How do I get rich?...the vital question not asked
by Peter Switzer
You know there’s a question not enough people ever ask me and it’s simply — how do I get rich? Frankly, it’s quite confounding that so many rational human beings who would prefer material comfort in their retired years, and even in the years before, aren’t on a quest to get rich.
As the great comedian Sophie Tucker once said: “I’ve been rich and I’ve been poor. Rich is better!” Yep, I know the great Billy Connolly ripped it off for a banking commercial in recent years, but even with this ad out there to provoke sound of mind Aussies, I still haven’t got the question!
Pay yourself first
This week in an ABC radio interview with Matt & Dave in Adelaide, the co-hosts were taken by an article in a newspaper that suggested you change the way you do things to minimize your wasted spending. They were bemused by the writer’s ideas of going straight to the milk cabinet to avoid the long walk from the entry point to those all-important fridges where Coles, Woolies and IGA stores can seduce you into buying stuff you don’t need!
They liked the idea of paying yourself first by committing to taking 10% of your pay each fortnight and slamming it into a bank account. This stands in stark contrast to what most people do — that is, they spend and spend and then look to their bank account to see what’s left? That strategy is bound to offer disappointment and undoubtedly won’t show you the way to the fast lane to greater riches.
That “pay yourself first” concept comes from a golden old book called The Richest Man in Babylon, which basically tells an interesting tale of a guy in ancient Babylon who was different from most people and he grew rich as a consequence.
Okay, if someone asked me how do I get rich, this is what I would answer — change you and change your wealth path.
How do you change yourself?
First, you have to admit that what you are doing now won’t work and so you have to accept that if nothing changes, nothing changes.
Second, if you sign up for change, you then have to ask: “Change to what?” I think you have to become a planner because most people don’t plan to fail, they just fail to plan.
Set a goal
Matthew Michalewicz, in a success book entitled Life In Half A Second, gave a great template for personal change that will work for getting richer. He says you have to have a clear goal, say $1 million in your super fund by the time you retire, with a million dollar home and a weekender by the sea somewhere up the coast. This has to become a visual goal that you see every day — don’t underestimate the power of visualisation. A great TV program on the ABC starring Todd Sampson was called Redesign My Brain and he showed how visualisation has a proven track record for improving results.
So, what I am telling you is that you have to, and you can, change your money brain but you must, after defining your goals, have the desire to become richer. If you are half-hearted about it or very laissez-faire, it could happen, but I’d bet against it unless you were exceptional in some other field of endeavor. It’s why footie players, rock stars and actors can get rich but they’re in a very slim minority.
Make it happen
Once you have the goals and the desire, you then have to believe you can make it happen. I reckon if you formally write down your goals for greater wealth and also write down “I really want this to happen” and you say this every day, it will become a part of your money DNA.
The great Muhammad Ali once told us,“It’s the repetition of affirmations that leads to belief. And once that belief becomes a deep conviction, things begin to happen.” His affirmation was “I am the greatest” and he became it. Yours could be “I will build my wealth and make my goals happen.”
Herb Elliott, our greatest ever male Olympic track and field star, says we all have a little voice that holds us back — you have to exterminate the negative little voice and replace it with a positive big voice!
Wayne Dyer wrote a best-selling book called You’ll See It When You Believe It and it simply supports my argument.
Once you believe it, you have to seek out the knowledge. Here I’d advise that you read books, magazines, websites like this one and don’t be afraid to do courses, go to lectures and copy those who have done it before you. Gain the knowledge and remember there are no short cuts. If something is too good to be true — such as fast and big returns doing stock or currency trading — then it probably isn’t true! Plan to build your wealth gradually and over time and the magic of compound interest will deliver you wealth.
Some people search for the knowledge by finding a trustworthy, smart adviser and they become knowledgeable in supervising their adviser. That can work as well.
Make your dream come true
Armed with the goals plus the desire plus the belief plus nailing the knowledge challenge, you then have to do the harder bit — execute or take the action. This means you actually make the changes that will make your dream come true.
When I was taught economics at the University of New South Wales, I stopped buying the Daily Telegraph, which I loved for its great sports section, and started reading the The Australian and the AFR because I wanted to understand business, stock markets and finance.
When the market crashed in October 1987, having those newspapers on my desk made me the expert on Triple M when they called to get me to explain what in the hell was going on?
As the poet Robert Frost wrote: “Two roads diverged in a wood, and I took the one less traveled by, and that has made all the difference.”
This works on so many levels.
Peter Switzer is the founder of the Switzer Super Report, a newsletter and website for self-managed super funds.
Published: Thursday, March 03, 2016
New on Switzer
- Stock markets scaring you? Read this and sleep easier 16 Aug •
- What's next for emerging markets? 16 Aug •
- Australia: Reserve Bank Board minutes in focus 16 Aug •
- Earnings Season continues 16 Aug •
- Disrupting the market 13 Aug •
- Are we heading for a global recession? 15 Aug •
- Is CSL Australia’s best ever company? 15 Aug •
- With low interest rates, many investors are looking beyond the banks 15 Aug •
- Surge in shared office space 15 Aug •