There are so many reasons why people don’t become wealthy. Some come from impoverished backgrounds and suffer mental health issues while others simply overconsume, experience bad luck or never build wealth fast enough.
And yet, there are now over 2.5m millionaires in the UK, with 258,000 British people becoming millionaires last year, according to research by investment bank Credit Suisse. So, plenty of people are getting rich.
But being rich means different things to different people. And it’s this statement I want to touch on because it uncovers the deeper truth that is preventing countless people from reaching financial freedom.
You see, from an early age our life experiences shape our future ambitions and expectations – and this matters, a lot. I once had an interesting conversation with a wealthy guy I met in London called James. He came from a dirt poor background but was fortune enough to value his education, and so he was able to get a scholarship at a prestigious university to study philosophy. Shortly after settling in, James was asked by his new peer group how much income he wanted to make in the future. He had never given it much thought until then because he was focused on his interests, so, he answered £50,000 based on what he considered to be a high salary. To his surprise, he was ridiculed for giving such a “low” number. He soon realised that the bar for defining success was set much higher in his new environment as he mingled with people from wealthier backgrounds. These students were jobless, inexperienced and no better than James, yet expected salaries that would presumably allow them to continue the expensive lifestyles their childhood afforded them. This ended up influencing the career path of James and he made a lot of money as an entrepreneur without the same handouts many other students had.
James may well have been happier following his passions, but the lesson here is one of limiting beliefs. Solely using past and current life circumstances to determine your roadmap to success is one of, if not the biggest mistakes you can make if you want to be rich. Because the goals you set and how you work towards them are shaped by your limited abilities, judgements, and belief of what is realistically achievable.
Let’s demonstrate this problem with a practical example.
One of your ambitions is to own a 2 bedroom house for £240,000. You earn £30,000 a year and can manage to save £12,000 of that income. You would have to spend almost 20 years of savings to own that house if you didn’t invest the money to make it work for you.
This is how many people approach building wealth. They map out the future without thinking about work promotions, side hustles, cost cutting, investments, and alternative career choices that would get them to their destination faster.
Inseparably, another common mistake is to set goals, big or small, but not deadlines to meet those targets. And without honouring that commitment you’re almost doomed to fail. That’s why nearly every successful business and entrepreneur works to deadlines and does everything in their power to make it happen. Defined, measurable goals hold you accountable and create a healthy kind of pressure that acts as a driving force for focus, motivation, creativity, and work ethic to achieve them.
In essence, you want to move beyond your current paradigm of thinking and set huge goals with a specific timeframe to achieve them. Then reverse engineer the path and change your lifestyle to get there. This sentiment mirrors the all-important second habit in the famous bestseller, ‘7 habits of highly effective people’, which says to begin with the end in mind.
As an example, if you’re 20 years old and want to be a millionaire by 30 then you need to figure out how to make £100,000 every year on average. If you don’t have the right job or skills for that, instead of lowering the goalpost, you need to step up and adjust your life to honour your goal. In this case, most standard 9 to 5 jobs aren’t going to cut it. So unless you’re interested in high skill, high demand professions like engineering or medicine, look for other paths such as entrepreneurship. Of course, businesses come with risk and can take years to generate good revenue, so make sure to write a business plan with financial forecasts so you understand whether there’s potential to hit high numbers.
There are plenty of other ways to make money online these days as well. And while 10 years to £1m seems out of reach, you could actually get there in 6-7 years if you were able to make £10,000 and double it each year.
Aim big, take it seriously, and never lower the bar. Because sticking it out is ultimately what separates the wealthy from the aspirationals.