RULE 2
Your Mind-Set Makes or Loses Money and Wealth—You Choose
Before you can be the CEO of anybody else, you must be the best CEO of YOU.
The reality is that YOU are capital. All wealth—and all poverty—begins with you. In fact, it begins within you, with the knowledge in your head and your heart and your soul. With your mind-set.
I believe that fully half of modern poverty—beyond basic issues of sustenance of course—is tied to a poor mind-set, to low self-esteem and a lack of confidence. Because if you don’t feel good about yourself, no one else will. Because if you don’t know who you are at 9 a.m., by dinnertime someone is going to tell you who you are. And bad things will come after that.
Here are some universal truths:
If I don’t like me, I am not going to like you.
If I don’t respect me, I don’t have a clue how to respect you.
If I don’t love me, I don’t know how to love you.
And it naturally follows, if I don’t have a purpose in my life, I am going to turn your life into a living hell.
Whatever goes around, comes around. We reap what we sow.
This is why I hammer so hard on the issue of self-esteem and confidence. Because it is the beginning of everything.
According to my HOPE Doctrine on Poverty, the second part of poverty is crappy role models and a crappy environment. The causes of poverty are illustrated in the figure.
Why do so many urban kids think that the highest possible aspiration they should have in life is to become a drug dealer, a rap star, or an athlete? It is because those are the aspirational images of success (crappy role models) that exist in the neighborhoods where they grew up and spent most of their time (crappy environment).
Everyone is aspirational. Everyone. These kids are simply modeling themselves on what they see as success. And so, we need to give them something better to see so they know what they can truly be.
No one wakes in the morning and says that their greatest life ambition is to be on welfare. That young family is modeling themselves on a legacy of family elders on welfare, a legacy of not getting the Memo. There is not a mother in her right mind who does not want her child to grow up to be successful, hardworking, and taxpaying, if for no other reason than to feel pride. But you cannot give your kids what you do not have. And if you don’t know better, you cannot do better.
In the absence of wisdom, ignorance happily fills the void.
Out of love, we pass down bad habits from generation to generation. I repeat: we do this out of love…
No woman wakes up in the morning and says that her greatest ambition in life is to be a prostitute. She is modeling what she sees as the symbols of aspiration in her neighborhood. She is also doing it for money. There is no other legitimate, continuing motivation to do it. Remove the financial aspect, and the entire global prostitution industry dies within a month.
It is what we don’t know that we don’t know—but we think we know—that is killing us.
And then you have the issue of environment. The best way to summarize this problem is: If you hang around nine broke people, you will be the tenth. But if you grow up with nine nuclear scientists, you will also likely be the tenth.
When you are poor and struggling—and everyone around you is poor and struggling—and when you don’t feel good about yourself, and your hope dies, you are not just skeptical, you are cynical. And once you become cynical, you are done. It is only a matter of time before you fail. You’ve already given up on yourself, so you can’t see the opportunities. Your worldview is through a negative lens, and your glass of life is half empty.
“Whether you think you can or think you can’t, you’re right.”
—HENRY FORD
Mind-set matters.
The HOPE Doctrine on Wealth
Growing up in Compton and South Central Los Angeles, I hung around with people who were doers and owners, positive folks who told me they loved me on a regular basis. As a result, today I consider myself a doer. I am an owner, I am positive, and I love myself. I am not a rocket scientist; I benefited from the assets of my environment, and I have been role modeling myself.
Truth be told, the greatest asset of my life was learning to love myself, whole and complete. My most important accomplishment was reaching a point where I became “reasonably comfortable” in my own skin. I believe this should be everyone’s goal.
Mind-set matters. A positive mind-set naturally leads to having aspirations for our lives. Aspiration is a code word for hope, and hope leads to a sense of opportunity, a view of the world through the lens of possibilities, where the glass is always half full. Hope is the beginning of true wealth, which I dig into even deeper in Rule 5.
True wealth, like true poverty, has nothing to do with money. True wealth is illustrated in the figure.
