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The Wealth Mindset

So you want to be rich . . . or are you rich already? Oxfam says you may well be. The charity says just one per cent of the population holds an astonishing 48 per cent of the world’s wealth. And if you live in New Zealand, it’s not hard to be part of that one per cent.

2 November 2021

According to the Global Rich List, which highlights worldwide income disparities, if you earn more than NZ$45,508 a year you qualify to join the one per cent of people in the ‘rich list’.

But does that mean you are also ‘wealthy’? That’s not quite the same thing, says Auckland-based authorised financial adviser and psychological therapist Paul King.

What is wealth?

“Wealth can be calculated as the amount of money you’ve got, or it can be ‘meaning’ – and understanding what meaning is, is something that as a therapist I'm trained to do,” says King. “I coach clients to understand the meaning of their own happiness, by asking questions.

“People know what makes them happy, they know what is meaningful for them, but it’s unusual that they get the time and space to identify it,” he says.

He says it can be a cathartic experience thinking about how money can – and might not necessarily – make you happy. Once people know what makes them happy, they can work towards reaching those goals, he says.

Lynda Moore, an accountant and financial adviser who calls herself the ‘Money Mentalist’, agrees. Moore says wealth is a far wider concept than money in the bank.

“I don’t agree that wealth is all about money and ‘stuff’. To me, a lot of clients bring in that it’s family and it’s relationships, as part of their wealth history.

“It’s also being able to spend time with these people. They say: ‘Wealth gets me time and gives me stronger relationships, that ability to give back’.”

Your money ceiling

But what does having ‘enough money’ mean to you? And are you sabotaging your own attempts to get richer? Moore says she asks people how much money they see themselves having when they retire. A million dollars, she asks?

Some people react with disbelief. They don’t believe they will ever have that much money. So, she asks them to keep thinking of a lower amount, until they’re comfortable with that sum.

“I call it their ‘money ceiling’,” says Moore. “Our belief structures get us to a point where we go, ‘I could never earn more than that’.

“You hit that ceiling and then you start pushing money away, because your beliefs won’t let you accept it.”

You can see the effects of the money ceiling with windfalls, she says. Often Lotto winners spend all their winnings and end up right back where they started.

“If they don't expand their beliefs, they will push that money away.”

That phenomenon is widespread. “We don’t even know we have that ceiling until we hit it. Business owners can grow their business until it stagnates, and when they hit that ceiling, they start buying toys.”

Reset your expectations

To push up your money ceiling, you need to change your perception, so you believe that you can achieve greater goals, Moore says.

“If you're earning $100,000 and say you want to retire with $500,000 – that feels comfortable – ask [yourself] how are you going to get there, what are you going to do to get you there?

“What skills do you have? Can you get a better-paying job, and can you grow your business? Which begs the question: if you can, why aren’t you doing it now?”

Part of the wealth formula is application and simple hard work – and part of it is understanding what is going on in your head.

“One couple I spoke to were living a lifestyle that their business couldn’t sustain. They had to make the distinction between their business and what they spent. Either they could cut back their lifestyle, or build their business.”

Drop the stereotypes

Another barrier to wealth is the common belief that money is evil.

Moore says: “There are so many negative stereotypes around wealthy people; that people like Donald Trump are greedy and stepped over people to get there. But there are a lot of wealthy people who do a lot of good for people. They’re the ‘humble rich’. We need more positive stereotypes around money.”

Also, many people carry their parents’ beliefs about money with them into adulthood.

“The generation who’ve had parents who lived through the Depression weren’t taught to enjoy money. They believe you should only have what you need.”

And unhelpful beliefs often persist into relationships, says Moore.

“I’m seeing some younger couples who’re living their parents’ attitudes in their own marriage. Mum spent too much money, so ‘If I spend, I have to hide it.’ Or Mum only got the housekeeping and Dad looked after the money, so, ‘No way, I don’t want to know about family finances’.”

Talk to your partner about money

Moore says a lot of couples don’t even talk about money. Whenever they do, the conversation leads to arguments, so they stop discussing it altogether.

“If you don’t talk about it, how can you become wealthy? Couples need to know how to talk about money – it’s all about communication and understanding where you are.”

Technology means we’ve lost the ability to handle money, too, suggests Moore.

“In my grandmother’s time, you got paid in cash and you divided it up and when it was gone, it was gone. Today, we don’t know how to handle it in the same way. EFTPOS machines and credit cards mean we’ve been distanced from money.”

She suggests you experiment by taking a wallet of cash to the supermarket and seeing how that changes your spending habits.

