It is said, that you are the average of your 5 closest friends.

“It’s better to hang out with people better than you. Pick out associates whose behavior is better than yours and you’ll drift in that direction.” - Warren Buffett.

I have a number of close friends that are wealthy multimillionaires, much wealthier than I.

I also have a number of close friends that are average people that will retire on the pension or with some retirement savings that will require a part pension to supplement their day-to-day living, however, these friends will need to work as long as they can.

My two groups of friends are really two ends of the wealth spectrum and it is quite interesting having conversations with them.

On one end of the spectrum, I go to the marina and sit on the back of my wealthier friends' boats (or mine for that matter) and we discuss things like business, property, stock markets as well as family, overseas holidays or extended holidays, politics, the economy, sport etc.

Then I may go to the local pub or club with my not-so-wealthy friends and the conversations will be about cars, trailer boats, weekends away, their work, what they do at work, their family, local gossip, sport etc.

All my friends are great people, however, the conversation is different between the two sets of friends. Looking more closely, I have observed that the conversations amongst my wealthy friends is about family, self improvement, experiences, and the seeking of ideas/tools/inspiration to do better for themselves, family and friends.

The converstaions are "deeper" and thoughtful/thought provoking.

However, the converstaions with my other (less wealthy) friends is about family, work, cost of living and prices of things, car repairs, home repairs, gossip etc.

These are much shallower conversations - more like small talk.

From what I have observed, wealthy and successful people tend to discuss ideas, concepts and look for information to better themselves. Mediocre people tend to talk about "things", other people and gossip.

It is also an observation of mine that my wealthier friends share and discuss wealth creating information, business ideas and investment ideas, and views on the economy so they can learn from each other - it's like a masterclass in business and wealth.

I have learned much from these conversations. I have asked many a question and also raised many topics where I too was able to contribute some valuable input for them also.

This has helped raise my game over the years, I'm sure.

My not-so-wealthy friends are not interested in discussing the topics that my wealthy friends do. In fact, they have little to zero input because it is not at all of interest to them. Hence, conversations are not educational (unless you are wanting to learn how to replace brakes or a fuel pump on a car!)

My wife and I were out to dinner with friends a few years back, and brought up the topic of retirement. We thought this would be an interesting topic, since we were all in our 50's and they were likely retiring in the next 5 to 10 years.

As it turned out, we were wrong!

They all said they would work until they could no longer do so. They had no idea how much they needed in retirement, what they would do with whatever retirement savings they had managed to build for when the day came, and they suggested they would go to a free government financial advisor upon retirement to get advice on what to do.

We were surprised by the lack of interest in their own financial situation and their own future, but then, I guess, that's exactly why they are in the financial situation that they find themselves in! They are the lovliest of people, but have a very poor understanding of wealth creation and wealth management.

One final observation that I will mention (though I have many more!)....

The individuals on the wealthy side of the spectrum are always looking to do better for themselves and their family. They will ask questions and seek advice from those who are doing better than them, in order to do better themselves, and they are willing to pay for good advice. For these people, learning never stops!

My poorer friends have NEVER discussed or asked any questions regarding matters of wealth creation, finance, investing etc. They never seem to show any interest in improving their lot in life. For them, learning ceased the moment they left school. They seem happy to just plod along with the assumption that the future will just look after itself - until they find out (mostly way too late) that it doesn't! This baffles me to no end.

The purpose of this post is to get you to look, really look at your friends, the conversations you have with them and where you fit in the mix. Are you the average of your five closest friends?

Lesson:

• If you are looking to do better, you need to shift your average upward. To do this, I'm not suggesting to let good friends go that are lower on the wealth scale than you. What I am suggesting is shifting your average up by adding wealthier and more like-minded friends in your life.

• I personally chose to keep almost all my friends (because they are good people, though not neccessarily like-minded in the wealth creation area). However, I increased the number of like-minded wealthy friends, that in turn helped me improve myself.

• Yes, I have let a couple of friends go, but it was because they were very negative and just dragged myself and others down. I figure there is enough misery in the world, so why should I have to put up with negative people in my life - right?!