an intriguing question because it implies that if you were to change your thinking, you might be able to become wealthy.
Is your thinking keeping you poor? It’s also the title of a new book from one of South Africa’s most prolific business strategists, authors and public speakers, Douglas Kruger. Douglas, welcome once again to Old Mutual Live Money Coach. What do you mean when you ask this question ‘Is your thinking keeping you poor?’
Douglas Kruger: Yes, it’s an unusual title isn’t it? Generally speaking, wealth literature tends to take the form of a get-rich-quick approach and this is vaguely accusatory. But having grown up in, straddling two worlds, struggling with poverty on the one side and living in a fairly wealthy neighbourhood on the other side. I’ve identified a number of patterns of thinking and types of psychology that really, I believe, make the difference between rich and poor.
This particular book has been a labour of love for me. It’s been 20 years of experience and five years of research into what those specific differences are. I am absolutely convinced that the fundamental difference between poverty and wealth, for families, for businesses, for South Africans, is really not down to what life dealt you. So much as, how you think about your life.
The power of positive thinking
CG: You genuinely believe, and this is a sub-title of the book, the rich think differently?
DK: Demonstrably so, right down to strange and curious things. Like the fact that most-rich people seem to be interested in games like poker and games of strategy, which is a curious one. But also down to simpler things like the difference in whether people view themselves as victims of or victors over.
Research has shown that in Southern Africa, uniquely, for post-colonial countries, we tend to enculture the idea that we are victims of the past. Rather than victors over the past. What’s interesting is you can justify either view, but they do lead off in different directions in terms of people’s personal wealth capacity.
CG: You also suggest that it is quite simple. I’m quoting here your words ‘sell something that is needed in a market that is growing, prevent anybody else from doing the same.’ What’s more to it than that?
DK: Yeah, simple to say, but difficult to do! In fact, that is right at the beginning of the book. I say I’m going to give away the greatest wealth secret of the Rockefeller’s of the last couple of hundred years and that’s what it is. It’s ‘sell something needed in a growing market, prevent others from doing the same.’ There, of course, are other approaches and avenues to achieving wealth. That’s really just the one that the mega, multi-billionaires have used.
But what I do in saying that, is to set the tone for what is intentionally a politically incorrect book. Where I go on to say that this is not written from a nice perspective. It’s saying, what’s the truth of the matter, let’s get down to what really works and dismiss what really doesn’t. But may be taught anyway out of political correctness.
Ways to raise your value
CG: Apart from inventing Windows or the iPhone, what other ways can you raise your value?
DK: I list ten different ways. But the one that I’m personally in love with is the idea of raising your personal value per hour. I give the wonderful example of the person who I think in all of human history did this the most effectively and that’s the author Charles Schulz.
He literally worked for an hour a day and he’s listed this year by Forbes as the third highest posthumous earning celebrity. That’s just after Michael Jackson and Elvis, but ahead of Ringo Starr of the Beatles. What he did, of course, was he amplified the value of an hour of work. He would draw his cartoon for one hour in the mornings and then sell it to 50 000 newspapers around the world. He did that for a 50 year period which of course accrues greatly.
But the idea that it can be used on a much smaller scale as well. It says it’s entirely possible to work back-breakingly hard for 10 hours or to work doing something very simple for say 10 minutes. The value of what you do in 10 minutes can way exceed the value of hard work over 10 hours. It’s understanding that differential that makes a massive difference to people’s career trajectories.
CG: What are the mind-sets that keep us poor?
What mental crutches keep us poor?
DK: The first one is victim hurt, the second one is reliance on state. Interestingly, globally, reliance on a government and reliance on state is the number one decimator of personal wealth. Interestingly, in sub-Saharan Africa, according to a CNBC report, we have six of the world’s ten most corrupt governments.
You have a universal dynamic in which the state is the number one threat to your personal wealth. But in sub-Saharan Africa, it is that much worse. Unfortunately, again, we have a culture of waiting for jobs from the government, waiting for social grants and so on. It is for my money, the thing that keeps us poor in sub-Saharan Africa.
