Have you ever sat back and asked yourself why other people keep getting ahead while you seem to be treading water? On one hand it’s futile to compare ourselves to others. There will always be people with more and we have and there will always be people with less. But on the other hand, what’s wrong from learning from the success of others? Nothing.
In a non-judgmental way, let’s consider the top 5 reasons why people succeed. Your goal is to learn without beating yourself up and then to implement as much of the following as possible. Let’s get going. Here are the top five reasons why people become wealthy:
5. Potential Earnings
How much you earn is not the most important wealth producer because many high wage earners spend everything that comes in and more. That said, a healthy cash flow is extremely helpful because it sets up the possibility for you to sock money away and invest. Without enough income, you’ll find it very difficult to ever put money aside for your future.
The key here is earning potential. You may not be pulling down big numbers now but what does the future look like? If the future is bright, it might make a lot of sense to stick with a job even if it isn’t that lucrative now.
Are there good opportunities ahead and are they realistic? How long will it take you to reach the sweet spot in your profession?
If your current job is a dead end, do everything you can to make a change. If you can’t jump into a different line of work, create your own new job by launching a side business or encourage your spouse to do so. Don’t worry about immediate results. Make decisions and take action today so that you’ll have the future income you need to save, invest and build your net worth in a serious way.
One big problem people have – especially younger people – is that many want immediate results. This is a huge wealth waster. If you are impatient and demand immediate results you are setting yourself up for a bleak future; here’s why.
Investments, jobs and businesses that “promise” immediate and high returns are usually costly pipe dreams and lies. It’s a law of nature; the higher and faster the return, the higher the risk. My experience is that these super quick return schemes usually lead to big losses.
Wealthy people understand that success takes time to build. And here’s a bonus tip for young Pilgrims; you have tons of time – so use it.
You may want quick results, but what you need is long-term success. You can build a very secure future by going slowly just like the rich people do.
My experience with well-healed people is that they tend to focus on what they know best and what creates the most value. Then, they outsource what they can to trustworthy experts. If you have a job or business with great potential, put all your professional attention there and don’t get sidetracked.
Of course it’s important to have balance in your life as well – we don’t live on bread alone. But be mindful of your time and energy – don’t waste any.
2. Overcome Fear
This is especially important when it comes to investing. According to Fox Business, 52 percent of Americans don’t own any stocks or stock funds. And it gets worse. The average person has less than $25,000 saved for retirement and only 26 percent of those under 30 own stock. (I’m not saying that stocks are the only way to build wealth but they are certainly one long-term investment that should be considered and should probably be part of your retirement portfolio.)
Some people don’t invest because they think they don’t have enough money. But the reality is you can start with as little as $500 so that problem can easily be solved. A bigger issue is fear and mistrust.
Of course it’s easy to understand where all the fear is coming from. The media bashes the market constantly – mostly because the journalists who cover the market don’t really understand what they are writing about.
1979 and 2008 are good examples. In both cases, the market certainly was in a terrible mess. And the media pounced. Many journalists reported that the market was dead forever – at exactly the wrong time.
The market isn’t a panacea and it does entail risk. But it’s also been a wealth generator – earning more than bonds or cash over the long run and a much better way (historically) to create retirement income than the alternatives. Wealthy people are able to overcome their own fear in order to capture the potential long-term benefits.
1. A Plan
When you have a plan, you bring everything together. Rich people know this. With a plan you project out what your earnings are going to be, how much you’ll save, how you’ll invest, and (most important) how much retirement income you’ll have when you need it.
Your plan helps you see what it’s important and what requires less of your attention. And because a plan gives you a long-term perspective, it helps you overcome the fear that the media is working so hard to generate for you.
Most of the people who are getting rich use these five tools to build their wealth. The good news is, there is probably very little standing in your way that prevents you from doing the same.
What other techniques are the rich using to enhance their finances? What else can you do to emulate them?