7 psychological tricks that will make you
rich. What most people don’t realize is that becoming
rich isn’t as straightforward as you would imagine. Sure, some people will inherit millions of
dollars or will gain their wealth through winning the lottery but a 2017 survey found
that 88 percent of millionaires are self-made. Only 12 percent inherited their wealth which
means that the majority of people that become rich are putting in the work to do so. But it’s more than hard work that drives
their success. What most millionaires won’t tell you is
that they employ secret psychological tricks to both earn and save more money and in today’s
video, I will share with you the 7 psychological tricks that will make you rich! Trick #1. Making small choices
The rich know that small choices, when compounded over time, can result in a large financial
impact. The simple act of saving money, no matter
the amount, can empower and motivate you in ways you might not expect. For example, saving just five dollars a day
with 10 percent compound interest would allow you to save $1,885 after just one year which
doesn’t seem like that much. But if you did this over 40 years, you would
end up with $948,611 which is a significant amount of cash to have on hand. Besides being able to accrue a large financial
nest egg by stringing together these small but positive choices, this daily commitment
to saving gives the rich a sense of control which many people lack in their financial
lives. You see, there are many aspects of life that
are out of your control. For example, you don’t have much control
over the economy or the job market and because of this, it can be easy to get discouraged
when things aren’t going your way. To avoid feeling defeated, give yourself the
opportunity to make a choice about something you do have control over. Choosing to save is one small way you can
have some say in your financial life. Just ask Charles Duhigg, author of The Power
of Habit. In his latest book, Smarter, Faster, Better,
Duhigg writes, “Motivation is triggered by making choices that demonstrate to ourselves
that we are in control. The specific choice we make matters less than
the assertion of control.” In other words, it’s not really about the
five bucks you save or the extra $25 you decide to throw at your debt. It’s the fact that you’re making the decision
in the first place that makes this psychological trick incredibly powerful. Trick #2: Don’t trust yourself
What the rich know that the poor don’t is that no one is perfect. Put another way, the rich tend to be more
self-aware than their not so well-off counterparts which is why is they employ tactics that will
reduce their tendency to self-sabotage. One of the ways they do this is through the
use of automatic deductions. You see, for the rich, the generation of income
is often not a problem but what holds people back from turning this significant income
into a significant net worth is their ability to save. When posed with the opportunity to spend,
it can be hard for even the most responsible of individuals to shy away from shelling out
cash which is why they like to make this saving process automatic. If you are unfamiliar with automatic deductions,
they work in the following way: whenever you get paid, a portion of your pay is withheld
from going into your main bank account. Typically, people will set up a savings account
that the money is routed into. Many wealthy individuals take this practice
a step further by restricting their access to this savings account to ensure that the
money that is allocated to this reserve can’t be spent no matter what which ensures that
their pool of savings increases over time. Trick #3: Imagine Your Future Rich Self
What do great athletes, famous actors and successful entrepreneurs all have in common? Other than being rich, the one thing that
ties them together is their use of visualization. Just about anyone who becomes successful will
tell you that you need to envision yourself achieving your goals before you can accomplish
them in real life but unfortunately, some people cannot see past their current day-to-day
state. For instance, spending $5 on a Starbucks coffee
doesn’t seem like a big deal and every day, millions of people give away their change
to fuel their caffeine addiction. However, for those who aim to become rich,
that $5 can have a more significant meaning. A rich individual faced with the decision
to spend $5 on a premium coffee would probably consider the future cost of making this purchase. You see that $5 today will grow to $100 by
the time you retire. If you thought of that purchase in this way
you might change your mind, right? What the rich do that the poor don’t is
continuously ask themselves what the future cost of their spending decisions are and whether
or not they align to the realization of their future rich lifestyle. And if you think this visualization technique
is something new, think again! Napoleon Hill's classic Think and Grow Rich,
first published in 1937, lays out a step-by-step approach to pairing visualization with action
and millions of people have successfully employed this technique. Hill suggested in the book that the first
step is to fix your mind on the exact amount of money you desire and be clear about when
you expect to receive this amount. Jim Carrey famously tried this technique in
1990 when he wrote himself a mock cheque for $10-million for "acting services rendered"
and post-dated it for 1995. He gave himself five years to become one of
the most successful working actors in Hollywood and was able to cash that check that he had
written to himself a half-decade earlier. Besides just visualizing the amount you want
to make, Hill also advised that you determine exactly what you intend to give in return
for the money you desire. After making these declarations, Hill suggested
that you close your eyes and envision living this rich lifestyle every single day until
it comes to fruition. This technique is said to program our unconscious