CG: Douglas, I’ve talked to a couple of other authors here on Old Mutual Live Money Coach and they stress the importance of saving, what’s your take on that?
DK: Saving is a yes-but, and in fact I set up the book with a number of varying important yes-buts. Which says that yes, saving is important, but research showed that it is not the thing that leads to wealth. Most cases of self-made multi-millionaires, people have used much more dramatic short to medium term earning mechanisms and have brought in large amounts of money first. They then save after the fact.
I quote another author who talks about, and I love this term, wheelchair wealth. Where he also says, yes, it will make you wealthy, but it’s over such a long term as to be impractical. It’s not actually a pathway to wealth. So there are a number of things like that where I say education, it’s a yes-but. Yes, it’s important, but a formal education in and of itself will not make you rich. It can help you to escape poverty, it’s essentially entrance into the game, but it’s not the full solution.
CG: Think of all those multi-billionaires who left Harvard halfway through their degree course. You’re listening to Old Mutual Live, the Money Coach edition. On demand, visit dogreatthings.co.za. I’m talking to Douglas Kruger, author of Is Your Thinking Keeping You Poor? 50 Ways the Rich Think Differently. Douglas, give me a couple of examples of how the rich think differently.
How they do it
DK: Well, I mentioned the one that they are interested in, poker, which is a bit of an oddity. Related to that is the idea that they like to chase numbers. You would think of that, gut reaction to that is you would think of a Scrooge McDuck counting his gold. But interestingly, rich people are not necessarily interested in money related to wealth per se.
They’re interested increasing a unit, whatever their metric might be. They’ve become fascinated by either the numbers of companies that they can start or the number of people they can employ. The number of deals they can do, whatever their metric is. They are massively satisfied by the idea of growing a number.
If you even look at that in the artistic community, you’ve got people like, say, Stephen King, who are now chasing record book sales of all time. Naturally the result of that is incredible wealth. But it’s actually the numbers that they’re interested in.
There’s something that drives their personal passion in pursuing a number and it’s very rare for us, when we enter the world of work. To actually put a metric to something, we simply want to get through the working week, get to the weekend and relax. These are people who live very differently because they’re on a mission that chases a number.
CG: Absolutely driven people in many cases as well. One of the most important ideas you set out, the way the rich think differently is the rich know that wealth is infinite. Because they are rich, it doesn’t mean that you and I have to be poor.
DK: Ah, yes, a wonderful book called Equal is Unfair informs this one. It flies in the face of what has become very conventional wisdom. People like Thomas Piketty, with wealth in the twenty first century, a very socialist view of how wealth works. Tend to dismiss how it’s created in the first place.
They look at wealth as kind of a amorphous block that there is so much to go around. You’re either taking from it, or contributing to it. It doesn’t work that way in the real world. We generate new wealth through new initiatives, new creation, new innovations. This is something that socialist and very left-wing thinking tend not to take into account.
What’s interesting is that we are given the idea in South Africa that there really is only so much to go around. We’re not encouraged to develop new wealth, to grow new sources of wealth. Instead what we’re encouraged to do is to take from where it exists and to redistribute. What you eventually end up with is a situation which a nation is trying to cannibalise itself into wealth and it simply cannot work.
CG: And there we’re going to leave it, we are out of time. This has been another edition of Old Mutual Live Money Coach, my name is Chris Gibbons. I’ve been talking to Douglas Kruger, author of Is Your Thinking Keeping You Poor? 50 Ways the Rich Think Differently, it’s available in all good book shops. Douglas, is it also available online?
DK: It is indeed, it’s available as a downloadable eBook from amazon.com.
CG: Douglas Kruger. Remember, please feel free to get in touch any time if you have any questions for me, or topics you’d like covered on Old Mutual Live Money Coach. Just send them direct to me at firstname.lastname@example.org, I’d be delighted to hear from you. Until the next time, thank you for listening. Old Mutual Live, on mobile, on digital, on demand.