In short, here is what the wealthy have:
They have high self-esteem and a high level of self-confidence.
They wake up in the morning believing that they can.
They have positive role models and are raised in an empowering environment.
They have hope and are optimistic about life.
They see opportunity everywhere.
How We Choose to Be Wealthy (or Not)
The ability to see opportunity everywhere is a key factor separating those in the Invisible Class who can build financial success and economic wealth from those who end up truly poor in aspiration. Let me explain.
I started the book talking about a video I recorded titled “Modern Slavery.” In the video, I paint a picture of a modern poor community, one where you see a check casher, next to a payday loan lender, next to rent-to-own store, next to a liquor store, etcetera.
I explain how people in the Invisible Class are being robbed in broad daylight, but almost no one does anything about it. They see these things as normal and do nothing to expel these businesses from their communities, while railing against other forms of perceived oppression such as police brutality and the loss of blue-collar jobs.
Meanwhile, those who are “wealthy” in their thinking drive through those communities, and they see in run-down homes an opportunity to buy, rehabilitate, upgrade, and rent them to working residents.
Think about the Korean family who has established a hair care store selling hair weaves exclusively to African American women (this example is particularly jaw-dropping to me) in a majority black neighborhood. There is absolutely nothing wrong with the Korean family doing this—except that black residents of the same community should have done it first. Simply put, black folks should have seen the opportunity to create a successful business that serves their community first. Instead, because of their poverty mind-set, they have been locked out of their own market.
When you have a “poor” outlook on life, you miss seeing the opportunities in front of you. You miss getting the Memo.
Take any number of business establishments that set up shop in poor and underserved communities. They are not sneaking into these communities in the dead of night. They are not stealing from someone and setting up illegal enterprises. They are not hoodwinking anyone. They simply got the Memo: They saw the opportunity, they believed in themselves and in their entrepreneurial abilities, and they took action. They invested time, energy, and resources believing they would get a return on investment.
Take those who walk right into your neighborhood and buy centrally located real estate for pennies on the dollar, transforming the neighborhood in time from a poor community to a gentrified, upwardly mobile, economically vibrant, new-age middle-class enclave. These are people who got the Memo.
Don’t hate. Those who do this are worthy of commendation. Remember, the best revenge is living well.
Look at what’s happening in Detroit and in Harlem.
Detroit is coming back. It’s a fact. The question is not whether Detroit is coming back but rather who is Detroit coming back for and when?
Downtown Detroit has already been claimed by a generation of upwardly mobile, college-educated young people who think that living in downtown lofts and starting small shops and owning restaurants there is a cool thing to do.
When you walk into a clothing shop in downtown Detroit and you see someone selling $300 T-shirts in 2016, then you know two things to be true: (1) Something is happening in Detroit. (2) Someone else has gotten the Memo.
And for years officials would have given you property in Harlem for next to nothing. But today a teardown in Harlem is $750,000—when you can find one. Brownstones sell for $1 million and more today. The black community responds by asking, “What happened to our black community?”
Those who got the Memo didn’t see a black community in Harlem. They saw Manhattan as what it is: an island, complete with the Upper East Side, the Upper West Side, Lower Manhattan, and what we call Harlem, with Central Park in the center of it all.
They saw white people (on the Upper East Side of Manhattan), white people (on the Upper West Side of Manhattan), white people (in Lower Manhattan)—and black people in Harlem.
After a while, with increasing wealth, a growing population, and limited land, white folks began to say, “Black folks aren’t so bad.” And then, smartly, they began moving into Harlem. They brought with them their businesses and their lifestyles, and they made it cool for their friends to do the same. And now Harlem is nothing more than upper Manhattan. Once again.
Hear this: Those who got the Memo didn’t see a black community; they saw centrally located real estate. And by the time the black community figured out what was going on, it was way too late.
