Problem #58: The top earners (1%) are getting richer, while the rest are getting poorer!
We’ve all heard about the 1%, and how their income is “growing at an alarming rate” compared to the rest of us. Does that make you un-easy? That someone else’s net worth or income is larger than yours? Do you think it’s unfair that they “have” whatever they want, while you struggle to get by with your finances as a so-called “have-not”.
What is causing this disparity? What secrets do they have, that us peasants haven’t discovered yet? Or is it luck, karma, or perhaps just good fortune? Let’s dig into this PROBLEM a little more.
So before we get to the income disparity issue, I wanted to discuss the whining about the 1%. If you’re upset that someone else is doing well, then it’s YOU that has the issue. Stop comparing yourself to others, and worry about yourself. The whole attitude surrounding the 1%-vs-the-rest is unhealthy to say the least. And the rest of us aren’t getting poorer, we’re just on a different part of the exponential curve that is compound interest.
But since we’re comparing ourselves to others, compare yourself to the rest of the world. There is no one living in the good ole’ US of A that is a “have-not”. No one! That’s just media speak to rile you up. Read this article if you don’t believe me.
Put on your big-boy pants, and take the responsibility to make the changes necessary to be a part of the 1% instead of griping about their success.
Hard Work is Not a Secret.
Now that we have that out of the way, I would submit that the secret to their success isn’t secret.
Take the advertising videos that are all over social media. Some young good-looking guy is walking around his million dollar house and through his five bay garage talking about how he’ll show you the secret to getting all the things he has? It looks like he barely works, and he buys whatever he wants.
But he’s preying on most people’s desire to get without effort. Think about it. If you could have what he has with little to no effort, you’d be all over that like white on rice.
But what he fails to mention is that it takes work to run whatever program he’s selling. Work! You don’t deserve it. You have to earn it!
The reason his testimonials say in fine print “Results not typical” isn’t because the “program” doesn’t work. It’s because most people give up on it before they have success, because “it’s too hard”.
That’s exactly what my seven-year old son says when he’s trying to get out of sweeping the floor – “it’s too hard”. I usually tell him to suck it up, and finish the job. Or something like that. And he usually does. He doesn’t like it, but he learned (even if he doesn’t realize it) what work is, and how to finish the job.
Now before you write me off because there’s a ton of people who work hard who have little to nothing, know that it takes more than hard work to become a 1%’er.
Work Smarter, and Save, Save, Save.
Have you ever heard the phrase, “Work smarter, not harder,”? Well, I think you should work smarter and harder. Let me show you what I mean.
When you get a paycheck, what do you do with it? You check your budget, and split up your paycheck into a bunch of tiny pieces. Right? All the bills that need to be paid, and of course necessities.
What about savings? How big of a portion are you saving? Or are you skewing your budget towards other things that you “need” now?
This is one of the other “secrets” of the “haves” that isn’t really a secret. Saving more money. Actually, saving as much as you can!
Think about a crisp hundred-dollar bill. What can you do with it? There’s a ton of stuff you could buy. Maybe a new outfit, new shoes, nice pocket knife, dinner out and a movie, groceries, cable for a month. But once you spend that Ben Franklin on any of those things, that money is gone. Sure you may have something in it’s place: a shiny “thing”, a full belly, a great night out. But the $100 is gone.
Instead, if you save or invest that $100, you’ll still have it. The stock market historically has averaged a 7% rate of return. So to be conservative (allowing for inflation), let’s assume 5%. You’ll get 5% on your investment – FOREVER.
Update: This linked site actually references a already inflation-adjusted rate of return of 7%. So I was adjusting an for inflation twice. -facepalm. Thanks Brad for pointing that out. But that makes my point even stronger.
In other words, your original hundred-dollar bill will make five dollar babies for you – every – single – year – for a lifetime. Your whole life, and perhaps even your kids’ lifetimes as well.
The 1% Have Figured It Out.
The more money you can save and invest, the faster your money will be working and supporting you (instead of you supporting you).
Like I said, it’s not really a secret. I think we just don’t fully grasp the power of compound interest and the future value of our current investments.
Delayed gratification is what makes this possible. Because, let’s face it, you can’t live on five dollars a year. You’re going to need a whole lot more bills. But that’s why you need to start now. Delay purchasing that new outfit or new shoes (you already have clothes – right?), and instead put your money to work for you.
The 1% have prioritized letting their money work for them. As a result, compounding has taken over, and their net worth is exponentially increasing – just like all the news outlets are reporting. But it’s not because of some underhanded deals. It’s compounding interest! And it can work for you too.
Start saving and investing! Find a “Benjamin” from somewhere and invest it.Give a man $100 - he'll eat for a few days. Teach him to invest it - he'll have $5/year - forever! Click To Tweet
Are you prioritizing savings/investing over buying cool things now?
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