2 Money Mistakes That Are Keeping You Poor | Psychology of Money | Wisdom Podcast

After years of research, I have found two biggest mistakes people make with money that keep them poor
No 1. - You don’t want money you want respect.
Spending money to show people how much money you have is the fastest way to become poor. People spend money on expensive stuff not because they need it but because they seek respect and admiration from others. There is a funny paradox here - people want wealth to signal to others that they should be liked and admired. But in reality, those other people often bypass admiring you, not because they don’t think wealth is admirable, but because they use your wealth as a benchmark for their own desires to be liked and admired. So, instead of respect, they develop envy and jealousy towards you.
I would advise people to be nicer and less flashy. No one is impressed with your possessions as much as you are. I once used to be a valet. I used to look at guests who came in driving Ferraris and Lamborghinis and think, God I wish I had one of those. I never really cared who was driving it.
You might think you want a fancy car or a nice watch. But what you probably want is respect and admiration. And you’re more likely to gain those things through kindness and humility than by showing off your wealth. And the most important people in your life people who love you will respect based on how you treat them not on how much more money you have.
2. The second mistake is not understanding what game you are playing. It has to do with your spending patterns which are mostly socially driven. Being swayed by people playing a different game can also lead you to make poor financial decisions. So much consumer spending, particularly in developed countries, is socially driven: subtly influenced by people you admire, and done because you subtly want people to admire you. But while we can see how much money other people spend on cars, homes, clothes, and vacations, we don’t get to see their goals, worries, and aspirations. A young lawyer aiming to be a partner at a prestigious law firm might need to maintain an appearance that I, a writer who can work in sweatpants, have no need for. That lawyer is spending money on his lifestyle for getting a career boost, writer on the other hand has nothing to gain from spending money on upgrading his lifestyle. It is a total waste. Keep this in mind before setting your expectations based on how other people spend money. They might be just playing a different game. Don’t get persuaded by the actions, behaviors, and spending patterns of people playing different games than you are.
Based on Psychology of Money by Morgan Housel - amzn.to/3CeSaLy

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