Getting rich as an employee

Shortly after posting my eight ways of getting rich, I was challenged on whether I had failed to include employment – working for someone else – because I didn't believe it was a way to get rich.>

On the contrary, it is an excellent way to get rich (although only a small minority of employees do ever accumulate significant wealth), and I did include it. I see it as part of the fourth way:

Entertain or exploit some other personal skill or talent

As an employee, you use your personal skill or talent on behalf of another person or organisation, and that for me defines employment – and for that matter, contracting and consultancy too.

Why, though, do so few employees become wealthy compared with – say – entrepreneurs? It may have a little to do with earning levels, although many employees outearn their entrepreneurial peers.

I think, though, it is more to do with perceived security. The employee generally feels secure; after all, they are not taking the risks the entrepreneur does. If they turn up every day and do a good job, they feel they'll be pretty safe in terms of their future income stream. Few entrepreneurs will take this view. The ones who last know all about creating a financial cushion, about making provision for the potentially harder times ahead. They tend to better control and plan their spending because they have more at stake, and in the long term, that's where the wealth takes root and grows.

But there's no reason why an employee could not adopt similar habits, and from even modest employment build substantial wealth.

Getting rich - magnifying your efforts

I recently blogged about the eigth ways of getting rich. The last two of those ways are a little different from the others. They are magnifiers.

When you invest money you have earned you make it work for you. Quite independent of your efforts to earn money, it beavers away making you more. It is as though suddenly you have acquired staff.

And when you control how much of your money you spend and channel additional money instead into investment, there's a further boost to your efforts, another staff member stepping up and making you richer.

There is often a belief that being careful about spending is a bad thing; we think of the miser, Scrooge, and the unpopular colleague who never buys a drink when it's his turn. But these are extreme cases and controlling spending and being fundamentally ungenerous are two very differenet things.

Spending is identified by the experts as the top factor in determining your lasting wealth. It seems that you annual income does little to influence your long term wealth, but how you spend your income, whatever its size, is a good predictor of wealth.

I have a relative who illustrates this perfectly. She arrrived in the UK in the mid 1960s with her new husband. Between them, they owned £5. Although well-educated by the standards of the country of their birth, they could only find menial work in the UK, never earning as much as the equivalent of minimum wage. My relative, now widowed and a pensioner, owns property and other investments worth well over a million.

The eight ways of getting rich

It strikes me that there are only eight ways to get rich. Any one or more of these has the capacity to make you wealthy:

1. Inherit from or marry a rich person
2. Steal, commit fraud or some other crime
3. Gamble
4. Entertain or exploit some other personal skill or talent
5. Own a business or represent other talented people
6. Buy and sell goods or services at a profit
7. Invest
8. Limit your spending

The more of these you do, the better your chance of establishing wealth. Very few of them are free from moral issues, but that's something you'll have to work through for yourself.

The book of your life

It's an old cliché that everyone has a book inside them, but there is an element of truth to the idea. At the very least, we could all write a book called, "Important Things I Have Learned In My Life".

An interesting idea is to write an outline of your version of this book. What are the main chapter headings? Will you organise it chronologically from childhood to the present, or by topic? What will be the key points in each chapter?

Knowledge vs. wisdom

The late Miles Kington said: Knowledge is knowing that a tomato is a fruit; wisdom is knowing not to put one in a fruit salad.

Let me put it another way. Winning Mastermind is easy: all you need is a good memory for facts. Winning in life is rather harder.

The route from knowledge to wisdom passes through three stages:

1. Experience - applying knowledge and gather more knowledge in the process
2. Reflection - evaluating the results of experience and gaining insights
3. Learning - from those insights, developing and refining approaches to adopt in future

Wisdom is where you end up - sometimes.

Blog your goals

In my post about goals or dreams, I suggested that you should make your goals public by talking to people about them. To supplement your face-to-face discussions, why not publish your goals in a blog?

You can then try to maintain an on-line record of what you do to get nearer to achieving the goals, what works, what doesn't, and encourage people to contribute their own ideas.

Goals or dreams?

When you have written down your goals, what do you do then? If you do nothing, then the chances are that these goals will never be more than dreams. If you want to attain them, there are some things you need to do, such as:

• Put them up on a wall where you can see them every day. Now and then, move them around so that your brain doesn't just edit them out through over-familiarity.
• Print them on a bookmark that you use in your planner or some other book you open regularly.
• Talk to people about them – either all of them or just one goal per person.
• See if you can become a 'goal buddy' with someone who also has written goals.
• Try and have one conversation every week that's about one or more of your goals.

Constantly challenge yourself (and your goal buddy!) with questions like:

• What have I done this week that gets me nearer these goals?
• What can I do in just ten minutes to progress one of my goals?
• If I spent a whole day working towards just this one goal, what could I achieve?

Trick yourself out of procrastination

I am a natural procrastinator. Often, I won't undertake a task until it is very nearly too late. This isn't usually because of a lack of time or a lack of skill, but a lack of will. Of course, leaving everything to the last moment can be a disastrous way to operate, so I have to curb my natural tendencies as much as I can.

The best way I have found to tackle procrastination is to lie to myself. I first came across the technique in the writing of Mark Forster and it capitalises on the comparative ease with which we can fool our unconscious minds.

You need to say to yourself that you are not going to actually do the job you're putting off, but rather that you are just going to prepare to do it, or start it by taking some very trivial action, and then stopping.

Here are some examples:

• I'm not going to call the customer, but I will look up the number and make a note of it.
• I'm not going to write that article, but I'll just brainstorm to identify the main content and ideas.
• I'm not going to clear the spare room, but I will find some bin bags and boxes that will help me.

The idea is all about creeating momentum. I often find that once I've finished the minor task, I just carry on into the major one. Even if I don't, I have genuinely accomplished something and made the job just a little bit smaller anyway.