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What is the Difference between Rich and Wealthy People?

Most people think that being rich and being wealthy is the same, but it is not. There is a massive difference.

Rich or Wealthy?

What is being rich? It is having lots of money right now. Earning a six-figure income is typically regarded as being rich.

What is being wealthy? It is having lots of money right now and in the future. Wealthy people can live for months, years, or even decades without working. The reason is, they have achieved financial freedom. They’ve developed residual or passive income sources. Whether they’re working or not, they make money or money comes to them.

When your passive income is greater than your cost of living, you’re financially free. If your cost of living isn’t high, you can achieve financial freedom at a fairly low level of wealth. Robert Kiyosaki points out that the rich have lots of money, but the wealthy don’t worry about money.

Wealth can also be much broader. It can include things like your health, fitness, and family. Or, the quality of your relationships and having a sense of inner peace.

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The Difference Between Rich and Wealthy People

Let’s see what the key differences between rich and wealthy people are.

Celebrity Look vs. Modest Look

Rich people have the celebrity look. They have flash cars, Rolex watches, Gucci belts, designer clothes, and expensive jewelry. They can have all that because they’re making a good income right now. However, that income is temporary because they have no wealth. They’re just giving off the appearance of wealth. That appearance could disappear at any moment. They live from a big paycheck to a big paycheck. Or even worse, that celebrity lifestyle is financed by being in debt.

Wealthy people often have a more modest look. They don’t always go for those fancy things. They would instead save 10, 20, or 30 percent of their earnings. By doing that, they will have more in the future. If a financial crisis happens, like a recession, wealthy people will be in a better position. Why? Because they’ve already built up some money reserves. The crisis would not affect them as much – financially, mentally, or emotionally. They know that they’ve got the financial reserves to get through difficult times.

Less Going Out, More Coming In

If you earn $500,000 a year, and you spend $540,000 a year, are you rich? Well, you might look rich, but I would say you’re not. Why? Because it’s not about how much you earn, it’s about how much you keep. On a month-by-month basis, wealthy people might be earning less. But the crucial thing is that they’re saving a lot more.

Wealthy people usually have a lot less money going out than they have coming in. As a result, they don’t need to worry about money. If a short term expense comes up, they can easily afford it. They’re not spending as much as they’re earning, and they’re building up their wealth over time. Also, if something happens in the economy, they can handle it. They don’t need to worry about that.

Money-Making Knowledge

Rich people have money. Sometimes the way they made that money was a bit of luck. They were just in the right place at the right time. Wealthy people know how to make money. Rich people work for money. Wealthy people know how to make money work for them.

Often, the difference between rich and wealthy comes apparent in a recession. Both the rich and the wealthy can lose money. But, the wealthy have the knowledge. They know how to make money. So they bounce back again. There are so many examples of wealthy people that have bounced back from recessions. They knew how to make that money back again.

Is It Sustainable?

How sustainable is their money? Is it easy or hard to lose it? If you think of Bill Gates, he has so much wealth that it would be extremely hard for him to lose it. So a wealthy person has sustainable wealth.

Compare that to a rich person, for example, rich celebrities. They have lots of money now, but there’s no guarantee they’re going to have that money in the future. What if they lose their popularity? What if someone else comes along who’s more liked than they are? Or, more successful than they are?

These celebrities, even if they are successful for a while, often have a fear that they could lose it all in the future. They have that fear of losing, and they’re only rich until the money dries up. That’s often in the back of their minds. Sustainability is a crucial difference between rich and wealthy people.

Active vs. Passive Income

What is an active income? An active income is where you trade your time for money. People working a conventional job are earning an active income. Many self-employed people – like therapists, plumbers, electricians, or personal trainers – earn an active income as well. They’re providing a service, and they get paid for it.

What’s a passive income? With passive income, money is not related to your time and effort. A good source of passive income is earnings from interest on savings. Or, dividends from shares. These are excellent forms of passive income. If you write a book and get royalties from it, that’s a passive income. Or, you can buy a property and have tenants that are paying you rent. You get money from those tenants. It doesn’t matter whether you work or not, you’re getting that rental income.