Keeping up with the Joneses?

Paul King headed the launch of the ASB Kiwisaver Scheme. “I kept getting the message that if people were given access to a pot of money that they would not [otherwise] have had, they will buy a boat and a bach and maybe a BMW as well. It’s not a great plan.”

Moore agrees. “You might be keeping up with the Joneses, but the Joneses are probably not wealthy in the true sense of the word.

“To me, that’s not wealth. The definition has to change, because we can no longer expect that at 65 that the government is going to look after us. Now we have to create our own security.”

But her concern is that too many Kiwis are not doing that, and instead are in debt.

“Financial planners are seeing more and more people who are going to have mortgages in retirement,” she says. “It’s a real concern. Yes, you can sell the house, but you still have to live somewhere.”

Save or spend?

King says we often blame genetics and feel we’re trapped in a personality type, saying to ourselves, “I’m a spender, it's the type of person I am.” People use this as an excuse to continue their behaviours, he says. “You might have a genetic personality but it will only switch on in certain situations, at a molecular level. So, you’re not tied to your genes.”

Says King: “In psychology there is a concept known as ‘schema’, which is how you see yourself in life. Schema is how you self-talk to yourself about every situation. It affects your life and meaning and perception of wealth.” Filling your thinking with positive things changes your mindset.

Moore talks about the ‘hedonic treadmill theory’. “Basically, the more we earn, the more we spend. Our happiness will increase and then level off, so spending the extra money doesn’t add to our happiness.”

She says if you find yourself coming up with reasons to spend money, you’re probably just rationalising and justifying, because at heart you know you shouldn’t.

“Say you’re buying taps. If you’re having an argument with yourself, [saying] ‘It’s expensive, but it will add value to the house’, that’s rationalisation and justification.

“If you really want that expensive tap, to stick to your budget, you’ll have to make cuts somewhere else.”

You probably won’t get rich just by saving instead of spending. But you will find your goals easier to reach.

“If you are going to raise your money ceiling to earn more to achieve wealth, the danger is you will spend it on lifestyle and not wealth accumulation,” says Moore. “So, use any additional income to build wealth first, then build lifestyle.”


Decide to be interested in your finances. Make an active decision to be interested. Decide that you are going to listen, ask questions, find out. Passive acceptance of ‘financial planning’ is disengaged and sterile. Answering a few questions about ‘attitude to risk’ and what kind of car you might like is not being interested, it’s filling in a survey.

Meaning: Meaning is everything. ‘Wealth’ does not mean money. What does having money mean? Your ability to enjoy its consequences is ‘wealth’. So, to plan your future wealth, first you have to really understand what makes you happy, and work backwards from there. Don’t leave this to chance or circumstance or accept someone else’s ‘financial plan’.

Intention and attention: They must both be present. Having the intention to understand will naturally bring your focus onto your planning. The cognition – understanding any difference between what you are doing or planning and what you would like to happen – is what needs your attention.

Trigger-thought-feeling: Something happens and you feel a certain emotion. If you examine your general emotional state and find you are not happy with it, then your ‘schema’ – the way you view the world and you in it – will need some adjusting. Next time you react to something with an emotion, ask yourself: is that really true, or could there be other explanations? The more positive, reasonable, rational possibilities you come up with, the better you will feel. You will be learning to insert ‘thought’ between a trigger and an emotion.

The Stockdale Paradox: Resilience generated by a combination of realism and optimism.

Admiral Jim Stockdale found, when he was held as a prisoner during the Vietnam War for eight years, that those who fared worst were the optimists. They would always set goals that were never met.

Paul King says that arbitrary optimism can set you up for constant disappointment. Limit ‘This will happen by then’ kind of thinking. Confront your situation, then do something about the things that are within your control, and accept what you really can’t change.

Identify your values; for instance, ‘kindness’ is a value, ‘successful’ is an opinion. Be aware of your values and make your decisions based on them.


First published 24 May, 2017

By Brenda Ward

The editorial below reflects the views of the editorial contributor only and content may be out of date. This article is sourced from a previous JUNO issue. JUNO’s content comes from sources that it considers accurate, but we do not guarantee that the content is accurate. Charts are visually indicative only. JUNO does not contain financial advice as defined by the Financial Advisers Act 2008. Consult a suitably qualified financial adviser before making investment decisions.

Informed Investor's content comes from sources that Informed Investor magazine considers accurate, but we do not guarantee its accuracy. Charts in Informed Investor are visually indicative, not exact. The content of Informed Investor is intended as general information only, and you use it at your own risk.


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