mind to find solutions to our financial problems and allow us to better see resources, people,
and events that will help us reach our goal. Trick #4: Sleep on big purchases
While sleep can reduce stress, improve your memory and elevate your mood, what most people
don’t realize is that it can also help you make wise financial decisions. In fact, sleep can be an important tool in
your toolkit when it comes to saving money. First, without proper sleep, your decision-making
capabilities diminish, and the chance of riskier monetary behavior rises. So that car you would not normally consider
buying may end up in your driveway. Secondly, sleep allows you the time to contemplate
big purchases. Taking the evening to sleep on large expenditures
allows your unconscious mind to process the information related to the purchase and analyze
it while you’re dreaming. Trick #5: Only spend cash
The next psychological trick that wealthy individuals use to become rich is to only
spend cash. I’m sure you’ve been out before and have
seen someone pay for an expensive item or a fancy dinner with a wad of cash and while
your first impression may have been that this individual was just trying to show off, there
may actually have been a calculated reason for this behaviour. You see, whether you are buying groceries
or a new phone, spending cash makes us notice the monetary effect of our actions. This is because as we are paying, we are physically
handing over money and we see the depletion in our wallet whereas when you use a credit
or debit card, the potential to spend sees almost endless. Part of this pain we feel when we spend cash
is due to what researchers call coupling. When someone buys an item with cash, they
immediately know how much that item cost, which can be painful. However, when someone pays with a credit card,
there is a time period between when they purchase the item and when they have to pay for it,
which makes the cost seem less important. So just how much more will it cost you to
pay on credit versus cash? In 2001, MIT published the results of a study
analyzing spending behaviour when spending cash versus credit. The results highlighted that shoppers spend
up to 100% more when using their credit card to pay instead of cash. Therefore, if you want to curb your spending
and employ this psychological trick then cut up your credit cards and start carrying around
more cash! Trick #6 Calculate the cost in hours
The second last psychological trick that the rich use to grow their wealth is to convert
the cost of their purchases into work hours. For example, if you make $20 an hour at your
job then buying that new $100 t-shirt is really 5 hours of your time. Unlike the poor, the rich habitually ask themselves
if the item they are obtaining is worth the time it took to earn the money to pay for
it, or in this example, is that shirt really worth 5 hours of work time? When you begin to see your purchases in this
light, it will dramatically change how you perceive the value of not only your money
but your time as well. The interesting part is that this way of thinking
not only benefits you when considering a purchase but it also can be used to assess how you
spend your free time. In general, time you are working at your job
or on your business are productive hours but what about free time? Have you ever evaluated how much money you
are forgoing by mindlessly scrolling through Instagram or Facebook news feeds? As of 2018, the average social media user
spent 136 minutes or over two hours a day on social network sites. Let’s say you make $80,000 a year at your
job or roughly $40 an hour. Is scrolling through Facebook for two hours
a night really worth $80 to you? In short, whether you are buying an item or
determining how to spend your time, keep in mind that there is a cost to everything and
that one thing that separates the rich from the poor is how they value these precious
resources. Trick #7: Use the Stranger Test
You walk into a store and see a shirt that you think would look great on you. While you now know that you should assess
how much time you are exchanging for that $50 t-shirt, you still feel inclined to buy
it. Well, before pulling out your wallet and completing
the transaction you should be running yourself through the Stranger test. If you’ve never heard of the Stranger test
before, let me explain. Imagine a stranger standing in front of you;
in one hand, they have the t-shirt, and in the other hand, they have $50. Which would you rather have? In most cases, the cash is probably more appealing. When taking this approach on a regular basis,
you will start to see yourself continuously picking the money over the item which solidifies
your position in not splurging and instead keeping that money in hand. Now, here on the Practical Wisdom channel,
we are about providing value so before we wrap up this video I want to share with you
a bonus trick that is critical to your financial success. Bonus Trick: Believe in Yourself
While all the previous tricks will either help you earn or save money from a practical
sense, the wealthy not only believe getting rich is natural, but they believe it’s a
right and this self-belief is the backbone of becoming rich. Steven Siebold, author of the book “How
Rich People Think” studied hundreds of self-made millionaires and notes that “World-class
thinkers know in a capitalist country they have the right to be rich if they’re willing
to create massive value for others,”. After conducting hundreds of interviews, Siebold
concluded that “it wasn’t the lack of desire that held the masses back from getting
wealthy, but the lack of belief in their own ability to make it happen.” In short, none of these psychological tricks
will help you become rich if you don’t believe you deserve to be living your dream rich lifestyle. So before implementing these 7 psychological
tricks into your day to day life, first make sure that your self-belief is aligned to the
lofty financial goals you have set out for yourself! Thanks for watching!
