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Home>Daily Capital>Investing & Markets>Five Reasons Why You’ll Never Be Rich And One Reason Why You Already Are

Five Reasons Why You’ll Never Be Rich And One Reason Why You Already Are

I remember being mesmerized by Robin Leach’s “The Lifestyles Of The Rich And Famous” TV show as a kid growing up in Kuala Lumpur, Malaysia. A million dollar house and a $40,000 car was the dream combination back in the late 80s/early 90s. My parents were not rich as US foreign service officers, but they were comfortable. My first glimpse at wealth occurred when my parents would sometimes bring me along to parties thrown by local businessmen. They built their fortunes by starting everything from rubber plantations, to beverage companies, to even chicken farms.

One day after school, my father’s friend sent his driver to pick me up in his black Mercedes 280SL. He was throwing a New Year’s celebration party and my parents had already gone first. Like most kids in the 7th grade I was enamored with cars, especially foreign cars that were charged 100% import tax rates. My parents drove a paintless 1976 Datsun with a missing hubcap so I was absolutely giddy to sit in a moment of luxury. It was during this 30 minute ride to Kenny Hills that I told myself that one day I, too, would be rich. Too bad life is easier said than done.

Over the years I’ve come to realize several hurdles that prevent many of us from getting wealthy. Let me share some observations in this post.


1a) Being a “C Student” who thinks s/he deserves an “A Lifestyle” – Remember during high school there would always be the goody two-shoe who sat in the front row, raised her hand constantly, and stayed after class to ask more questions? Well, she went places. I was the guy who strategically sat in the middle of the classroom because apparently teachers only pick on people in the front and back.

After a mediocre freshman year, my parents decided to slap me silly by telling me the truth. “Sam, if you continue to just get C’s and B’s, then all you’ll ever live is an average lifestyle. Don’t come crying to us when you’re an adult and still watching re-runs of The Lifestyles Of The Rich And Famous,” they said. From then on, I hit the books like a maniac because I wanted options.  Whatever type of student you are, make sure your lifestyle gets adjusted accordingly.

1b) The inability to delay gratification. – Even though you haven’t given your best and can’t afford the best, there’s a strong tendency to go into debt in order to fulfill your immediate desires. If you ask anybody who has consumer debt after their fifth beer, they’ll admit they bought things they couldn’t afford and did not need. Delaying gratification until you can afford something is absolutely one of the keys to building wealth. Piling on credit card debt at a 15%+ interest rate is a sure way to financial failure. Not even Warren Buffet has returned greater than a 15% annual compound return in his illustrious career. For those in debt, well done beating the greatest investor ever.

2) Spending way too much on a car. A car is the #1 personal finance killer given it is an unnecessary luxury that rapidly depreciates over time. I suggest spending no more than 1/10th of your gross income on the purchase price of a car. If you make $50,000 a year, then buy a nice second-hand Honda Civic for $5,000. If you make $500,000 a year, that new 4 series BMW coupe is quite alright. And if you only make $20,000 a year, then consider taking public transportation or biking. The last thing the median earning household should do with their $51,000 income is buy the median priced $30,000 car after taxes.

3) The unwillingness to go the extra 10 miles. When you first begin your career, you know nothing. You’re a cost center who is easily expendable by management. As a result, it’s imperative to do everything possible to show your worth by coming in early, leaving late, frequently asking colleagues if they need help, and being proactive with new responsibilities. Please review a series of career limiting moves from a previous post if you need a reminder on what not to do. Even as a veteran employee, it’s important to never take your work for granted. Your career is likely your #1 income earner. Nurture it as much as possible.

4) Saving as if Social Security or a pension will still take care of you. Back in the 70s, worker bees wouldn’t really save because they had pensions and Social Security to depend on. Nowadays, people still seem to be saving as if Social Security and pensions will be a 100% guarantee with a national savings rate of under 5%. The government has already highlighted that Social Security can only provide roughly 70% of its benefits in the next couple of decades in its current state. Meanwhile, pensions are disappearing faster than time. If you’re not maxing out your 401k, or saving at least 20% of your after tax income every year, you will likely be very dependent on the government or loved ones to get through your remaining years.

5) Not building enough income streams. Consider figuring out ways to build multiple income streams immediately, while you still have all the enthusiasm and energy in the world. You may love your job or business now, but interests fade and bad things happen all the time. Income streams can be in the form of dividend yielding stocks, REITs, rental properties, tutoring, starting a side business, earning royalties, and building a CD ladder, to name a few. The idea is to build enough passive income streams so that by the time you are absolutely sick of work, you are able to break free and rejuvenate while having a series of income streams keeping you alive and happy. Savings is the foundation for wealth. It’s up to you to start investing your savings wisely.


For all those who think school is a waste of time, good grades are a waste of effort, and working towards a great career is a soulless exercise, you might be right. The all-out pursuit of riches can very well lead to a miserable life.

Watch one of the all time classic scenes from The Cosby Show where Dr. Huxtable asks his son, Theo how he expects to get into college and earn a living with poor grades. What transpires is one of the most hilarious interactions ever. In this 4 minute clip you’ll learn everything you need to know about minimalism, relationships, budgeting, work, taxes, career, love, and happiness.

No matter what you think about wealth, the good news is that you are already rich if you are reading this post. Someone with a net annual salary of $30,000 a year, is part of the top 1.23% richest people in the world according to the nifty calculator by Unfortunately, not all of us can earn US dollars and live abroad.

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Photo: Piggy Bank Awaits the Spring by Philip Brewer is licensed under CC BY 2.0

The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.

Any reference to the advisory services refers to Personal Capital Advisors Corporation, a subsidiary of Personal Capital. Personal Capital Advisors Corporation is an investment adviser registered with the Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training nor does it imply endorsement by the SEC.

Sam Dogen is the author of the new personal finance book "Buy This, Not That: How To Spend Your Way To Wealth And Freedom." Sam has been using Personal Capital to keep track of his finances for 10 years. He is the founder of Financial Samurai, one of the largest independently-owned personal finance sites with over one million visitors a month.
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