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Getting Rich Your Own WayAchieve All Your Financial Goals Faster Than You Ever Thought Possible
By Brian Tracy
John Wiley & SonsISBN: 0-471-65264-4
Chapter OneLearn How to Become Rich
"When your desires are strong enough, you will appear to possess superhuman powers to achieve." -Napoleon Hill
If someone with limited abilities can become rich, why is it that so few people become wealthy? Even though we live in the most affluent country in the world, where most people earn and spend a fortune in the course of their working lifetimes, why is it that the majority end up dependent on Social Security, pensions and relatives when they retire?
If a person earning $25,000 per year would just save $2,500 per year, 10 percent of his income, and invest it carefully to earn a return of 10 percent compounded over the course of his working lifetime-the years from age 21 to age 65 (44 years)-it would grow to $1,794,762 through the miracle of compound interest.
If a mentally retarded young man without a single advantage in the world can become wealthy (see Introduction), and a person earning $25,000 a year, saving 10 percent of his income, can become a millionaire or a multimillionaire, then almost anyone can become rich who wants it badly enough.
Why People Don't Become Rich
The question I began to ask was, "Why is it that people don't become wealthy?" In a country like ours, with the opportunities that we have, why is it thatso 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.
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 20, you can grow up and become a fully mature adult in our society without it ever occurring 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 than people who grew up in homes where their parents are not wealthy. Wealth achievement is part of the worldview of children of wealthy parents.
Therefore, 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 will never take any of the steps necessary to make it a reality.
Make a Decision!
Another reason that people don't become wealthy is that they never decide to. Even if a person reads a book, attends a seminar, or associates with people who are financially successful, nothing changes until she makes a decision to do something different. Even if it occurs to a person that she could become wealthy if she just did certain things in a specific way, if she doesn't decide to take the first step, she ends up staying as she 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.
Procrastination can prevent people from becoming wealthy. 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 procrastinate. 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 he can become wealthy, and he has made a decision to change, procrastination will push all his plans into the indefinite future. Procrastination is the thief of time, and of life.
Pay the Price
What economists refer to as the inability to delay gratification is another reason that people retire poor. The great majority of people have an irresistible compulsion 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 frugality as a lifelong habit, it will be impossible for you to achieve financial independence. As W. Clement Stone, founder of Combined Insurance Company of America and one of the richest men in the world, said, "If you cannot save money, the seeds of greatness are not in you."
Take the Long View
The last reason that people retire poor is perhaps as important as, if not more important than, all the others. It is lack of time perspective. In a longitudinal study conducted in the 1950s and published in 1964 as The Unheavenly City, Dr. Edward Banfield of Harvard University studied the reasons for upward socioeconomic mobility in the United States. He wanted to know how you could predict whether an individual or a family was going to move upward one or more socioeconomic groupings and be wealthier in the next generation than they were this generation.
Banfield studied and compared his findings against the most common explanations for economic success in the United States and in other countries. Was it education? No. Many people with good educations actually moved down economically. Was it intelligence? No. A lot of very intelligent people were poor and unable to earn a living. Was it being born into the right family? No. Many people born into affluent families did poorly as adults, while many people with poor educations became very successful. Was it being in the right part of the country? Was it being in the right industry? Was it luck? What factors were best at predicting that a person would move up economically over the years?
Project into the Future
All Banfield's research brought him to a single factor that he concluded was more accurate than any other in predicting success in the United States-time perspective, 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 a 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 children are born, even though the youngsters will not be attending for 18 or 19 years. This long-term thinking is what causes parents to open savings accounts for their young children to assure that they will be able to attend good colleges when they graduate from high school.
Saving and planning for the future is long time perspective in action. The young couple who begins putting $50 a month aside in an education 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 perspectives almost invariably move up economically in the course of their lifetimes.
Pay the Price in Advance
A person who graduates from high school, goes on to university, attends medical school, earns an M.D. degree, perseveres through internship and residency, and then after 10 or more years of training becomes a licensed physician, has a long time perspective. He has earned the right, through years of sacrifice and delayed gratification, to prestige, status, and a high standard of living. That 10 to 12 years of work and study is an investment in his career for the rest of his life. His long time perspective will also assure a higher standard of living for his children, as well as better schools, and more opportunities for them. His children will very likely marry better, have higher social and economic aspirations, and live better lives.
