I’ll avoid the macro political angle of rich people lobbying lawmakers to pass laws to preserve and grow their wealth in exchange for campaign funding, etc.
Let’s focus on the micro angles.
Here’s probably one of the most underrated aspects as to why the rich get richer.
Psychological insurance.
When you’ve got a good chunk of money in the bank and a good stream of money flowing in, you free yourself of the worries of meeting your expenses. You have a level of financial peace of mind you haven’t had before and because your mind is more “settled”, you have the luxury of freed up brainpower to think more creatively.
And because you have a cushion, you have the ability to take more risks.
That will inevitably lead to taking action on the creative ideas you’ve come up with which will make you more money and the cycle repeats itself.
Now inevitably along the way, you’re going to meet other rich people and you’ll discover that much like yourself, each of them has developed their own “system” of making money.
They’ve found a way to deliver great value to people and scale it OR they found a way to deliver great value in a really concentrated form.
So then it becomes mutually beneficial to tap into both your respective systems to make each other even more money.
If one person owns a car wash and comes into contact with another person who owns a car lot, they can tap into their systems and refer clients to one another, thereby making each other more money.
Famous celebrities have a “system” of fans that follow them so other people who want to tap into that system give these celebrities free cars, clothes, jewelry, etc., for advertising purposes. People see that, they want to emulate those celebrities, and in a twist of irony, buy those things which they can’t afford which the celebrities have gotten for free.
The systems shared also applies to systems of knowledge as well.
One rich person can refer you to a particularly good CPA to help save you money on taxes and another can refer you to a great investment advisor as well to help grow your money.
But another particular thing happens when the rich make more money.
Everything they wanted before when they didn’t have money – they don’t want it anymore.
And then it dawns upon them.
They realize BECAUSE it was so hard to get in the first place, that’s what made it so valuable in their eyes, something worth seeking.
Sort of like when you were a kid and candy. It was relatively hard to get candy then but now that you can afford any candy you want in any quantity, it’s not that special anymore.
Same thing here except the “candy” is bigger and more expensive.
So with that desire deflated, they have all this money and it’s not doing anything sitting in a savings account so they tap into the knowledge and systems of other rich people they meet and start to invest it in order to grow it. They invest in real estate, stocks and bonds, businesses, particular retirement accounts, etc., which all together gets them more money and the whole cycle repeats itself.
Once you get over the hump, things get a lot easier.
Once you’ve got that cushion and a good flow of income coming in, the cycle begins to work in your favor.
So how can you get there faster?
Just model the actions that get the rich richer to help you get over the hump faster.
You can replicate those effects by paring down and living simply to give you that cushion faster so you get that psychological insurance so you can think creatively in order to develop your own systems that will deliver value on a massive or concentrated scale, meet other people who have developed their own systems and learn from them and leverage those systems in mutually beneficial arrangements, realize the illusion of things you wanted because they were hard to get, and use that money you would’ve spent on those things to invest it and grow it, and then you simply rinse and repeat.
So many people are fooled into continuing the cycle of poverty by not looking more closely as to why the rich get richer.
But if you take some time to understand why the rich get richer, you can utilize the same tools to get there faster.
Don’t be fooled by the flash.
It’s all psychological.
It will only slow you down on your journey of getting over the hump where the cycle begins to work in your favor.
