Three Ways to Get Rich

Recently,  I watched Michael Moore’s documentary “Capitalism: A Love Story”. As always with his films, I found it to be entertaining propaganda.

One of his primary arguments is that the rich have duped “the rest of us” (Moore brilliantly aligns himself with the workingman) into believing in capitalism by spreading the myth that anyone in America can become rich.

It’s a wonderful irony. Here is a guy, the son of an autoworker from Flint, Michigan, who gets rich in America through hard work and initiative… and then makes a movie based on the premise that you can’t do that.

The truth, as Moore sees it, is that the only power the poor have over their financial future is to vote in social democracy — where the “system” works to put more money in the pockets of the working and middle classes.  (Though, as history has proven, that doesn’t usually happen.)

The reason socialists have a problem with capitalism is that it cannot make everyone wealthy. And that’s true. I like the idea of making the world a richer place. But I know from experience that it can be done only one person at a time.

And this brings us to the question Moore raises in his film: Is it possible for an ordinary person — without special contacts or resources — to become wealthy in America today?

I’ve been studying that question since I started writing about wealth building 10 years ago. And it’s clear to me that ordinary, unconnected, wage-earning Americans do it all the time.

I’ve mentored at least a dozen people who started out at the bottom and are now multimillionaires. So Moore’s premise, I’m saying, is bullshit. You can get wealthy in America. And there are three ways to do it:

  1. You can get wealthy by scrimping and saving.
  2. You can get wealthy by hoping and praying.
  3. You can get wealthy by earning and investing.

Getting Rich by Scrimping and Saving

The Millionaire Next Door, a bestselling book in 1996, revealed the shocking fact that the typical American millionaire didn’t acquire his wealth by starting a business or becoming a banker or through any of the other ways that are celebrated in books and movies.

It turns out that most millionaires got rich by scrimping and saving.

Anyone — and I mean anyone — can get rich this way. You can start out broke. You can be illiterate. You can be a minority. And you can still get rich this way.

Why? Because if you follow the scrimping and saving formula, it is a mathematical certainty. A 100 percent sure thing.

Start with $5,000 in the bank. Then set aside $470 a month in a conservative savings program (say tax-free bonds) earning, on average, 5% (the 100-year historical average). You will have just about a million in the bank when you are ready to retire.

If you start when you are 20, you’ll be a millionaire – no doubt about it – when you are 65 years old. If you continue to save for another 10 years, your wealth will increase to $1.7 million. By the time you are ready to leave money to your grandkids or the Metropolitan Opera, you will have a fortune of $3 million.

Getting rich this way doesn’t require guts or brains. All you need is a commitment to work enough to make enough money to save every month, and the discipline to keep socking it away.

I recommend this method to anyone who is young enough to take advantage of time. It is the primary wealth-acquisition program I recommend to college graduates in my book “Automatic Wealth for Grads… and Anyone Else Just Starting Out”.

If you are not young enough yourself, you can use this method to make your children or grandchildren wealthy.

Getting Rich by Hoping and Praying

Acquiring wealth by scrimping and saving is a sure thing, but it does take a long, long time.

And even if we have the time, most of us don’t have the patience for it. All other things being equal, we’d like our wealth served to us on a silver platter by tomorrow morning, thank you very much.

Getting rich quickly — the ultimate financial aphrodisiac. Is it possible?

The answer: Absolutely — if you are very, very lucky.

You hear about it all the time — how someone, somewhere in the world, becomes enormously rich “overnight” by winning a lottery, hitting a jackpot, coming into a huge inheritance, or by making amazing leveraged bets on stocks or bonds or real estate.

But the chance that you will get rich that way is very remote.

Your odds of winning a typical state lottery, for example, is more than 14 million to one. Your odds of winning a million-dollar jackpot at a craps table is more than 2 million to one.

These are extremely long odds. And though I have no moral objection to gambling, I look at it as foolish and potentially addictive entertainment.

Getting Rich by Earning and Investing

Speaking of the lottery, I should tell you that I happen to have made millions of dollars from it. But I didn’t get that money by buying lottery tickets. I made it the old fashioned way — by investing time and money in a business I understood (direct-mail publishing).

Here’s the story: In the 1980s, I worked with a publishing company that put out a magazine and several newsletters about lotteries — local, state, and international lotteries. We featured articles about winners and essays by mathematicians who had systems for improving the odds of winning — that sort of thing.

Those publications were very successful. I think at one time we may have had 100,000 subscribers — people paying us $39 a year. You can do the math.

This brings me to the third “way” to get rich: by earning and investing.

I believe in scrimping and saving for the young. I don’t believe in hoping and praying. But I have great faith in getting rich by earning and investing. I’ve done it myself. I’ve taught others how to do it. I know it works — even today when we’re suffering from the terrible national hangover that came from the orgy of hoping and praying that got our country into so much debt.