Quite a lot of people make passive income through an online business. They create products that they sell online. There’s a bit of effort involved in creating the product. But once it’s done, sales come through even when they’re asleep. That’s a key difference. A passive income is a way of making money that isn’t dependent or utterly dependent on your time and effort. It means that you can take a break for a month or two, and that money will still come in.

It’s More Than Money

Rich people tend to focus on money too much. They could be working extremely long hours to make that money. Think about people like stockbrokers, lawyers, and doctors. They are rich, but they could be working 50, 60, maybe even 70 hours a week to sustain their rich lifestyle.

Wealthy people value time. Time is often the most important thing for them.

They also value friendship. That’s very important to them, too. They’re the kind of people that will help you out if needed. There’s a great saying that is “your network is your net worth”. Wealthy people are aware of the value of networks, friends, and family. This is a key difference between rich and wealthy people.

Assets vs. Liabilities

Liabilities cost money to maintain or fix them. Assets don’t. That’s the crucial difference. Examples of assets are stocks and shares or interest on a bank account. A lot of people think that a house is an asset, but it’s not. A house needs maintenance. You could buy a house for $100,000, do it up, and sell it for $200,000. That would seem like a good investment.

But, don’t forget the cost of the work involved. Unexpected costs, like leaks or roof repairs, can happen. You might still make a profit when sold, but it’s still a liability, not an asset until you sell it. You need to put money into it. There’s always a risk that you’ll need to put some money into it in the future. You have to be prepared for that.

Social Media Fascination

Wealthy people are less preoccupied with social media than rich people. I’m sure you’ve experienced this. You’ve seen someone’s new car on Facebook or exotic holiday photos on Instagram. The problem with social media is that it distorts reality. You only see the highlights of someone’s life.

It’s almost like it’s the opposite of the news. The news tells you all the bad stuff that’s going on in the world. Social media shows you all the great stuff that’s happening to other people. This can really distort reality.

What I recommend with social media is that you take it with a pinch of salt. Don’t let what other people are doing on social media distract you from your own financial goals. You can see other people traveling, having beautiful houses, or having kids in private schools. Think if they can really afford that. Are they just living paycheck to paycheck? Or, even worse, borrowing money to achieve that lifestyle?

Nothing Is More Valuable Than Freedom

You now know the difference between rich and wealthy people. Think about what being wealthy means to you. Could it be time with your family and friends? Could it be some time just for you? Perhaps, owning your own home? Maybe, having a cleaner? Or, being able to travel a lot more, and having the time to do it.

I’ll finish off with a few points from the book Simple Path to Wealth by J. L. Collins. Spend less than you earn and invest the difference. Avoid debt at all costs. Money can buy you many things, but nothing is more valuable than your freedom. So ultimately, having money will set you free. When you can live on four percent of your investments per year, you are truly financially independent.

Thank you for reading this article.  If you enjoyed it and found it useful, then please share it with other people, or on social media.

Hope you are having a wonderful day!

Paul

Reticular Activating System and Goals | How to Use Your Unconscious Mind to Achieve your Goals

In this article, you are going to discover the powerful connection between the reticular activating system and goals. You will then learn 8 fantastic ways to use your reticular activating system to achieve your goals.

We continually get bombarded with information that stimulates our brain. This is why your reticular activating system and goals must be aligned so that you notice the abundance of opportunities that will help you get ahead.

Once you understand the key connections between your reticular activating system and goals, you will be using both your conscious and unconscious mind in harmony. This makes achieving any goal much easier and requires less conscious effort.

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What is the Reticular Activating System?

According to Tech 21century.com, we receive the equivalent of 34 gigabytes of information every day. That’s a huge amount of information and is increasing year by year. The influence of technology, social media, and our very interconnected world constantly bombards us with information to respond to.

If you put 34 gigabytes of information onto your laptop every day for a week, it would become overloaded! Same with us humans!

So to prevent us from being overloaded, we have the reticular activating system (RAS), and this acts as the gatekeeper. It takes in the 34 gigabytes of information that come from our 5 senses. It then filters out the unnecessary from the important. The reticular activating system decides which information to pay attention to and what can be ignored. A staggering 99% of all sensory input is ignored by the conscious mind.

