Rich AF: The Winning Money Mindset That Will Change Your Life

by Vivian Tu

a lack of basic financial literacy keeps our working class working.

the point is just that our current system depends on blue-collar workers not having that upward mobility, not having the luxury to leave sucky jobs, to keep a consistent labor force hungry for whatever work they can get.

The whole “just work hard and you’ll get rich” mentality drives me insane for this exact reason: the rich aren’t making money the way that regular people are making it.

their money is a much better moneymaking tool than their bodies or their minds.

When rich people buy stuff, they don’t buy it just because it’s a luxury they want to enjoy. They buy it because it will make them more money. In other words, they put the vast majority of their spending power into buying assets (stuff that makes them money over time) instead of liabilities (stuff that costs them money over time).

So you have people at the bottom of the pyramid fighting with each other tooth and nail instead of trying to overthrow the people at the top of the pyramid. No surprise, but this is great for the rich people. The broke normies aren’t coming for them, because they’re too busy fighting each other.

Rich people love helping each other out.

The thing is, they also recognize that because they’re sharing that knowledge, other people will open up and share what they know.

Yes, it’s partially because they like to see their friends succeed. But it’s also because they’re thinking strategically—and thinking toward the future. They’re thinking of collaboration, not competition.

Rich people know that sometimes stuff takes time, and they are happy to wait.

The mindset rich people have isn’t How do I scrimp and save and keep every last penny locked up in my account? It’s How can I get this money flowing and growing—and waste no time doing it?

The first big problem here is survivorship bias. We’re only hearing advice from people who had opportunities to succeed in the first place.

The other thing is that while these older rich people aren’t wrong about what worked for them—obviously, it did—they fail to recognize that what worked for them worked for them. As in, past tense. They’re not entering the job market now. They’re not starting from scratch in Today’s Economy™. And that makes a huge difference in what’s possible for those of us who are actively building wealth, now, at this time in history.

Jobs aren’t just about paychecks. They’re cultural, they’re local, and they shape our identity. So suggesting that a “better job” or a “new career” is all it takes to end brokeness forever is hardcore out of touch with reality.

Telling us to “find a cheaper place” not only isn’t a feasible short-term solution, it’s steering us away from a fundamental vehicle for amassing wealth.

Short-term small expenses aren’t making or breaking our financial lives and keeping us from achieving our goals the way most financial gurus want you to think they are.

For another thing, it’s actually more expensive to be poor. Covering ongoing costs with stopgap cheaper options can actually cost you more in the long run—and you don’t have a choice.

(If you’ve ever read Terry Pratchett’s Discworld series, you might be familiar with Captain Samuel Vimes’s observations about cheap boots versus expensive boots. I was basically living out my own version, but with pantyhose.)

(Seriously: a Black family in California swapped out their family photos with photos of a white friend’s family, and their home appraisal went up by HALF A MILLION DOLLARS. For the same. Exact. House.)

You can only save as much as you earn . . . but you can always earn more.

Rich people are especially good at three things: selling their skills, networking, and knowing when to get the fuck outta Dodge.

Rich people don’t see their career trajectory as copy-paste, copy-paste. They’re playing a game of word association, strung together with the skills they’ve acquired and the knowledge they bring.

This is the other thing that sets rich people apart from the average person: they’re never, ever satisfied, and they are always looking to trade up.

there are basically two kinds of workplaces: ones where you can break in, work laterally, and fraternize your way into the inner circle, and ones where, no matter how hard you pat yourself on the back, no matter how good you are, you’re not going to be able to politick your way into the boys’ club.

(hint: ask what you can do to make them look better to their boss)

The most important piece of professional career advice I was ever told was this: “Your company or corporation doesn’t care about you.” Your coworkers may care about you. Your boss (if you have a good relationship) may care about you. But your corporation does not care about you.

We’re going to keep it super simple and do this stoplight style—red, yellow, green—so grab three highlighters or get those colors loaded up in your little Excel paint box.

Red is for expenses that are truly not flexible. All the stuff that you simply can’t cut out or cut back on whatsoever without dying, losing your job, or, like, breaking the law? Those are your red categories.

Yellow is for expenses that are necessary, but may be flexible in amount or frequency.

Finally, green is for your straight-up discretionary expenses:

50/30/20 Budgeting Not to play favorites, but this might be my favorite budgeting strategy because it is so easy. It’s the slice-and-bake cookies of the budgeting world. HelloFresh for your bank account. Here’s how it breaks down: 50 percent of your posttax income goes to needs 30 percent goes to wants 20 percent goes to saving/debt/investing (we’ll get to how to save and invest it in the next chapters, but for now, it’s fine to just earmark that money)

Also, since you literally categorized and labeled your spending, it’s easy to start: use those color-coded categories to figure out what goes where in your 50/30/20 breakdown. But because 20 percent needs to be available for saving/investing, this means that all of your spending—red, yellow, and green—should add up to about 80 percent of your income (aka 50 percent + 30 percent). If it’s soaking up more than 80 percent, then it’s time to start tweaking your spending plan, starting with that middle 30 percent—the “wants,” aka green categories.

With reverse budgeting, you just commit to putting a chunk of cash in savings and investment accounts before making literally any other spending decisions.

It’s a “reverse” method because your very first move is putting money in savings and investments (instead of just saving however much is left after expenses).

I realized I was overspending—not because I was spending money I didn’t have, but because I wasn’t getting the value I wanted in exchange for that money anymore.

So as you review your spending, allow yourself to have—seriously, commit to it—those things that make you happy.

No matter how your personal plan shapes up, remember that a budget only really needs to do two things: Leave you feeling good about what you spent your money on. Are your basic needs met? Are you happy with the value your dollars have brought you compared to the effort you put in earning them? Are you getting in some of those nonnegotiables to actually enjoy your life? Ensure you have some money left over to save and invest. A good budget isn’t just about not getting yourself in debt and zeroing out at the end of every month. It’s about getting to that rich-person place where your money is what’s making you money. Your ideal budget doesn’t just allow you to save: it gets you maximizing those savings so you put your dollars to work, rich-AF style.

It all comes back to the fundamental truth of rich people: when you’re rich, your money works for you. When you’re broke, you work for your money.

I typically like to recommend an emergency fund that’s big enough to cover at least three months, but ideally six months, of living expenses (or even nine months, if the environment is looking recession-y).

Every expense can be negotiated. BUT: small expenses are less worth the effort to negotiate.

investing—not saving—is how you get rich. Because you cannot save your way to rich.

Investing should be a system that you can do in the background, easy peasy, and will gradually snowball you to getting richer and richer as time goes on.

At its most basic, investing is simply putting your money into something that has the potential to grow in value over time.

that wild-ass stressed-out Wall Street scene you’re picturing? That’s trading, not investing.

You can invest even if you have debt.

not all debt is created equal, and it all comes down to the delta.

we have decades and decades of historical data that can show us how much, on average, the market tends to grow over time, in the form of a single handy number. That magic number? 7 percent.

on average over time—because time is key!—you can reasonably count on 7 percent “inflow” per year.

When the government wants us to do something, they’ll cajole us with a bribe. When the government doesn’t want us to do something, they set up a big bad consequence.

And what does the government want us to do when we’re investing? Put money away for retirement. Why? Well, think about it: if you stop working, no longer earn an income, and have zero dollars to your name, you know who’s gonna be on the hook for your food, rent, and medical costs? That’s right: Uncle Sam, and he does not want to cut that check. No, the government would much rather you personally go HAM with saving for your golden years and retire with plenty of money for your arthritis meds and condo in Florida.