There are two hitches with getting rich by earning and investing:

  • You can’t do it overnight. It will take some number of years.
  • It’s not a 100 percent sure thing, as it is with scrimping and saving.

How many years does it take to get rich by earning and investing?

I’ve seen some people do it in as little as a year — and some take as long as seven years. The average has been somewhere in between.

When I sat down to write “Seven Years to Seven Figures”, I wanted to figure out why it doesn’t work for everyone.

So I interviewed eight people who had developed multimillion-dollar wealth in one to seven years. I asked them exactly what they did. I looked for similarities. Ultimately, I was searching for a common denominator.

As it turned out, I came up with three things that they had in common.They had all:

  • Learned a financially valuable skill.
  • Started a business by finding an uptrending market niche to apply their financially valued skill to.
  • Spent considerably less than they made and saved the difference.

The Four Obstacles to Earning and Spending Your Way to Wealth

I was excited. I thought I had discovered a formula that would transform the readers of that book into multimillionaires. I imagined getting hundreds or even thousands of letters from my readers, thanking me for pointing the way.

I did get some nice letters — but they were in the dozens or hundreds, not in the thousands.

What about all the other people who read the book? I had given them the formula. Why hadn’t they used it to make themselves rich?

There was only one way to find out. I had to ask them.

That, as it happened, was easier said than done. It’s tough to ask a person, “Why didn’t my advice work for you?”

But I did ask — although it was embarrassing for them and for me too. And what I discovered is that the people who’d read the book but hadn’t gotten rich had never actually implemented all three parts of the formula.

They told me things like this:

* I’ve been preoccupied with other things — a full-time job, a family that needs my time, fences to mend, taxes to pay, etc. But I’m going to start fresh this year.

* I’m ready to start but I haven’t found my niche yet. I like the idea of natural health, but I’m also into photography and cooking.

* I’ve tried various skill-building programs but they haven’t worked for me. I took a copywriting course, but I couldn’t get any clients. Then I took a real estate course, and the market collapsed. Then I got into Internet publishing, but I think the market now is too competitive.

You might see these as excuses. But I don’t think they were. Many of these people truly were busy with other things. Many were confused about the best business for them to get into. And many who put their wealth-building plans into action found themselves blocked in some way, became frustrated, and gave up.

And there is one more obstacle that I’m sure all of them faced, though no one mentioned it to me. It is something that anyone who has attempted to become wealthy — or has succeeded — knows very well.


I’m talking about fear, of course. The fear of failure. The fear of looking foolish in front of your family, friends, or colleagues. The fear of discovering something about yourself that you don’t want to know.

There must be a hundred books and ten thousand articles written about the fear of failure — but from the sample I’ve read, 90 percent of them are dead wrong.

Fear is, indeed, an obstacle. But the solution to fear cannot be found in mantras and visualizations and self-talk. The only sure way to defeat fear is through success.

The intelligent person should fear failure when he ventures into a new business. After all, some 80 percent of new businesses fail. But if he understands exactly how successful businesses are built, his fear will be less. And if he further understands some of the most fundamental secrets of wealth building, his fear will be small enough to overcome.

I have spent a lot of time thinking about the four major obstacles to success, trying to discover if there wasn’t some way to overcome them all with a single jump. And now, foolishly perhaps, I think I’ve come up with something that works.

I call it my Special Theory of Wealth. It reduces the habits and practices of successful wealth builders (including me) into an equation that even a child could understand.

This theory includes the key ingredients of wealth-building success: opportunity, true value, and the compounding effect of time. And it explains a lot that cannot be explained by many of the popular strategies for wealth building, including some of the ideas I myself promoted years ago.

It explains why TM was able to build a million-dollar business in a single year, while juggling the responsibilities of her marriage, children, and charitable endeavors, and while writing and making public appearances and going to book club meetings, and doing much more that I can’t even remember.

The four obstacles to success did not deter TM, because she recognized them for what they were — opportunities. Had she not made this simple change of perspective she could not possibly have gotten her business up and running in a year, much less built it to one that has national reach and recognition.

My Special Theory also explains how SA became rich in less than three years by being able to “find his niche” in less than 30 minutes and then direct his energies into it. This increased his income by more than $2 million a year, and made him a multimillionaire with a business (valued at more than $8 million) that practically runs itself.

And it explains how LP finally stopped drifting from one business to another two years ago and finally started making a six-figure income.

The reason so many people don’t achieve success is that one or more of the four obstacles genuinely block them.

Without understanding this — which is the foundation of all successful moneymaking strategies — it is impossible to find the time, choose the niche, and then execute a game plan.