“Why is it that people don’t become
wealthy?” In a country like ours, with the opportunities that we have,
why is it that so few people retire financially independent? And I
eventually found the answers. Here are what I consider to be the five
reasons why people don’t become wealthy.
Who Me?
First, at the top of the list, is that
it never occurs to them. The average person has grown up in a
family where he has never met or known anyone who was wealthy. He goes
to school and socializes with people who are not wealthy. He works with
people who are not wealthy. He has a reference group or a
social circle outside of work who are not wealthy. He has no role models
who are wealthy. If this has happened to you throughout your formative
years, up to the age of twenty, you can grow up and become a fully
mature adult in our society, and it may never occur to you that it’s
just as possible for you to become wealthy as for anyone else.
This is why people who grow up in homes
where their parents are wealthy are much more likely to become wealthy
as adults then people who grew up in homes where their parents are not.
So the first reason why people don’t become wealthy is it never occurs
to them that it is possible for them. And of course, if it never occurs
to them, then they never take any of the steps necessary to make it a
reality.
Make a Decision!
The second reason that people don’t
become wealthy is that they never decide to.
Even if a person reads a book, attends a lecture, or associates with
people who are financially successful, nothing changes until he makes a
decision to do something different. Even if it occurs to a person that
he could become wealthy if he just did certain things in a specific way,
if he doesn’t decide to take the first step, he ends up staying as he
is. If you continue to do what you’ve always done, you’ll continue
to get what you’ve always got.
The primary reason for
underachievement and failure is that the great majority of people don’t
decide to be successful. They never make a firm, unequivocal commitment
or definite decision that they are going to become wealthy. They mean
to, and they intend to, and they hope to and they’re going to, someday.
They wish and hope and pray that they will make a lot of
money, but they never decide, “I am going to do it!” This
decision is an essential first step to becoming financially independent.
Maybe Tomorrow
The third reason that people don’t
become wealthy is procrastination. People
always have a good reason not to begin doing what they know they need to
do to achieve financial independence. It is always the wrong month,
the wrong season, or the wrong year. Business conditions in their
industry are no good, or they may be too good. The market isn’t right.
They may have to take a risk, or give up their security. Maybe next
year.
There always seems to be a reason to
procastinate. As a result, they keep putting it off, month by month,
year by year, until it’s too late. Even if it has occurred to a person
that they can become wealthy, and they have made a decision to change,
procrastination will push all their plans into the indefinite future.
Pay the Price
The fourth reason that people retire
poor is what economists call the inability to delay
gratification. The great majority of people have an
irresistible temptation to spend every single penny they make and
whatever else they can borrow or buy on credit. If you cannot delay
gratification, and discipline yourself to refrain from spending
everything you make, you cannot become wealthy. If you cannot practice budgeting
as a lifelong habit, it will be impossible for you to achieve
financial independence.
As W.Clement Stone said, “If you
cannot save money, the seeds of greatness are not in you.”
Take the Long View
The fifth reason that people retire poor
is perhaps as important, if not more important, than all the others. It
is lack of time perspective. In a
longitudinal study conducted by Dr Edward Banfield at Harvard University
in the 1950s and published in 1964 as The Unheavenly City, he
studied the reasons for upward socio-economic mobility. He wanted to
know how you could predict whether an individual or a family was going
to move upward one or more socio-economic groupings and be wealthier in
the next generation than they were this generation.
All his research brought him to a single
factor that he concluded was more accurate than any other in predicting
success in America. They called it time perspective. This was
defined as the amount of time that you take into consideration when
planning your day-to-day activities and when making important decisions
in your life. Time perspective referred to how far you projected into
the future when you decided what you were going to do or not do in the
present.
An example of long time perspective is
the common habit of upper class families in England to register their
children at Oxford or Cambridge as soon as the child is born, even
though he or she will not be attending for eighteen or nineteen years.
This is long time perspective in action. The young couple that begins
putting $50 dollars a month aside in a scholarship fund so that their
newborn child can go to the college or university of his or her choice
is a couple with long time perspective. They are willing to sacrifice in
the short term to assure better results and outcomes in the long term.
People with long time perspective almost invariably move up economically
in the course of their lifetimes.
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