Friday, September 12, 2008

Coming To Terms with Never Getting Rich – A Look at the Pre-Requirements

What If I just don’t have what it takes to get rich?

I simply don’t have it. It being the elusive trait self made rich people have. Whether it is simply daring, risk ignorance, animalistic instincts or just a plain good old entrepreneurial spirit I simply don’t have it and I’m starting to think I never will.

I’m not talking about simply being successful which it no small feat in itself. I’m talking about getting truly rich, several millions of dollars worth kind of rich. It seems like some people are just born with the right set of traits combined with a bit of luck and make it big.

It shouldn’t be that hard. Many rich people aren’t as smart as me and aren’t as talented. Why can’t I make a small fortune then? What is it that I lack?

I’ve given quite some thought to the matter and come up with several key traits and circumstances which one needs in order to get rich. I believe the following are essential to getting truly rich and they carry a price, as anything in life does.

#1 Hunger

Many self made rich people describe their childhood as less than ideal. Many tell stories of poverty and lack of means. Many rich people developed a sort of hunger that grew from a lack of means or a need to prove something. Paradoxically enough, the better the childhood you had, and the lack of “traumas” you had to face the less you have to prove as an adult and as a result chances are you are pretty comfortable in your upper/middle class social standing. I haven’t developed any real hunger for anything other than for money that will serve for a comfortable retirement at 40.
This hunger serves as a driver for going and getting. Without something to prove, why bother with all the hard work?

#2 Entrepreneurial Spirit

Some people are born entrepreneurs. We all know a friend of a friend who owns one coffee shop here, two apartments there and a small start-up company elsewhere. These people can’t really live any other sort of life without great frustration. Entrepreneurs usually keep on going forever, long after they’ve already ripped great financial success. It’s their nature.
Serial entrepreneurs are very common in the High-Tech industries, in real-estate and everywhere really. They always initiate, think of new ideas and somehow have a god given talent of starting anew.

#3 People skills

There’s no success without people. They buy, sell, manage, work and we’re totally dependent on them. Humans are social animals and without good people skills not much can be achieved. The current networking trend or plain old connections serve as success multipliers. Sometimes a good word or a friendly introduction can open doors to huge opportunities. In the end, it’s all about people.

#4 Risk “Ignorance”

For the lack of a better term risk ignorance is what I name the ability to take risks without being intimidated by them. It may even be more extreme. They may ignore risks at all. Thinking about risks limits our actions. Any rational person considers his actions before taking them usually weighing the risks and benefits.

If you’re like me you’re very risk averse and will probably never mortgage your house to finance any business endeavor, for example. Risk and return are tightly bound, as we know, and therefore chances of getting really rich are slim to none since a sacrifice is required.

#5 Luck

The other necessary side to risk ignorance is a healthy dose of good luck. Rich people stories are naturally success biased. We almost never hear of people trying and failing since it doesn’t sound as glorious.

We are fed success stories and naturally value our chances at success much higher than they really are. Risk, by definition carries a certain chance of success and a certain chance of failing. The stories that do get to us are of the people who already proved to be lucky in one or more business adventures.

It’s Better to Try and Fail Than to Have Never Tried At All ...

I hold quite a deterministic point of view. Philosophically wise it makes sense to me. Still, there is no better way to get to know oneself than actually trying. It doesn’t have to be a big bang try which will end up with heavy personal cost. Any small initiative might succeed (like this tiny little blog of mine which in my standards is doing quite well).

From my personal experience there are only a few experiences quite as empowering as making $100 dollars on your own, without the grace of an employer.

I’m coming to terms with never getting really rich. Becoming more successful is something I aspire to and work hard for but still, I almost know I’ll never be able to look at my balance and see a 7 figure, not to mention 8 figure number shining brightly back at me.

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Image by: noahwesley


Anonymous said...

I think all these traits are skills that can be exercised and slowly developed - like muscles.

