2013-08-09

Why Aren't More People Wealthy?

As any successful immigrant will tell you, the United States of America offers its residents an almost-unparalleled environment for wealth-creation and economic success. If someone here is reasonably committed to saving their money and investing it in sound and time-tested entrepreneurial activities - things like franchises, consulting side-businesses, teaching lessons, playing in a cover band, receiving rental income, and so on - it is not at all difficult for the average individual to generate two or three middle-class incomes. I'm not saying it's easy, nor am I suggesting that success is guaranteed. Nevertheless, this sort of thing happens so commonly in this country that it really does beg the question: Why aren't more people doing it?

When I talk to other people about this sort of thing - specifically, my own personal desire to pursue these sorts of supplemental income streams - most of them respond by rattling off a list of problems with the activity in question.

For example, if I talk to friends and colleagues about owning a fast food franchise, I get a variety of negative responses. Some wonder why I would be interested in "flipping burgers for a living." Some say, "If it were me, I wouldn't want the trouble of having to worry about a business like that 24/7. It becomes your life!" Some criticize the franchise in question: "Why would you want to own one of those? I hate that place!" Some dislike the prospect of having to hire and manage a team of teenagers.

If I talk to friends about managing rental properties, people often give me a derisive smile and say, "So you want to be a slum lord?" Others talk about the many instances of property damage they have witnessed being caused by tenants of buildings to which they have some casual or familial connection. Others warn me that it is a bad business to be in if I am not a professional contractor. Some don't understand the difference between rental properties and "house-flipping." Others just think the market for rental property is bad because of the recession.

Likewise with ideas about running a music school, or a professional cover band, or doing some consulting work on the side. Whatever the idea happens to be, there is a good chance that many people can think of many reasons why they are of the opinion that it is sure to either fail or make me miserable.

When I get this kind of feedback, it doesn't bother me. Instead, it bewilders me. For every compelling idea I can think of for generating a modest second income, people in general are sure it's going to fail. It's not that I disagree with their criticism, it's that I'm amazed that they are willing to let their doubts outweigh the many potential benefits of doing a little more for oneself.

My conclusion is that wealth is more about psychology than it is about capability or hard work. Some people are very worried about losing what little they have. Others are always looking for manageable ways to improve their economic situation. To me, this is the difference between an entrepreneur and the average member of the middle-class.