Monday, October 08, 2007

Millionaires and the Middle Class

The newspapers were strewn with stories few days back about Mukesh Ambani overtaking Mittal as the richest Indian. Courtesy, the rising share prices of various group companies of Reliance.

Ok, if you feel you cant relate to some one like Mukesh Ambani, here is some more food for your brain. If you think men like the Ambani's and Mittal's are beyond our reach to comprehend and analyse, lets talk about the lesser gods. According to World Wealth Report released by Merrill Lynch and Cap Gemini recently, the number of millionaires in India has crossed one lakh mark -- recording the world's second fastest growth after Singapore. The number of high net worth individuals(HNWI), with a net asset of at least one million dollar, increased by 20 % in only an year.

1 million dollar=3.9 crores (average)

Some very impressive figures. But is not fantasy. It is a fact happening right around us, amidst us. And they are young. No, they don't belong to the service class churning big pay checks. A quick run through on their profiles would show up they all belong to the dynamic new brigade, called entrepreneurs. India, with a booming economy has provided a thriving ecosystem for these entrepreneurs to flourish and create wealth for themselves and their families.

So, are there any lessons learnt from their stories? Indeed, yes. Because many of these HNWI are first generation fortune makers who made it with their own might.

The purpose of this post is to outline a few distinctions that separate millionaires and the middle class. I read about them in a book that I was browsing through at Landmark. But when the sales girl spotted me taking notes she politely asked me not to. I have presented here whatever I could scribble.

Top distinctions between millionaires and the middle class

  • Millionaires think long term. The middle class thinks short-term.

Society can be broken down into five groups of people: the very poor, poor, middle class, rich, and very rich. Each group of people thinks differently about money. Very poor people think day to day. Poor people think week to week. Middle-class people think month to month. Rich people think year to year. And very rich people think decade to decade.

here are three primary goals that can be found in the mind-sets of these five social groups. The primary goal for very poor and poor people is survival. The primary goal for middle-class people is comfort. And the primary goal for the rich and very rich is freedom.

The reason that very poor and poor people seek to survive and the middle class seeks to be comfortable is because they have a scarcity mentality. They believe there is not enough money for everyone to have more than enough. The rich and very rich know the truth: there is enough money for everyone to have more than enough.There is power in long-term thinking. It can and will make you rich if you make it a habit.

  • Millionaires talk about ideas. The middle class talks about things and other people.
  • Millionaires embrace change. The middle class is threatened by change.
  • Millionaires take calculated risks. Middle class is afraid to take risk.
  • Millionaires continually learn and grow. Middle class think learning ended with school.
  • Millionaires work for profits. Middle class work for wages and salary.
  • Millionaires have multiple sources of income, middle class people have one or two income sources.
  • Millionaires focus on increasing net worth, middle class people focus on increasing their paychecks.
  • Millionaires ask positive “what if” questions everyday. Middle class people don’t have the curiosity to know answers.
(To be added more content explaining each of them.)


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