Your subconscious mind will pick up everything. It’s the reticular activating system that alerts the conscious mind to information that is important. The reticular activating system learns over time and alerts you to the same information on multiple occasions. That’s one of the ways that a habit is formed.

However, our conscious mind is smarter. So if you pay attention to something consciously, your reticular activating system will put it on the more important list. The reticular activating system will then start to unconsciously notice things that are relevant to what you are paying attention to.

It’s for this reason that the reticular activating system is super important for goal setting. It plays a key role when you focus on what you want. It’s also important for sustaining life, and I’ll cover this in a moment.

Examples of the Reticular Activating System in Action

Here are some examples of the reticular activating system in action.

  • You buy a new car and then notice other people driving the same car. Why? Because the model of your new car is now unconsciously on your important list. Your reticular activating system notices other people that also have the same car.
  • You are a pregnant woman, and you notice other women who are pregnant because this is now on your important list.
  • As you learn a new word, perhaps some technical jargon or abbreviation, you start to hear other people saying that word a lot.
  • You are at a party with lots of noise. Whilst in a conversation, someone shouts your name. You hear your name through all the background noise. Why? Because your unconscious mind knows that your name is important and it picks that up.
  • When your baby coughs or cries at night, your reticular activating system will wake you up from deep sleep to attend to the baby. That’s because one of the functions of your reticular activating system is sustaining life.

Your reticular activating system will also help you focus on one thing as well if that’s seen as important. Let’s say that you’re completely engrossed in a soccer match or a movie. Your reticular activating system will not bring other things into your conscious awareness unless they are more important than the soccer match or movie.

Reticular Activating System and Goals

Your reticular activating system is the mechanism in your brain that helps make goals happen. With conscious direction (such as writing down goals and focusing on what you want) you begin to attract people, things, places, situations and opportunities into your life.

Here are some examples of this happening.

  • You have decided to eat clean and healthily so that you can increase your energy and lose weight. You start flipping through the pages of a magazine and your reticular activating system unconsciously spots a relevant article or recipe that will help you. If you had tried to do that consciously, would you have found it? Probably not.
  • You’re trying to solve a technical problem on your computer. You take a break and start mindlessly surfing the internet. Suddenly an article appears in the search results with the solution.
  • You are a bystander at a party and you overhear a conversation that is highly relevant to the new career goal or job that you have been focussing on and aspiring to attain.
  • Someone says something directly to you and you have an “a-ha” moment because it’s just what you need to hear at the time. You might have heard the same advice many times before, but at this moment, it was important, so you picked it up.

So with all the above examples, the answer was always there. You just didn’t notice it until now.

Have you ever wondered why comedians find jokes in the most bizarre and mundane of situations? Well, a comedian’s reticular activating system is always looking for something that will be great material for a joke and for the funny side of any situation.

To summarize, your reticular activating system is super important because it helps bring people, things, places, situations and opportunities into your life based on what you focus on consistently.

When you lack goal clarity and focus, you miss out on opportunities as your reticular activating system has nothing to go on. If the reticular activating system doesn’t see something as important, you will miss out and it will instead focus on the mundane or negative.

This is why it is so important to focus on what you want. When you focus on bills, lack debt and sickness consistently, then a life of abundance, good health, prosperity, and peace will be out of reach for you.

If you desire a life of abundance, good health, prosperity, and peace, then take time to focus on these in detail. This will get your reticular activating system working for you rather than against you. Keep reading to learn the specific steps to unleash the power of your reticular activating system.

How to Use the Reticular Activating System to Your Advantage

So I’m now going to cover some ways to help you use the reticular activating system to your advantage.

1. Use SMART Goals That are Written Down

A smart goal is one that is Specific, Measurable, Attainable, Realistic and Time-bound. I recommend that you follow my step by step process for setting goals. Then write them down in your own handwriting. The reticular activating system will act more effectively with handwritten goals, as opposed to goals that have been typed on the computer.

2. Ask Questions to Make the Goal More Vivid

A great question to ask is “how will I know when I have achieved it?” Taking the time to answer this question will help you get your goal extremely clear in your imagination.

Then ask, “what will I see, hear, or feel?” and “where, when, and with whom do I want it?” These questions will help you bring in places and other people and this also helps to make the goal more vivid.