The deals are gone. Property values are through the roof, and we find ourselves priced out of yet another market. In our own neighborhood. A place that had been our neighborhood for over a hundred years. And not knowing anything different, we see this as yet another example of inequality, injustice, gentrification, possibly even racism and discrimination. In reality, we simply never got the Memo.
And there you have it.
Do you know how the Bible describes poverty? In Proverbs 10:4, the Bible says, “Lazy hands make a man poor, but diligent hands bring wealth.” Maybe your pastor forgot to tell you about that verse.
Yes, the members of the Invisible Class are sent into the modern economic marketplace with systemic handicaps: crappy self-esteem, crappy role models, no knowledge of economics or how money works, and no hope, as a bonus.
But in order to move forward, we must take ownership of ourselves. We must find a way to heal, to learn to love ourselves, and thereafter to love each other, to get ourselves out of this mess. Otherwise, we can never truly be free.
The new slavery is not shackles or police handcuffs on our arms and legs. These are shackles and handcuffs on our hearts, our minds, and our souls.
The new wealth is about healing and believing. It is about a mind-set that sees opportunity—and that gets the Memo.
Okay, CEO of YOU: Step Up
Increasingly you are on your own.
Employment is no longer a thirty-year, single-employer career promise as maybe your mother or father or grandmother or uncle enjoyed. Most employees today will work as many as a half-dozen different jobs in the course of their working lives—sometimes a combination of two or more jobs at the same time.
With major companies merging, one person rather than two may be needed for the same position, so fewer people will work for big companies over time.
You are on your own.
Small businesses and entrepreneurs overwhelmingly employ the most people in the United States and the world over, but (at least here in the United States) we now have for the first time more small business deaths than small business births. What we need is a small business revolution, and what we have are small businesses in active retreat.
You are on your own.
You can scream, holler, wish, hope, or pray if you like (well, we should all pray). You can cry victim—you can even file a formal grievance somewhere. But no one is coming to save you.
Everyone today has problems, and increasingly no one cares. Am I trying to depress you? No, I am trying to wake you up. You see, no one is coming to save you. You are going to have to do that for yourself.
God may love you in heaven, but here on earth you must save yourself.
The fact is, most of us have the same problem. Large sections of the working class and middle class the world over are entering the Invisible Class. These people are seeing their comfortable standard of living and, even worse in their eyes, their very way of life slowly deteriorating and slipping away. They are increasingly resentful about the state of the world and, as a result, are markedly less compassionate than, say, their parents and grandparents before them. These are not bad people. They are almost all very good people. But they are stressed out and worried, which makes people narrowly focused and (understandably) more self-absorbed. This speaks to the recent election results.
If I were white and high school educated, seeing my once-stable blue-collar economy of fifty-plus years falling away, I would feel invisible and frustrated, too. But—just like with our depressed urban areas—instead of going in and helping these small-town communities to reimagine and reset their local economies, we let them drift into sadness and obsolescence.
When we should have helped to revitalize the economies of these beautiful small towns, we ignored them. We hoped that their problems would solve themselves, but of course they actually got worse—so bad that like the upset urban poor and people of color in America, poor whites wanted a spokesman too. Enter a man as a presidential candidate, viewed by a majority of this disenfranchised group as a man in charge of the “Anger Party” and a vessel of articulated frustration for poor white male pain in America.
All of this and more underlines the truth that you are increasingly on your own in this world.
Governments are broke.
Resources are increasingly limited.
Quality education is increasingly expensive and increasingly favors the well connected. It could even be argued that public education is increasingly becoming a private amenity.
The middle class is financially strapped, and the working class is beginning to feel poor.
In this developing environment, being a victim—legitimate or not—will not save you. You must now save yourself.
This is the era in which people must learn to not only do for themselves but to truly empower themselves, to chart the economic course for their own lives.
This is the beginning of the empowerment age.
What About Public Assistance?
Sympathy: the feeling that you care about and are sorry about someone else’s trouble, grief, misfortune, etcetera.
Empathy: the feeling that you understand and share another person’s experiences and emotions; the ability to share someone else’s feelings.
