There are four ways to become rich:
- Live Below Your Means
- Expand Your Means
- Do Both
- Getting Lucky
Living Below Your Means
Living below your means and investing your savings prudently is the only guaranteed way to become rich. But, this approach requires enormous sacrifices – you must manage your spending your entire life and that requires making sacrifices: small house in an inexpensive neighborhood, no vacations, no restaurants, no kids. If you do have kids your kids are forced to sacrifice along with you. They have to buy their own stuff: iPhones, movie tickets, toys, cars, college education, etc.
Most are unwilling to make those sacrifices. We want the nice home in the safe neighborhood, we want the nice vacations, we want to give our kids their iPhones and a college education. So, for the vast majority, living below your means requires too much sacrifice.
But, for those willing to make the sacrifice, wealth is virtually guaranteed. So, the question is, how bad do you want to be rich? Is being rich so important to you that you are willing to make the sacrifices that are required?
Expand Your Means
Expanding your means usually requires taking on risk and working long hours, by pursuing a dream or starting a business. According to my research and many other studies on wealth creation, about 80% of the multi-millionaires and billionaires make their money this way. The upside is enormous wealth where everyone in your family benefits from your risk taking and hard work. The downsides include time away from family due to long work hours or poverty, you could fail.
Living below your means and expanding your means requires the most sacrifice.
Getting lucky means you fall into money somehow without any real effort. Examples of this are big gambling wins such as hitting the lottery, the slots, horses, etc. Or, you you inherit your wealth – you’re born into a rich family or inherit money from a parent, grandparent, aunt, uncle, brother or sister. The reason so many gamble is because they are unwilling to make the long-term sacrifices required.
Almost everyone wants to be rich, but they want that wealth without having to take on risk, work long hours, or make sacrifices for themselves or their family. Becoming rich is not easy.