5 Reasons Why The Rich Are Rich, And You’re Not.
I get it, we all want to be rich. We all want to be millionaires.
Unfortunately there is a misperception of just how difficult it is to become wealthy. It may be simple in theory, but exceptionally difficult in practice. Some will say, “Just start your own business,” or, “just invest $10,000/year for thirty years.” Sounds easy, right?
The fact is, the public’s perception of what it takes to become a millionaire, is reality deficient. Until we come to terms with this reality, the dreamers-of-riches will continue to face disappointment.
Here are five reasons why the rich are rich, and you’re not.
1) You’re Not Old
Believe it or not, most millionaires are in their 50’s and 60’s (I realize that 60 isn’t even “old” anymore, but you get the idea). It takes a long time to build wealth. Do you want to have kids? Well set your “millionaire” goal back a few more years; kids are really expensive and tend to drain savings accounts.
The majority of millionaires I work with became millionaires in their 50’s. Most did it through consistent contributions to their 401(k)s and other investments, the slow appreciation of their home value, and the steady paying down of their debt. No one got there overnight.
If you’re 35 years old and you’re pissed because you’re still not a millionaire, you need to chill out. These things take time. Be patient!
2) You Don’t Own Your Own Business
Building a business is extremely hard. If you do it well, and if you do it right, your business can serve as a vehicle to millionaire status faster than working for someone else.
Entrepreneurship certainly is not for everyone. It takes courage, dedication, and an all-around doggedness to keep going when the going gets tough – not to mention an idea that seeds the business.
If you’re uncomfortable with striking out on your own then A) don’t hate your boss for earning much more than you because they have taken all of the business risk, and B) be patient (see rule #1 above)
3) You Have Lots Of Time On Your Hands
You’ve heard the old adage –
You can have either time or money, but not both.
I see this rule exemplified every day. If we have a client that is hard to get a hold of, there is a high likelihood that they own their own business, or have a position of responsibility in a large company. These clients have very little down time. But you know what? They earn a lot of money.
I’ve seen clients on the opposite end of the spectrum, clients to whom we must explain why they can’t retire (because they haven’t saved enough money) even though they’ve been working for 45 years. These clients seem to have all of the time in the world to come into the office, chat about the weather, and opine on the political climate.
There is a reason why successful entrepreneurs preach never-ending hard work as the path to success. You’ve got to put in the time! And if you put in the time, chances are better that you’ll reap the rewards.
4) You Spend Too Much Money
Most people fall into this category. For most people who aren’t old, don’t own their own business, and have a lot of time on their hands, it is still in fact possible to become a millionaire. That is the beauty of living in the United States of America.
The problem is not that you earn too little, it’s that you spend too much!
Most people don’t like hearing this. It’s easier for many to believe that our lives are outside our control. But the fact remains that each of us is in control of our expenses – at least to a much greater degree than we are in control of our incomes.
If you spend every dollar you earn, you’ll never build that nest egg. You’ll never have any money to invest. If you don’t have any investments you’ll never experience the power of compound interest. Without compound interest, many of us would never become wealthy.
Long story short, you need a nest egg, and you can only build it by spending less than you earn. Get your spending down so that you have capital to invest!
5) Your Economic Value Is Too Low
This is a hard one to talk about, but it must be talked about. I’m not passing judgement about your social/cultural value; Van Gogh died penniless after all. I’m talking about economic value: how much someone will pay you to do or create something for them.
In my first five years out of college, I earned an average of $12,000 per year – mind you I was living in the Bay Area, CA. I was teaching and writing music and had an occasional pickup gig as a drummer at a 49ers or Warriors game. I may have perceived my social value to be high (teachers are valued, right?), but the reality was that my economic value was incredibly low. I also had a lot of time on my hands, so… rule #3.
I had to take a hard look at my life and what kind of work I was pursuing. I had to ask whether or not I could realistically earn the kind of money that I wanted to earn while being a percussion instructor. The answer was no. So, I hit the books, hard. I built a new skill set from scratch in an effort to increase the value of the services I could provide to others.
Now, instead of students relying on me to teach them how to play paradiddles, people rely on me to make sure that their investment portfolios can weather a recession. A bit more high-stakes, no? My economic value has increased, and the money I earn now reflects that.
It’s incredibly hard to build large amounts of wealth if you are stuck in a low-value job. If you think you are underpaid, get out there and try to find an employer that will pay you what you think you’re worth! If you can’t find an employer that will pay you more, then it’s not the employer who is the problem. You need to increase the value of your skills.
Just remember that if you can add more value to other’s lives, it’s only a matter of time until your income reflects that value (unless you’re a Dutch post-impressionist painter with severe mental illness).
Get aggressive, get hustling, and get after it!
A Final Thought
If none of the above items are news to you, then you’re going to be just fine. You understand the interconnected nature of time, hard work, and a valuable skill set. Sooner or later, so long as you’re building that nest egg, you’ll probably reach your goal of accumulating a million dollars.
If any of the above items are in fact new to you, then take pause. Consider how your career choices, time habits, and expenses affect your ability to build wealth. A small change now can make all of the difference in the world!
Do you have a question, or would like me to cover a particular topic, feel free to leave a comment below!