Everybody wants to be rich. But most of us don’t realize that we simply aren’t even ready. Becoming and being rich is about much more than just having a pocket full of cash. You need to be prepared or you will quickly find yourself with empty pockets once again.
If you want to find out if you are truly ready to become rich, ask yourself these 8 questions.
#1 What does being rich mean?
Do you want to be Rich or do you want to APPEAR to be rich? Some people just want to be envied by others for the stuff they have. If you own 5 Corvettes and a Hummer, live in a 6000 sq ft house, and wear a suit and tie everywhere, that does not necessarily make you rich. You can buy all of those things on credit and work to pay them off until you die. That ain’t rich!
If that is what you want then you can stop the quiz here because what you really want is a bunch of stuff. Being rich means amassing enough wealth so you do not have to work until you die. It means having enough money so your money works instead of you. Being rich means you have not obligated yourself to spend time earning money because you have to but rather because you want to. Having the ability to spend your time the way you want is what it means to be truly rich.
You can’t do that if you are working 65 hours a week to pay off all the stuff you bought on credit. So before you move on you need to take the time to determine what it is that you really want. If you want it, you can proceed to the why and how.
#2 Why do you want to be rich?
Do you want to be rich so you can buy stuff? Well we already determined, you don’t need to be rich to own stuff. You can be indebted forever and never have time to enjoy that stuff by purchasing it on credit. Conversely, there are plenty of truly rich people who own a lot of stuff. And there is nothing wrong with that.
However, I would be willing to be that the stuff was not the reason most rich people were determined to become rich in the first place.
The human mind is a funny thing. It will allow you to work just hard enough to reach your goals and requires a great deal of focus and determination to exceed them. If your goal is to just own stuff then your mind will quickly figure out it can have that stuff by just slapping down the ol’ credit card. Voila, mission accomplished. But if you have better reasons for becoming rich and owning stuff is a byproduct of that, you will find you will be more determined to accomplish much more.
The reason I decided to become rich was because I was fed up with feeling obligated to spend my time doing things that did not make me happy. Primary among those things was working. Once you have enough money to not HAVE to work, working becomes much easier to tolerate. And my motivation for working hard to become rich was to never feel the requirement to work again.
Crazy, I know. Work hard now so you don’t have to work at all later. Its called sacrifice and we will discuss it in question #3.
#3 What are you willing to sacrifice to become rich?
In achieving any goal, there will be sacrifices along the way. Major league baseball players sacrifice time at home because they need to travel with the team. Someone on a diet sacrifices the pleasure of eating cake now so they can be in shape later. And millionaires sacrifice spending money now so they can accumulate enough to be called millionaires.
It is that simple. If you want a million dollars, you will have to save a million dollars. That means not spending it the money now. Another way to become rich is to simply earn more money. Maybe that means getting a 2nd job and sacrificing more of your time.
However you decide you are going to reach your goal of becoming rich, I can promise you, there will be sacrifices along the way. If you aren’t willing to make those sacrifices, it wont happen. If you are hooked on Starbucks and simply can not make it through the day without your $6 latte, even though you make minimum wage, then maybe you don’t really want to be rich.
#4 Do you have the right mindset?
If you are poor and become rich suddenly, chances are you will just mismanage the money and become poor again. The difference between the rich and the poor is mindset.
The rich understand that resources are finite. They understand that the ultimate diminishing resource for each individual is time. Therefore the rich know that they need to spend their time as efficiently as possible. The rich figure out how to not trade time for money but rather make their money work for them.
The rich also understand that once a resource is gone, its gone. Once time is gone you can’t get it back. Once money is spent, it is gone. The poor mindset is all about sort term returns and instant gratification. They trade hours for dollars and spend those dollars almost as quickly as they earn them.
#5 Have you set any goals? Have you set the right goals?
What exactly are you looking to achieve? What specific goals have you set along the way to reaching your ultimate goal? Are they the right goals?
