Getting Rich Isn’t Easy: These Rules Can Help

wgwWomen get wealthy in a lot of ways. They start their own businesses (Jenny Craig, Oprah Winfrey, Martha Stewart), run giant corporations (Pat Russo at Lucent, Anne Mulcahy at Xerox), or forecast the stock market (Abby Joseph Cohen at Goldman Sachs). They achieve their positions through brains, talent, drive, and luck, and not just through government programs. Once they make their money, they’re usually pretty smart about handling it. So let’s look at what the do (not necessarily what they say) and learn.

1 LIVE ON LESS THAN YOU EARN

Before you start throwing plates at my head (“Jane, you dummy, who couldn’t live on less than a million–or $10 million–a year?”), let me hasten to say (crash, bang!) that I’m talking about the folks who not only earn big bucks, but also manage to keep them. Everyone knows the riches-to-rags stories of foolish Hollywood celebrities, sports stars, politicians, and business fat cats. When their lives blow up, it’s because they bought too many goodies or gambled too heavily on investments that soured.

 

Your $$$ lesson No one gets ahead by spending every cent. What’s more, anyone can be downed by debt. Instead of devoting your next raise or bonus to new purchases, think of your future and fatten your retirement plan.

2 BE A TIGHTWAD

I have a friend who shops for bargains on groceries and wears 20-year-old suits (which still fit her!). So you can imagine my amazement when, as we were browsing in an antiques store last year, she fell in love with a small Italian statue and bought it on the spot–for $17,000. I had no idea she had that kind of money. “I’m just careful,” she says. “I don’t waste money on unimportant things.”

Your $$$ lesson Blowing money on meaningless or ostentatious purchases won’t win you lasting friends-and it could leave your bank account in tatters. Skimp where you can so you’ll have something left to spend on what really matters to you.

3 PUT SECURITY FIRST

Most rich people I spoke with played around aggressively with some of their money. They bought and sold companies, speculated in real estate, or traded foreign currencies. But they also had a substantial chunk invested safely–in bank CDs, Treasury securities, or municipal bonds. If all their risky ventures turned to dust, they could still live comfortably on the income from their bonds.

Your $$$ lesson So you can’t afford a giant pile of bonds-few of us can. But you can still weave a safety net for your family, in case your income drops or your investments tank. Do it with term life insurance (at least seven times your income for a family of four), clean credit cards, and emergency money in the bank.

4 HIRE GOOD HELP

If you’re not comfortable making money decisions, find someone who can guide you. And watch what he or she does! Even the top-tier advisers hired by the superrich can make mistakes–or steal. One woman told me her sister’s fancy stockbroker blew through her $3 million estate while she lay dying.

Your $$$ lesson To pick an adviser, ask for recommendations from friends, interview at least two, and find out how they’re paid. (If a fee, you’ll lay out more cash. If a commission, you have to be careful that the planner isn’t pushing you toward investments on which he or she gets a percentage of the sale.

HOW SOME RICH PEOPLE LOSE IT

THEY TRUST THE WRONG PEOPLE A slew of Hollywood stars, including Cameron Diaz, Courteney Cox Arquette, and Matt Damon, were swindled out of millions by the financial “guru” who handled their investments.

THEY LIVE TOO WELL Rapper M.C. Hammer earned an estimated $33 million in 1990–and filed for bankruptcy in 1996. Apparently, owning a Kentucky Derby race-horse, 17 cars, and a Boeing 727 stretched him too thin.

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| October 24th, 2015 | Posted in Money |

One Response to “Getting Rich Isn’t Easy: These Rules Can Help”

  1. Michelle Estes Says:

    Definitely, it is not easy to get rich. And it is also not easy to maintain it. I know of a few people who are rich enough but they act like hungry dogs. They never stop looking for money that they tend to set aside what’s really important in life.

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