The mindset GAP

The mindset_gap_sweat_your_assets

I’ve read a thought-provoking article on Farnam Street on the Wealth Gap and the Mindset Gap. It makes the point that the Mindset Gap is the one we should focus on first!

To present his case, the author tells the story of the past COVID months, where two groups with two different mindsets emerged:

1) The first group became paralyzed and waited. They waited for someone else to take the lead and tell them what to do. They waited for schools to go online and figure out how to educate their kids. They waited for clarity. They waited for certainty. And they waited for other people to solve problems so they could continue with life.

2) The second group of people refused to stop. While they might have slowed down, they kept adapting. Inch by inch they did what they could and moved forward. They hired teachers or turned to Khan academy for their kids. They kept the expectations of themselves and their kids high. They pushed forward at work and home. They solved problems. And they learned new skills.

For the author, the difference between these two groups – we could call them the “active group” and “passive group” – comes down to mindset, not wealth.

All the energy you put into things you can’t control comes at the expense of things you can control. And because the second group focuses on what they can control, the second [active] mindset is far more resilient and adaptable than the first [passive] mindset. And that makes all the difference.

However, when the author talks to people about this, he reports that they often bring up the “wealth gap” saying: “It’s easy for the rich to hire tutors and teachers and childcare and keep their kids working hard.”

FS author believes this answer – and the underlying mindset – misses the point. “It is easy to overestimate the role of money and underestimate the role of mindset. Often, we convince ourselves that if only we had the resources, we would apply the second [active] mindset. But the second [active] mindset isn’t a luxury of the rich, it is a necessity to build wealth in the first place [if there is any correlation between wealth and mindset, for the author the strongest causality is due to the mindset].

For the author, when you focus on the money you miss the leverage of mindset hiding in plain sight. 

A lot of people without a lot of money had figured out ways to focus on what they could control. While they didn’t control what the schools did, they did control giving their kids extra work or putting them in Khan academy. 

Here is another powerful statement from the article: “At the end of day one, the difference between the first and second mindset is indistinguishable but at the end of a decade, the gap is too large to catch up“. The extra step, day after day, compounds! 

“Sooner or later, you realize everything comes down to mindset. When you focus on what you can control, there is always an action you can take to put yourself in a better position. When you focus on things you can’t control you tend to freeze, unsure of what to do, and you wait”.

For the past two years, these two mindsets have been invisibly applied in the background. Now that the world is opening, the gap is becoming visible. My son’s teacher told me she’s never seen so many grade 6 kids so far behind. I can only imagine the education loss in higher grades.

At the office, if you stood still for the past two years, you were lapped by the people that didn’t stop. 

No matter if you are studying or working, if you are already wealthy or not, the mindset gap creates an outcome gap that will only compound in the next decades. Educate yourself to be relevant, and keep an active mindset: Sweat Your Assets!