People in the Invisible Class—the poor, the struggling, the underserved, the left behind, and the pushed aside—need less sympathy in the twenty-first century and much more of what I call “modern empathy.” Let me explain.
Remember when I said that if I gave a homeless man $1 million, he would be broke within six months? It’s not a moral issue, and it has nothing to do with whether I like the homeless man or not. It does not have anything to do with a bias toward the homeless or a bias against giving out pure charity (I am a fan of pure charity, for the record).
It’s not about race or racism (note that I have not even mentioned a race for the homeless man in this example). It is not about my good intentions, or yours. In fact, it is important to remove any sense of guilt out of this hypothetical example and the decisions associated with it. Any decision you make emotionally, I guarantee you, will be a bad one.
The simple fact is that the homeless man was homeless for a reason, be it for mental, physical, emotional, financial, or other problems. We need to empathize with the man and his plight in order to be in a position to assist him on the road to economic liberation.
But that is not what happened here. In this hypothetical example, I felt sorry for the man, and so—maybe even to feel better about myself and my own shortcomings—I gave the man $1 million and wished him well.
In this example, there was almost no way for the man to be successful. He would have been broke within six months because nothing changed in his head, where most poverty actually begins. Without financial literacy, one finds out very quickly that an uninformed rich person and their wallet are soon separated.
And no different than the person who won the lottery and ended up broke or the professional athlete with a $100 million contract who ended up broke, this man would soon have found a large and growing group of “family and friends” to help him spend his newly gotten gains on things that did not add to his future wealth and well-being.
What the world needs now is less sympathy and more empathy. Public assistance is keeping many of us alive out of sympathy, but it is not giving any of us the power to be free and independent. And we all know it can be taken away in an instant depending on political fortunes or chance.
What the world needs now is less of a hand out and more of a hand up.
Beyond giving the men and women of the Invisible Class fish—or even teaching them how to fish—there needs to be a new national focus on showing them how to own the bait and boat, and thereafter how to own the lake, too.
We need to make sure we are applying care on the level of human dignity, the version of welfare that dates back to the Roman Empire, and thereafter adopted by the early Chinese, European, and other world leaders. I’m talking about taking care of our elderly, taking care of our children, and taking care of our disabled and others who cannot take care of themselves.
To this day, African Americans as a percentage of their population utilize public assistance to a much greater degree than whites and at a slightly higher rate than our Latino brothers and sisters. Asians, interestingly enough, use very little formal public assistance. This probably has more to do with a culture of deep support within the extended family among various Asian race groups.
It is for this reason that I believe that my community in particular simply did not get the Memo. We are not creating sustainable wealth, our own jobs, and our own economic base, and that is not because of a lack of talent. Everywhere that African Americans focus their talent and energy, they succeed (for example, in music, entertainment, professional sports, and the arts).
We are not dumb and we are not stupid. It is what we don’t know that we don’t know—but that we think we know—that is killing us.
A Fish Story
Someone once told me this story.
A man is sitting on the porch of his ramshackle home, facing a lake.
A community developer visiting the community said to the man, “You seem very able. Have you ever thought about getting a boat and fishing in that lake?” The man responded, “Well, why do that?”
The community developer then said, “Because if you fished and did well, you could sell your caught fish to the local markets, and then buy a larger boat.” The man responded, “Well, why do that?”
The community developer then said, “Because if you did that you could hire some of your friends, creating jobs, and maybe someday buy a fleet of boats.” The man responded, “Well, why do that?”
The community developer, growing frustrated, then said, “Because if you did that you could become a community hero and a major employer in your own community.” The man responded, “Well, why do that?”
The community developer, now totally flustered and out of options, said, “Because if you built wealth and did all this, you could then relax and retire yourself for the rest of your days, doing what you love, sitting on your porch.” The man then responded, “Well, I am already doing that!”
Sad, but funny.
How you choose to live your life is a choice. Improve your odds and choose the mind-set of wealth.