Now ask “what will achieving this goal do for me?” or “what’s the benefit?“. These questions will help you focus on the benefit and the feeling or emotion of that. Really intensifying the feeling of achieving your desired goal will help impress this more deeply on your reticular activating system.

Now ask, “what am I already doing to move towards this goal?” This will focus your mind on the progress that you are already making. Your reticular activating system will pick up on this as well.

Finally ask “what qualities, skills and emotional states do I need to reach my goal?“. This is a great question! It will encourage your reticular activating system to go looking for the qualities, skills, and emotional states that you need and bring these into your life as well.

3. Keep the Goal or Problem to Solve at the Top of Your Mind

Think about your goal many times a day! Talk about your goals to your family, friends, and colleagues that you trust and that believe in you. Write down your goals and dream about them. The more you do this, the more it will impress on your reticular activating system.

Another great way is to post pictures, charts, or graphs of your goal around your house. Find places where you will often notice them unconsciously. Bathroom mirror, fridge, desk and wardrobe doors are great places. Alternatively, create a vision board and post pictures of your goal on there.

4. Take Consistent Action

Consistent action is important in achieving any goal. However, it helps the reticular activating system as well. When you are taking consistent action, you are also thinking about it consistently. Your reticular activating system will act on this and alert you to new opportunities.

5. Train your Reticular Activating System

I had a client recently that had lots of anxiety in her life. I realized very quickly that she only focussed on the negative things that were happening to her. When I mentioned anything positive, she dismissed it immediately.

I asked her to tell me 5 things that went well for her today. She really struggled and after 5 minutes, we only had 3 things and that was with a lot of prompting from me. Her reticular activating system had become so trained to focus on negative things only. As a result, she found it almost impossible to think of anything that was positive or useful for her. It was like the neural pathway in her brain that looks for good things had almost completely closed down.

Here is a great exercise to help train your reticular activating system to notice positive and useful opportunities for you.

Grab a piece of paper and then set a timer for 5 minutes. Now write down everything that you have achieved in your life so far. This will be easy to start with. Examples could include getting a university degree, falling in love, getting married or buying a house. You can add career and health achievements into the mix as well. What about travel and great friends you’ve made? After 2 or 3 minutes you will start to run out of achievements. Keep going and look for smaller achievements. Keep going for a full 5 minutes writing down everything you can think of.

Once the 5 minutes is up, give yourself a pat on the back. What you will notice is that your reticular activating system will keep thinking of other things that you have achieved after the time is up. That’s because you have begun to train your brain to focus on the good things that you have done in your life so far.

6. Create Positive Affirmations

Positive affirmations force the reticular activating system to kick in automatically. The reticular activating system then adds these items to its important list. This works best when you do the following 3 things:

  • Speak your affirmations out loud.
  • Create affirmations that are very specific to your goals.
  • Feel the positive emotions that you want to experience as well.

Ensure that your affirmations are stated in the positive. For a goal of losing weight, the positive affirmation could be “I am thin, fit and healthy”.

7. Use Visualization

Your reticular activating system cannot distinguish between real events and synthetic or imagined reality. Anything that you can vividly imagine will seem real to your reticular activating system and it will act on it. Your reticular activating system believes whatever message you give it, whether it comes from external life experiences or something you create inside.

Your imagination and subconscious mind love pictures! It’s even better when you include what you can hear (including your internal self-talk), feel, touch and perhaps taste and smell as well.

It’s also important to make the image very large! Imagine that you’re seeing it on an incredibly large cinema screen. Visualize the goal as having already been achieved.

8. Repetition

This is simply doing as many of the above techniques regularly and consistently. Each time you do one of these techniques, you are building a new mental pathway in your brain. This makes it more important to your reticular activating system. Then your reticular activating system can get on and do its job.

So now you have a much clearer idea on how the reticular activating system actually works. You also have some strategies that you can use to start getting the reticular activating system to focus on the people, things, places, situations, and opportunities that will help you achieve your goals.

Thank you for reading this article.  If you enjoyed it and found it useful, then please share it with other people, or on social media.

Hope you are having a wonderful day!

Paul