The Cranky Sysadmin A world of technology, fun, and ignorant rants.

October 26, 2013

Why are Rich People Rich and I’m Not?

Filed under: filthy_lucre — Cranky Sysadmin @ 10:22 am

Below the fold, I explore the differences between rich people and poor people (like myself). It is helpful to me to analyze the differences instead of just being jealous of rich people. I hope it’s helpful to you as well.

I define rich people as people who have enough money that they can pursue whatever they want without worrying about money. I exclude people who don’t participate in a money system from the “Rich Person” definition. I define poor people as those who, no matter how much they make, must worry about money or the essential things that money can buy, most days.

Someone told me recently that rich people are no different than you or I (assuming you’re not rich). Another favorite thought is that rich people take advantage of us and that’s how they become rich. I also hear people point to inheritance as a differentiator. All of these opinions sound like excuses to me. These statements allow me to shrug my shoulders and not expend the effort to become rich.

So what are the relevant differences I can see between myself and rich people? I’ve been thinking about this for a long time and I’ve come up with a list.As hard as it is to admit it, all of the items put me in the poor category.

  • I exchange my time for money whereas rich people exchange time and money for money. A rich person will spend time and money to make money. Frequently, it won’t be all his time (as in a business with employees) or all his money (like buying stocks on margin or real estate with mortgages). I can’t think of an example where this isn’t the case.
  • Rich people spend less than they make whereas I make less than or just as much as I spend. All of the books that I’ve read on becoming rich beat this subject like a stubborn mule.
  • Rich people have intelligence and intuition about finances. I don’t. I never had a class in school about finance and I rarely hear about other people getting a financial education unless they are CFO’s and economists. Poor people are also discouraged from talking about money in social settings.
  • Rich people take risks and I don’t. I don’t think this is a complete statement. I suspect that rich people know how to mitigate risk better than poor people, but I haven’t been around enough rich people to know for sure.

This list also suggests the things that block me from becoming rich.

  • Unreasonable fear.
  • Living beyond my means.
  • Financial ignorance.
  • Not using my free time and money wisely.

That should be enough self flagelation. It’s past time for me to try to fix it. When you see the filthy_lucre category in my posts, it’s probably about my attempts to become financially independent. The vehicles I’m interested in right now are stock and option trading, ETF’s, foreign currency, and commodities futures.

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