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Did you ever wonder how the rich acquired their money? Some simply inherit their wealth, but many built their fortunes through their own efforts, whether from establishing successful businesses to consistently hitting major-league curveballs.
You may ask: are there common tendencies that lead to riches, and can I develop those tendencies?
The Spectrem Group took the simplest approach — they surveyed people with a net worth of over $25 million for the factors that contributed to their success and compiled the results. The top five answers are shown below.
- Hard Work – 87% of survey respondents mentioned hard work as a critical factor. From your perspective, you may see a business owner raking in profits, but you do not see the 80-hour workweeks and sweat equity they invested to build the business in the first place, and how hard people have to work to maintain a business in a competitive environment.
- Education – 78% of respondents listed education as an important factor in success. Education does not necessarily mean graduating from Harvard with honors — it means making the most of the educational opportunities available to you, and never to stop learning and improving your skills regardless of your field. The School of Hard Knocks has produced millionaires, too.
- Smart Investing – Similar to education, smart investing is an enabler. Investing wisely and with focus enables you to make the most of what you have and parlay that into new opportunities, such as opening a business. Of the respondents, 72% cited this as an important factor, which is somewhat intertwined with the next two factors below.
- Taking Risk – Along with that hard work and education, you have to be willing to take risks to be successful. So say 63% of the survey respondents. Buried in this is the implied property of insight — you have to be able to distinguish an intelligent risk successfully from a reckless venture, and to learn from your mistakes when you fail. Over time, your ability to assess risk and reward correctly will improve. If it does not, you probably do not have what it takes to be a millionaire, and even if you do luck into wealth, you are likely to lose it.
- Frugality – Almost 60% of the respondents cited frugality as a major factor in their wealth, which makes perfect sense — if you are not reckless with your money, you are more likely to hang onto it. However, don’t confuse frugal with cheap. Cheapskates will not spend money for any reason (and thus don’t invest in much of anything). The frugal understand value, and are not afraid to spend or invest funds if they receive value in return.
The next two factors cited, being in the right place at the right time (56%) and luck (53%), really aren’t much different, except that the rich often tend to make their own luck through actively seeking opportunities. Initiative is important.
How about that all-important inheritance? Only 30% of the rich listed that as an important factor.
So to summarize, the rich become rich through hard work, constantly improving their education and skills, taking advantage of the opportunities available to them when a reasonable risk is involved, and having the initiative to seek out those opportunities and the insight to recognize them. You may not become a millionaire following this path, but the odds of you being a success are pretty high.
Meanwhile, if you aspire to be a millionaire but you are not interested in hard work, learning, skills improvement, intelligent risk-taking, or insight, there’s always the lottery. Good luck!