Most of our life depends on routines: I get up in the morning and brush my teeth and I don’t reflect on this simple action and/or take decisions about it every morning. Without depending on routines and habits our lives would be impossible – the sheer immensity of the number and difficulty of decisions would not leave space for anything else.
This is matched by developing bodies of (collective) knowledge and experience consisting mainly of ‘dogma’ – well, if one feels really charitable these can be called ‘mantras’. I am not feeling very charitable lately; I just feel bored – so questioning some of these dogmatic ‘truths’, both in my life and the personal finance literature, has been my way of getting some excitement back into life. I already told you that ‘debt’ is not a word I use; I much rather prefer ‘negative wealth’.
Today I would like us to think about the differences between being ‘poor’, ‘broke’, ‘rich’ and ‘wealthy’ and where each of us fit in this scheme. Why should we care? Because our positioning charts the course of our actions; because knowing where we are helps us see where we wish to be.
Personal finance dogma, not because of a fault of its own I hasten to add, has us believe in a simple way to find our place: we can be poor or we can be rich. Of course, it allows for ‘broke’ and ‘wealthy’ to enter the scene but mainly as a matter of permanence (poor is forever; broke is temporary) or as synonyms.
Where I see a problem is that according to the personal finance mainstream, where one is poor or one is rich is defined only by their material situation as measured by one’s income, cash flow and net worth.
Whilst these measures are adequate to divide us into poor and rich, they do not have the sensitivity to separate between ‘poor’ and ‘broke’, ‘rich’ and ‘wealthy’.
What Do We Need?
To be able to separate between ‘poor’ and ‘broke’, ‘rich’ and ‘wealthy’ we need another dimension; we need to account not only for measures of our material situation but also our mentality. In this sense, the difference between ‘poor’ and ‘broke’ is not material – in both cases one has little or no money and material possessions – but it is one of mentality, positive or negative. Differences in mentality unfold along six areas, namely belief, feelings, language, approach, planning and action. If you want to know more about these differences go here.
Shall I Be ‘Wealthy’, Shall I Be ‘Rich’…
Accounting for both, our material and our mentality positioning, the options are:
Being ‘poor’: negative material positioning and negative mentality.
Being ‘broke’: negative material positioning and positive mentality.
Being ‘rich’: positive material positioning and negative mentality.
Being ‘wealthy’: positive material positioning and positive mentality.