Maybe physical stretching or yoga is a good analogy:

You need to stretch just enough in each of these areas to be uncomfortable. Then, rest and let your expanded comfort zone expand naturally. Then, stretch again.

Then, you will start to advance in these areas at different rates.

Just let it unfold naturally, on your own timetable.

Then, 10 or 20 years from now, you may indeed get rich,and then look back on this post with amazement at how much you grew!

vilkri said...

There is one more, very essential element to getting rich: having rich parents. Check out this page . "The strongest predictor of an adult’s relative wealth status is his or her income, which in turn is highly predicated on his or her parents’ income and wealth." There are some people who make it big and come from small backgrounds, but they are the exception. However, their successes are highly publicized which gives us the illusion that all of us should be able to do the same.

Another essential element can be summed up in the old adage, "It does not matter what you know, it matters whom you know." If you grow up in the upper class, you have friends in the upper class who can fix you up with business. If you do not have these connections, it is much harder to get the same business, even if you offer a better product or service.

I know all this sounds kind of fatialistic, but it does not have to be that way. Since we were lucky enough to live in the US, most of us do a lot better than a large majority of the world's population. Almost all of us have the opportunity to have a comfortable life - not rich, but comfortable. What is so bad about that?

Abigail said...

I don't think I'd ever want to be rich. It comes with a lot of risk and responsibility.

I've only ever wanted to be comfortable. Maybe have enough in the bank to not think through every single purchase three times.

I think you're right about the determining qualities. What most "pulling up by their own bootstrap" stories miss is that there are plenty of people who tried and failed. But since we only hear the positive, we end up feeling entitled to success. Hence the people who risked with a subprime, but were perplexed when they lost. Hence the "rich" people who end up bankrupt, because they spend to keep up appearances so, as you said, they can prove themselves.

Okay, enough frustrated ranting. I guess I just wonder if we wouldn't be a lot more economically healthy as a country if more people aimed to be "comfortable." If we wanted houses that were on the smaller side. If we didn't care so much about what cars we drive. Or how other people see our lifestyles.

Sara Aase said...

Excellent post and excellent comments! I have been wondering the same thing myself -- will I/we actually have what it takes? In our case, we haven't yet clearly defined our goals other than to get back to not living paycheck to paycheck and never quite making it. But discovering the connection between better budgeting and saving and wealth is fascinating, and one that makes me think with a little ingenuity, maybe we could do it. But Vilkri makes an excellent point about family. Have you read The Middle Class Millionaire? It's the clearest take yet I've read on spelling out why some of the points you mentioned are so. Keep it up. I'll be a regular reader!

Abigail said...

Well, clearly you're inspiring because for the second time in under two weeks, I ended up riffing off you on my blog.

It's got the erudite title "5 reasons being rich sucks"

Hope you enjoy it!

Dorian Wales said...

Thank you for all your excellent comments. I've been a bit busy with the carnival of personal finance and only now had the time to carefuly read through.


Savings Toolbox said...

Great post! I think it's great that you are reminding people that getting "rich" involves a lot of factors and not just one or two simple things.

I think being successful is a much more realistic dream to someone once said money can't buy happiness.

Nice job!

Ray said...

I think you're probably shortchanging yourself. Like the old saying goes, shoot for the stars and get to the moon, or something along that line :-)

But then again, IMHO, if it's a conscious decision from your heart that you do not want to put in the effort to get rich, that is fine, as long as you know that you'll be truly happy with it.

Anonymous said...

I'm glad I came across this post. It is excellent. I think the implication is, those who don't "have what it takes" to be rich are less than those who do. I don't buy it at all. Being rich is not a state of being but position of "having" wealth. The important 'being" in my book is being at peace with yourself - regardless of how much money you have.

All these books that push folks into the mindset of becoming wealthy leaves them many in a constant state of anxiety - and for no good reason.

Good for you for writing this post!

Dorian Wales said...

@Anon - Thanks for the feedback. It is appreciated.