While everyone's definition of "success" should be different, for most people, money is at least one of the factors in the equation. Money does a lot of things; arguably the most important is to create more choices.
So what makes rich people different?
The Personality Traits of Wealthy People
A relatively new study compared the personality traits of 130 millionaires against a broader population.
The researchers found that wealthy people tend to be:
- More extroverted. Makes sense. No one achieves anything worthwhile on their own; the ability to engage with others, build relationships, motivate, and inspire all are important. (But it's also true that introverts can be wildly successful.)
- More conscientious. Also makes sense. Making smart decisions, focusing on long-term goals, setting a good example. In fact, research shows that people who marry someone conscientious tend to earn more promotions, make more money, and feel more satisfied with their work.
- More emotionally stable. Yep: Making emotional decisions can derail progress toward long-term goals.
- Less neurotic. Double yep: When you're moody, anxious, worried, or afraid, it's hard to be as successful as you otherwise might be.
- More self-centered. Wait; that doesn't sound too good. But then again, as no less an authority than Adam Grant says humble narcissists have very high expectations for success...but also understand that great achievements are almost always the result of collective efforts. (In short, you believe you can achieve big things...but you know you'll need people to help you.)
As the researchers say,
"Both empirical and conceptual personality research suggests that extraordinarily high achieving individuals may constitute a group that, on average, differs on several personality traits including higher extroversion and conscientiousness, and lower neuroticism, as well as higher narcissism and locus of control." (My emphasis.)
The part about control raises an important point: You will never get rich by working for someone else.
And you will never get rich by living a "safe" (more on that in a moment), "positive work-life balance," time-clock-punching professional life.
That's something the researchers also agree on:
"The 'entrepreneurial personality profile' has been described by a combination of high extroversion, conscientiousness, and openness as well as lower agreeableness and neuroticism.
"This constellation is thought to address typical affordances [yep: researchers love awkward phrases] of being an entrepreneur such as acquiring new customers, managing finances, developing innovative products, negotiating with suppliers, and coping with enduring phases of uncertainty and risk."
Want to Increase Your Chances of Getting Rich? Start a Business
IRS data supports the premise that it's incredibly hard to get rich if you work for someone else.
Check out "The 400 Individual Tax Returns Reporting the Largest Adjusted Gross Incomes," a report periodically issued by the IRS. While the IRS Statistics of Income division sounds like a place where fun goes to die, it turns out there's some interesting data buried in the charts and tables.
For example, in 2014 it took $126.8 million in adjusted gross income to crack the top 400. Making a "mere" $126.8 million only got you on the list, though; the average earnings for the top 400 were $202.4 million.
Where it gets interesting is how the top 400 made their money:
- Wages and salaries: 4.47 percent
- Interest: 4.24 percent
- Dividends: 10.89 percent
- Partnerships and corporations: 16.24 percent
- Capital gains: 65.16 percent
The last bullet tells the story: The top 400 averaged $192.1 million in capital gains income; well over half of their income came from the sale of capital assets.
Granted, some of that could have been profits from stock investments, but the lion's share came from the sale, in part or in full, of business interests.
And here's what all that means to you:
- Working for a salary will not make you rich
- Neither will keeping your money in safe, "income" investments...
- ...or investing primarily in blue chip stocks
- Owning a business or businesses, whether in whole or in partnership, could not only build a solid wealth foundation, but someday could...
- ...generate a huge financial windfall.
The data clearly supports the last point.
A total of more than 4,500 taxpayers have made the top 400 between the years of 1992 and 2014, but only 29 percent appear more than once, and only 3 percent appear 10 or more times. Clearly, getting rich--in monetary terms--is the result of investing in yourself and others, taking risks, doing a lot of small things right...
...and then doing one big thing really, really right.
And, hopefully, achieving other goals along the way--because then, even if you don't get rich, you'll still be wealthy.
Bottom line? If you hope to someday be rich, at least in monetary terms, start a business.