Why Can’t I Be Rich?

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It is a common goal, especially among Americans.  Shoot, it is a core of the American Dream, right?  We want to be rich and successful and possibly even famous!  Recognize these?

“I wish I made six figures!”

“I wish I could win the lottery!”

“I wish I could marry a Sugar Daddy/Mama and my life would be set!”

As the old saying goes, “If wishes were horses, beggars would ride.”  While I am a complete and utter advocate of setting big goals, I do think there is a difference between setting big goals and having outlandish ideas about how to acquire more money.  This might come as a shock, and I feel certain it will be an unpopular idea, but becoming rich (i.e. making and having a lot of money) requires hard work.

Oh sure, people DO win the lottery, so it certainly can be said that windfalls exist.  Were you aware of the fact, however, that most lottery winners (or recipients of any sort of windfall) go broke?  According to the National Endowment for Financial Education, approximately seventy percent of windfall recipients go broke.  The reasons why are many, but it mostly has to do with a lack of good guidance and advice.

Short of obtaining some windfall and then being smart about getting good guidance, what can we common folk do to become rich?  The answer is simple, but not easy – work hard.   I don’t just mean to work hard at your job, although that is one key to this equation.  Building wealth requires more than just earning a good salary.  In fact, that is where many people actually go astray, because they think they just need to earn more to have more.  Wealth building, like most worthy goals, requires three things: focus, diligence, and time.

Wealth building requires focus

First, you must become laser focused on your goal.  Dream big, but the best goals have a solid base in reality.  Is the goal you have actually achievable?  Is it specific?  Have you established a defined time horizon for its completion?  And most importantly, is your goal written down?  Create a goal that is a stretch for you, but not so unrealistic that you will most likely fail.  Outlandish goals set people up for failure, and that makes them scoff at goal-setting in the future, which is a real shame.

Define a goal and get focused about it.  Flesh out that goal – break it down into manageable chunks and start building the framework for how to achieve it one step at a time.  You might create a goal, for instance, that names the net worth you would like to have in five or ten years.  Then divide up the time horizon so that you have smaller goals annually that would lead to your big goal.  Finally, you would create monthly and even weekly targets of things you need to do in order to move this goal down the field.

Wealth building requires diligence

This is where diligence comes in.  Review your goals regularly, in order to keep yourself focused on them.  Be diligent about following the small steps you have outlined in order to achieve the bigger steps.  But when it comes to a wealth goal, you will need to also be diligent in another way.

In my experience, wealth building is always about choices.  Specifically, it is about the choice between “now” and “later.”  People with a wealth-building mindset are focused on “later.”  They will forgo expenditures now that would derail their long-term plan.  You simply cannot spend all your income now and expect to build wealth.

Here is an example for your consideration.  Let’s say you get an unexpected bonus at work.  Your immediate thought might be about what wonderful vacation you could go on, or you might think about some major purchase you can buy with that money.  Those would be examples of “now” thinking.  Our society, unfortunately, completely supports and encourages “now” thinking, by the way.  I understand this can be an uphill battle.

Instead, maybe you spend some time reviewing your financial goals and determine the best use of that bonus money.  If your goal is to increase your net worth (your assets minus all liabilities), then you could either use the bonus money to pay down some debt (decreasing a liability) or you could save or invest the money (increasing your assets).  Either way, you will have increased your net worth by the amount of the bonus.  This would be “later” thinking, as you aren’t getting immediate satisfaction from your financial move like you would if you spent it instead.  Or do you?

While you might not immediately have something or some experience to show for your financial choice, you do actually have the immediate satisfaction of having moved a step closer to your goal.  This can become quite an addicting feeling!

In my financial planning practice, we sometimes have clients that come to us after receiving some sort of windfall, such as an inheritance.  Kudos to them for seeking out counsel before becoming one of the seventy percent that go broke after windfalls!  But most of our wealthy clients became wealthy the old fashion way – they earned it, they sacrificed, and they saved.  This didn’t happen overnight, which brings us to the third required element in wealth building – time.

Wealth building requires time

The “time value of money” is a common theme in financial management.  I will give you a pretty amazing example shortly, but in a nutshell, the longer your savings (or particularly, your investments) have to grow, the better.  You can save smaller amounts for a period of time, or if you procrastinate saving, you will have to save larger amounts at a time to make up for the lost compounding time.

The classic example is investing in an IRA.  Let’s say that you begin to fund an IRA with $2000** per year when you start working at age 25.  You do this for only ten years, and then you just let the money grow until retirement at age 65.  Your total nest egg at that point would be $210,349, assuming a 7% rate of growth.

Your friend, on the other hand, is a procrastinator!  She waits until she is 35 to begin investing, and she proceeds to invest $2000 in her IRA for the entire 30 years until retirement at age 65.  Your friend’s nest egg at that point would be $188,922 with the same rate of growth.

Clearly you came out ahead – for a total investment of $20,000 ($2000 each year for ten years), you ended up with $21,427 more than your friend.  But here is the shocking part – your friend had a total investment of $60,000 ($2000 each year for 30 years) and ended up worse off.

The lesson here is that time matters in investing.  Don’t procrastinate!

You need time for your savings and investments to grow for you, but you also need time to be able to save/invest as much as possible toward your goal.  People just do not get rich overnight, no matter what you hear.  Slow and steady wins the race, you know!

Even modest earners can accumulate great sums of money if they just focus on their goal, sacrifice some spending in the now, diligently keep at it, and let it simmer on the back burner for as long as possible.  Like it or not, it will always be about choices – in this case, choosing to sacrifice now for later rewards.  But this is really the way most goals work, right?  Big rewards require big risks and sacrifices, no matter what your goal is.


What are your financial goals?  Are you able to sacrifice the “now” in favor of “later?”  Share below!  Or if you want to start a discussion with some like-minded friends, join the free SimpleMoney Community on Facebook to share your thoughts!

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You might also enjoy:

Should Your Goals be Simple?  Or Big, Hairy, and Audacious?

Don’t Know How to Start Saving?  Start Here!

Who Wants to Be a Millionaire?



*Previously published in WNC Woman Magazine, a print and digital publication that is now defunct.

**In 2019, the maximum you can fund in a traditional or Roth IRA is $6000.  If you are age 50 and older, the limit increases to $7000.












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