If your goal is to be rich, you must start with what is your definition of rich. One million dollars? Five million dollars? A billion dollars?
Once you have decided upon a final goal, you need to give it a time limit. A goal without a time limit is just a dream. The time limit makes it real. It forces action now.
Finally, with a goal as large as this, you will need to set smaller goals along the way. Almost like rungs on a ladder or steps on a staircase you are climbing. And each of those goals should have a time limit.
Maybe your goals look something like this.
- My net worth will exceed $1 million in 35 years
- I will be 100% debt free with the exception of my mortgage in 12 months
- Within 18 months, I will establish a $10,000 emergency fund
- I will open an account with Robinhood and deposit 500 a month starting in 18 months.
You might even need to put smaller goals in between those goals. Goals should be written down, revisited and revised periodically.
#6 Are you focused on achieving your goals?
Are you 100% laser focused on achieving your goals? You have set a goal of reaching $1 million net worth in 35 years. One of the steps to achieving that is saving $500 a month every month. If you decide one month that you would rather go on vacation with that $500 then that will cut into your ability to achieve your ultimate goal.
Its like the dieter who just wants to eat that one piece of cheesecake today. You need to be laser focused and maintain consistency over time or you might as well give up now. I am not saying you need to be perfect, but you need to set realistically achievable goals and then stick to the plan to achieve them.
If the dieter sets a goal to never each cheesecake again and cheesecake is their favorite dessert, then they will likely fail. A more reasonable goal would be to limit their consumption of cheesecake to once a month maybe.
Similarly, in our example of the millionaire goal, if you desire a vacation, find the funds somewhere else. Maybe you need to sacrifice cable for a few months. Maybe sell some of the stuff sitting around the garage. Find any way to do it without cheating on the goals you already set and are focused on completing.
Once you make the decision to cut into your savings for consumption, the decision becomes easier the next time and then again and so. Eventually you will be right back where you started and wondering why you can’t get ahead.
This goes back to mindset and will power.
You can set all the goals in the world, but if you don’t have the tenacity to stick with it and the mindset to see it through to the end, you will fail every time. Why do you think so many lottery winners end up broke? Because they have a poor mindset. They spend and consume until it is all gone. They fail to plan for the future. The poor have no goals for their money other than to spend the resources as quickly as possible. They have not taught themselves the self control required to make sacrifices.
You can give someone with a poor mindset $100 and they will come back with a full belly and a sad look on their face because the money is gone. Give someone with a rich mindset $100 and they will come back with $1000 and a smile on their face.
#7 What tools are you using or do you plan to use to achieve your goals?
Just like an architect uses a pencil and paper as tools to draw blue prints, you too will need tools if you are to architect your financial independence. I am talking about everything from simple tools like a calculator and a journal to track your finances all the way to which brokerage app you will install on your phone for your investments.
If you haven’t even thought about what tools you will need to become rich, then you haven’t really put much thought in. This is part of the planning process. A repair man doesn’t show up to a job without any tools. He arrives with a tool box and a van full of tools he might need to complete the job.
Your job is to amass a net worth large enough to reach your definition of rich. If you show up to the job site unprepared with no tools, how can you expect to complete the job?
You need to start thinking now about how you will acquire your fortune and what tools are required to do so. I recommend starting with at the end and working in reverse. Determine what your ultimate goal will be, then the smaller goals in between and finally what tools you will need to achieve each goal.
Check out my resources page as well for some of the tools I have used and continue to use.
#8 Will you be happy once you achieve your goals?
Remember the old adage be careful what you wish for. Now that you have had a chance to ask yourself some questions to determine if you are actually ready to be rich, you need to ask yourself if this is really what you want. Will you be happy once your goals are achieved? Will all of the sacrifices have been worth it in the end? Is the juice really worth the squeeze?
If you determine that it is, then I welcome you to the road to financial independence.
Thanks for reading
Earl