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So You Want To Be Rich?

November 30th, 2006 at 12:57 pm

Here's the question I get asked most often when people learn that I write about personal finance: "So how can I become rich?"

Here's the answer: "Do what you already know." That's the secret. Your already know everything you need to know to be rich. The problem is, even though you know, you probably aren't going to do it.

Let's be brutally honest. Anyone who is writing about personal finance will be writing about something that you already know (but probably aren't doing) 90% of the time. There will be a small chunk of knowledge here and a new service there that you may not have heard about, but for the most part, personal finance really is straight forward and easy to understand. You don't believe me? Here is the formula to get rich:

1. Start saving early
2. Spend a minimum of 10% less than you make.
3. Invest the money you don't spend.

That's it. No secret formulas or hidden gems. If you want to be rich, it's as simple as that. Of course, there is some tweaking that you have to do. You can't invest in any old thing, but even that isn't difficult to figure out and you already know where you should invest the money (401k with matching funds, Roth IRA and stock index funds being the most obvious - see, you knew that too).

In reality, I shouldn't have a job (and I would gladly look for another one if everyone would do what they already know they should do) helping people with their finances. Somehow I don't think I'll have to worry about changing professions in the future. While it is easy to understand how you become rich and you know what you should be doing to achieve that wealth, it most certainly isn't easy for a lot of people to actually follow what they know they should be doing.

I blame it all on the lottery attitude. If you aren't rich (or aren't moving in that direction), it's simply because you have decided to ignore what you already know in favor of pursuing easy money. The problem is that even though some people do get lucky and win the lottery, the odds are better that you will die from a flesh eating bacteria than you will striking it rich that way. You have decided to go after the quick buck because you aren't willing to put in the work that you know needs to be done. You may think you have a valid reason for this, but it's nothing more than an excuse.

So there you have the secret. Once again you know exactly what you need to do to become wealthy. Odds are that you are like the majority of people, you will once again ignore the obvious and see if there is an easier way, but I'm hoping since you are visiting this site that you are one of those that proves me wrong...

6 Responses to “So You Want To Be Rich?”

  1. Ima saver Says:

    I agree Jeffrey. I am an example of a person who has never made very much but always saved at least 10% of what I did make.

  2. Broken Arrow Says:

    Yeah, I was about to say, "Must have patience" or "It's a marathon not a sprint" as part of the key ingredients.

    My friends won't do this because they still have the "get rich overnight" mentality. They don't want to wait 30 years. They want it 30 seconds ago!

    Of course, there is more to this subject matter, such as is it even a good idea to pursue "richness" or how does one go about enjoying the investment journey? Like it or not, 30 years is still a long time. But I suppose that can be fodder for later entries. Big Grin

  3. baselle Says:

    To follow what BA said...

    One of the forum questions was: What will you do when you become rich? I replied that I was already rich. I don't fear the mail, I don't fear surprises, I know what I want, and I sleep well at night. I have more than many "rich" people. If you define rich in terms of money, you might never get there. If you define rich in other ways, you might already be there.

  4. baselle Says:

    Psst, Jeffrey - how did you get that Blogoversary button on your blog?

  5. jeffrey Says:

    Psst, Jeffrey - how did you get that Blogoversary button on your blog?
    All you need to do is go to the site and copy the code then insert it in your bio area. Once Nate comes on full time, it will be worked into your blogs where you can simply check if you want it...

  6. jersey jen Says:

    right on, bro!

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