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You may have heard the phrase rat race before. It is a term used to define the financial loop people experience. Most people never attain wealth because they get caught up in the rat race. The rat race is created by two human emotions called fear and greed. First, the fear of being without money motivates us to work hard, and then once we get that paycheck, greed or desire gets us to think about all the wonderful things money can buy.
It turns into a cycle, get up, go to work, pay bills. Their lives are controlled by two emotions: fear and greed. Offer them more money and they increase their spending. This is called the rat race. Let’s say there is a guy called Bill, Bill graduated from college and got a solid job. Once he got his first paycheck, he spent it on buying designer clothes, a car, and a house.
After working for several years, he was promoted and got a raise. Bill took the extra money and spent it on even more clothes and unnecessary items. He earned money, spent money, and that motivated him to work at a job all of his life. Despite being unhappy, Bill did not change his life because he was scared of not being able to pay his Bills. Just like everyone else.
How to escape the rat race
The first step to escaping the rat race is to tell the truth. You need to tell the truth about what you’re feeling. You don’t have to say it to anyone else. Just admit it to yourself. Most people don’t confront it logically. They react emotionally instead of using their heads. They get a few bucks in their hands and again, the emotions of joy, desire, and greed take over. And again, they react, instead of think.
They feel the fear so they go to work, hoping that money will soothe the fear, but it doesn’t. It continues to haunt them and they return to work, hoping again that money will calm their fears, and again it doesn’t. Fear keeps them in a trap of working, earning money, working, earning money, hoping the fear will go away.
So, just admit it to yourself and understand that more money is not your solution.
Understanding emotions and financial literacy…
Be an observer, not a reactor to your emotions. Most people do not know that it’s their emotions that are doing the thinking. When a person says “I need to find a job,” it’s most likely an emotion doing the thinking.
Say you have bills to pay and you’re thinking about how to pay them. Chances are you’ll feel scared and your emotions will start to control your thought process. Instead of immediately running out to get a job, ask yourself “Will a job be the best solution to this fear over the long run?” It probably won’t be. A job is really a short-term solution to a long-term problem.
- “The main cause of poverty or financial struggle is fear and ignorance, not the economy or the government or the rich. It’s self-inflicted fear and ignorance that keep people trapped.” – Quote from Rich dad poor dad
- “Most people live their lives chasing paychecks, pay raises, and job security because of the emotions of desire and fear, not really questioning where those emotion-driven thoughts are leading them. It’s just like the picture of a donkey dragging a cart with its owner dangling a carrot just in front of its nose. The donkey’s owner may be going where he wants to, but the donkey is chasing an illusion. Tomorrow there will only be another carrot for the donkey.” – Quote from Rich dad poor dad
That is why you must focus on educating yourself and becoming financially literate. You need a strong financial foundation to be rich in the long-term and keep what you earn. That is why most lottery winners lose their earnings, they do not have a strong financial foundation.
Learning the difference between assets and liabilities is a great start. I will publish a post on assets and liabilities soon, tune in for more!
Book: Rich dad poor dad by Robert Kiyosaki
- Acknowledge how your emotions control you and your motive for money
- Gaining financial literacy will help you manage and maintain money
Notice: The stories above are fictional.