How to Become Rich
First, a Little Perspective
While many people dream of becoming rich, most never achieve this dream.
Of course, rich is a relative term with regard to financial wealth, as the average poor or middle class person today enjoys luxuries unknown to the wealthy people of ages past.
As I pointed out in my Hub entitled Views of Food Then and Now, starvation and famine have been the major cause of death throughout history but in recent years, as a result of our rising wealth, food has become so abundant that obesity is rapidly becoming a leading cause of death.
Compared to the wealth of Bill Gates, the average American is poor. However, if we compare the creature comforts enjoyed by the same average American of today to those enjoyed by George Washington, the richest man ever to hold the office of President of the U.S., it is George Washington who comes up short.
Money Can't Guarantee Happiness - But Neither Can Poverty
The term rich can also be applied to the accumulation of other things besides financial wealth.
Things like good health, close relationships with family or friends, good health, a rewarding career, enjoyable hobbies, etc. can also make people feel rich and well off.
Being rich does not necessarily mean a person is happy. The story of King Midas is a classic tale wealth and unhappiness as is George Eliot's classic Silas Marner in which the hero, Silas, finds happiness only after losing his horde of gold and taking in and raising an orphaned child.
The term poor little rich girl is a further examle of a person being both rich and unhappy as it describes a person born to great wealth who is also alone and friendless in the world.
However, before carrying this philosophical discussion too far, let us remember that we live in the twenty-first century of today and not the eighteenth century of George Washington and we need more money to acquire the creature comforts that are available today.
As to happiness, while it is true that we cannot buy happiness with money, we should not forget author Leo Rosten's observation that, Money can't buy happiness, but neither can poverty.
The Old Fashioned Way of Working and Saving is the Best Method
There are a number of ways to become rich and here are a few of the more common ones:
1 Inherit a fortune – for the most part this is a matter of luck in that you either have to be born into a family with a rich relative who will leave you their fortune or you have to encounter and befriend a wealthy person who is childless and decides to leave you their fortune. Both of these are long shots.
2 Win the Lottery – this is every sucker's dream, but frankly, the odds of meeting and befriending a childless stranger are probably greater than winning any lotteries.
As for the lottery run by my state (Arizona, and probably every other lottery in the world), I had a mathematician demonstrate to me once that your chances of winning the lottery by purchasing a ticket are statistically only slightly (very slightly) greater than your chances of finding a winning ticket on the ground that someone else brought and lost.
Links to My Other Hubs on Money & Finance
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3 Be born with a talent in great demand – This one also depends upon luck but you do have more control and greater chances with this than with numbers 1 and 2 above. Inventory your talents to see what you have and what the market wants – athletes, singers, entertainers are currently hot commodities.
Then work very hard at developing your talent and you just might make that fortune.
While it may look easy, when you take time to study the background of the beautiful millionaire model or the the athlete making millions throwing a football, you will find that an incredible amount of time and effort went into reaching their present position.
Also, the stress of their present fame is usually more than most of us want to have to endure.
4 Grab an Opportunity and Run With it – Get a good education in a hot area, such as IT, web design, nano technology, etc.
Work hard to become a leader in the field and keep watching over your shoulder for the next opportunity in the field. Then, when the opportunity presents itself, throw all of your time, energy, and every cent you can get your hands to to start a company to produce the product or service.
If you guessed correctly and the product or service is just what the public wants NOW you can either go public and make a fortune on the sale of some of your stock or sell it for billions to a company like Google (a la You Tube) or Yahoo.
Of course your plan could bomb and you could find yourself with nothing but a pile of bills or, worse, fail because you were too early and have to endure the pain of seeing someone else make a fortune with the same ideas a few years later when the market is right.
5 Be Old Fashioned, Work and Save – This route is open to practically everyone and the younger you are the better. It involves working hard and saving.
In their book, The Millionaire Next Door: The Surprising Secrets of America's Wealthy, the typical American millionaire is described by authors Thomas Stanley and William Danko as a very ordinary person who has slowly and steadily accumulated wealth through work and savings.
Most of these millionaires live typical middle class lives with few outwardly displays of wealth. In fact the only thing that distinguishes them from their other middle class neighbors is the size of their bank accounts.
Most of these millionaires own their own business but they are traditional low tech businesses.
While their neighbors live off of credit and spend thousands each year on finance charges, these people save (earning interest) and pay with cash. Their homes are comfortable suburban tract homes, their cars are late model family type cars, their clothes are off the rack.
The author's point is that these people are no different than the vast middle class that makes up America other than they are more focused on their work and they save rather than borrow.
By middle age these people are usually very wealthy but their habits remain those of the middle class.
In fact when Stanley and Danko were writing their book they held a series of focus group sessions in fine hotels and invited people whose financial status put them in the millionaire class, and asked them to describe their lifestyle and how they made their fortunes.
In the room where the focus group was held they arranged for a table of free drinks and snacks that included fine wines, expensive mixed drinks, caviar and other expensive appetizers. For variety they also included some beer and traditional appetizers.
What surprised Stanley and Danko was that the beer and traditional appetizers disappeared fast while the wines and caviar type food and drink went untouched. The work and saving are habits that are developed and cultivated over a life time.
6 Retire a Millionaire – for a young person this is probably the easiest road to wealth, but they have to wait for it.
Simply open a Roth IRA account with a good Mutual Fund or other investment company when you get your first job at 16 or 17 (or later, but the longer you wait the less time you will have for the money to grow).
Arrange for your paycheck to be deposited to you checking account automatically and, at the same time, arrange for the mutual fund or investment company to automatically withdraw a fixed amount from your checking account each month, say $25, $40, $75 whatever you can afford.
It may hurt for the first couple of months but then you will get used to living off of the lower amount (your take home pay minus the IRA deposit) and forget about it.
In time your income will go up and you can either leave your IRA withdrawal the same or increase it by part of the raise.
Over the course of the next 40 – 50 years, the reinvested income from your deposits will grow to many times the amount that you are investing and when you retire you will not only have accumulated close to a million dollars or more but, after age 59 ½ you will be able to withdraw it tax free.
© 2006 Chuck Nugent
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