The time perspective of a doctor investing 10 or more years in education at the beginning of his career may be the lifetimes of one or two generations, 50 to 70 years. We intuitively sense that a doctor, someone who has dedicated so many years to learn his craft so that he can attend to us and our families when he is most needed, is a person who has earned our respect and esteem. This appreciation for long-term thinking may be why the family doctor is usually at the top when surveys of the most respected people in society are compiled.
Attitude Is Everything
Time perspective is an essential measure of social class. A wealthy family or a good education will help, but ultimately your level of status and prestige will be determined by how far you think and plan into the future as you go about your day-to-day work and life.
If an immigrant couple comes to the United States with nothing and goes to work at menial jobs, sacrificing so that their children can go to school and attend university, that immigrant couple is demonstrating class, no matter how well or poorly they are doing in the present. They are virtually guaranteeing upward social mobility for themselves and their offspring.
The opposite of a long time perspective is no time perspective at all. The average professional person has a time perspective of 10, 15, or 20 years, perhaps longer. The average laborer has a time perspective of about two pay periods. The derelict, the hopeless drug addict, or the alcoholic at the bottom of the social pyramid has a time perspective of hours, or even minutes. He does not think about the future at all, only the next drink or shot. Each person's position and direction in life, from the top to the bottom of society, are determined by the length of their time perspective.
Think about the Future
The very act of lengthening your time perspective, of thinking far into the future, changes your attitude and your personality. You begin the process of getting rich your own way by thinking ahead 10 or 20 years. As you do, you become more capable of setting bigger, longer-term goals and making long-term plans for their accomplishment. You become more thoughtful about your decisions, and more sensitive to the long-term consequences of the ways that you invest your time or money. You develop greater patience and perseverance. You actually become a better and more positive person.
From this day forward, practice lengthening your time perspective. Begin to see that everything that you are doing today is part of a long process that is moving you inexorably toward becoming financially independent, if not rich, over the course of your career. This is the mind-set of people who move continually upward and onward throughout their lives.
Commit to Your Career
Many people begin work or start careers and it never occurs to them they may be doing the same job for 20 or 25 years. It doesn't occur to them that they should invest any amount of time, money, and energy to learn how to do their jobs very, very well.
You should be prepared to make any sacrifice to excel at what you do. This enables you to earn the very most that it is possible to earn in that field. Even if it takes years of hard work to get to the top, with a long time perspective you will persevere. You will realize that the time is going to pass anyway. The only question is, how much will you be earning five years from today?
Five Ways to Stay Poor
Once again, here are the five reasons why people retire poor: One, it never occurs to them that they, too, can become wealthy. Two, if it does occur to them, they never decide to become wealthy. Three, if they do decide to do something to improve their financial lives, they procrastinate, sometimes all their lives. Four, they cannot discipline themselves to delay gratification, to resist spending everything they earn and a little bit more besides. Five, they operate with a short time perspective. They think and act day to day and month to month instead of planning 10 and 20 years into the future.
Five Ways to Become Rich
If you are really serious about becoming wealthy, there are five primary ways that fortunes are made.
Become an Entrepreneur
The number one road to riches, at the head of the list and on the top of the hit parade throughout U.S. history, is entrepreneurship, starting and building a successful business. Entrepreneurship includes every kind of business, from farming and trucking to real estate and computers.
Seventy-four percent of self-made millionaires in the United States, going back 200 years, come from self-owned businesses. An individual starts with an idea for a product or service, turns it into a business, builds it up from the ground floor, and as a result becomes wealthy. Henry Ford, Andrew Carnegie, John Jacob Astor, Cornelius Vanderbilt, Ross Perot, Sam Walton, Bill Gates, Michael Dell, and Larry Ellison are all people who started with little or nothing and built their own successful businesses. And there are millions of others.
Work Your Way Up
Another way to become rich is as a highly paid executive of a successful company, or as an employee of a company that awards stock options that become valuable. Ten percent of self-made millionaires in the United States are men or women who have joined large corporations, or companies that became large, and worked for these companies for many years. They usually worked hard; were promoted and paid well; earned stock options, bonuses, and profit sharing; and as a result of holding on to that money, became millionaires and multimillionaires.
Paul Allen started Microsoft with Bill Gates, sold out when he became ill, took much of his share of the company in stock, and is now a multibillionaire.
Excerpted from Getting Rich Your Own Way by Brian Tracy Excerpted by permission.
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