I think a lot when I’m pulling weeds, and I got a lot of thinking done over the past few days. This week, I spent several hours pulling those small green devil stalks in our backyard, and I got to thinking about a subject that I’ve pondered off and on for YEARS – why won’t most people ever become rich?
At one point in time, I simplistically chalked this up to income. Most people are not pulling down seven figures a year, and who could possibly get rich without such a large paycheck? Of course, becoming a part of the personal finance community and taking control of my own money situation taught me that income has very little to do with getting rich. It makes it easier, but high salaries very often don’t relate to high wealth (Hat tip to The Millionaire Next Door).
If it’s not about income, then what prevents most people from getting rich? Over the week, I mentally built a small list of causes that I believe keep people from basking in the glory of riches. Let’s take a look at what I came up with.
Why most people will never get rich
1: They prioritize other things – The phrase “actions speak louder than words” gets to the heart of this cause. Almost everyone wants riches, but until we prioritize getting rich over spending money on stuff that we don’t need, most of us will never truly accomplish that goal. Most people do not want to get rich bad enough to make it happen, bad enough to cancel expensive cable television services or cell phone plans, or bad enough to drive around in a 10-year old Corolla instead of a brand new Mercedes, or bad enough to say no to expensive dinner or vacation invitations. These are uncomfortable decisions that need to be made to help accomplish financial goals.
2: They don’t believe that they can – In some cases, people simply refuse to believe that anything GOOD could possibly happen to them. A poor attitude is a devastatingly destructive state of mind for people who want wealth. If we believe that nothing good will ever happen to us, that will ultimately become our reality.
3: They want to keep up with the Jonses – When status matters, keeping up with the Jonses is how that status gets maintained. If Jim next door rolls in with a new BMW, guess who wants one too? Most of us see items that we don’t have with at least some degree of jealousy, and this habit is a huge factor in preventing significant wealth accumulation.
4: They don’t accept that “it takes time” – Our inability to delay gratification keeps money flowing out of our wallets faster than we could possibly blink. For most of us, getting rich takes time. It means sacrificing a little discretionary spending for the sake of your future self, and the word “future” scares a lot of people. Life is short, spend money now. What if I die next week in a car accident? I don’t want to wait 10 years before I can enjoy the nicer things in life. These are the excuses that keep us working towards a goal of wealth that never seems to get any closer.
5. They think it is too late to start saving – While it is true that the earlier we start saving, the earlier we accomplish our financials goals, that does not mean we can’t start saving in our 30s or 40s. In fact, while I did funnel some money into my 401k throughout my 20s, it was only the bare minimum. I truly started to save BIG MONEY in my early 30s. I started late, but late definitely beats never!
6. They built very few passive income streams – Salary is great, but getting rich (and staying rich) becomes much easier when passive income streams are developed as a channel for continuous income. Stock market and real estate investments are passive while commuting into an office and working a full-time job is very, very active. Generating income outside of the office (where your money works for you) is a big factor in getting rich.
7. They live on credit – While the use of credit cards is not necessarily a bad thing, using credit to make a purchase before acquiring the funds to pay those purchases off is a huge mitigating factor to getting rich. Arguably, credit card debt is the very worst type of debt in existence. Why? Interest rates are generally through the roof, and running a month-to-month credit card balance may also indicate a tendency to live beyond our means.
What else? Can you think of other causes why most people will never become rich?