How Every Decision Can Make You Richer (or Poorer)
Opportunities are like sunrises. If you wait too long, you miss them. — William Arthur Ward
You go to lunch with a colleague. Everything is good. When the waiter puts the bill on the table, the total is $26.
Do you pick it up? Do you wait and hope he does? Or do you suggest you split it?
On the surface, this is a minor decision. But in truth, it is one of a million chances you’ve had, have, and will have to become wealthier.
A cheapskate might look at it this way:
If we split the bill, I’ll be $13 poorer.
If I can get him to pay it, I’ll be $13 richer.
If I pay the whole bill, I’ll be $26 poorer.
To the cheapskate, the best decision is obvious. So when the bill arrives, he gets up to “go to the bathroom,” hoping he’ll be $13 richer when he returns.
But I have a different view…
For wealth building, like quantum mechanics, often operates according to laws that seem contrary to what is “obvious.”
Paying the tab, in other words, might actually make you richer. Because the $13 you spend on your lunch partner might give you a return of much more than $13.
Your generosity might signal to him that you are the kind of person he can trust. It might tell him that you are someone who is willing to give first without demanding recompense. If he sees you in that light, a relationship might be seeded by this small investment on your part. A year later — it is possible to imagine — he might recommend you for a promotion when he himself gets promoted to head up your department.
It depends on your assessment of his character.
If he impresses you as a person who believes — as you do — in reciprocity, you will know that the $13 is a wise investment. If, on the other hand, he shows you that he is a person who believes in exploiting others, the wise move might be to pay only your share of the bill and not develop the relationship any further.
In either case, you are richer.
In the first case, you are richer in a potentially lucrative business relationship. In the second case, you are richer in knowledge — knowledge about him that can help you avoid trouble or seize opportunity in the future.
Every Moment a Milestone
I am making two points:
Almost every event in your life is an opportunity for you to become richer.
By seeing every situation as a wealth-building opportunity, you can take the actions that will gradually make you very rich.
I am sitting at a cigar bar as I am writing this. I am wondering if I should take a break from the writing and have a drink. On the face of it, this is an ordinary situation. But I am going to view it as a wealth-building opportunity.
Here’s how:
If I have a drink, several predictable things will happen:
It will give me a warm feeling.
It will make me think the writing I am doing right now is better than it actually is.
I will leave the bartender an oversized tip.
Only the first of those things will make me richer. And that will be a fleeting richness that will require a second drink to sustain itself. But that second drink will amplify the other two outcomes. And both of them will leave me poorer.
So I decide to pass on the drink and continue to write.
That will give me an immediate return because I will feel good about my decision. And I’ll be engaged in thinking again.
It will also give me a long-term benefit. Finishing my work on this course will allow me to move on to the larger project of my retirement. When it is completed, I’ll send it to my publisher. And if the course sells well, it will produce a large amount of money for my charitable foundation.
Life is full of these small decisions and milestones and if wealth is your ultimate goal, you must begin to see every moment as a wealth-building opportunity.
You Always Have Choices
The people I call “Instinctive Wealth Builders” (IWBs) understand this on a gut level. They see every transaction — social, personal or business — as a wealth-related opportunity. They are always angling, even subconsciously, to increase their wealth.
Most of us aren’t born with that instinct. For us, a casual conversation is just a casual conversation. And choosing to join a club or hire or fire an employee is that and nothing more.
But the moment we put this principle into practice, we see the world differently. Its potential is no longer limited. And we view every action we engage in as a chance — big or small — to increase or diminish our wealth.
My friend Bernard has this kind of mind. I have known him for more than 20 years. During that time he has started at least a dozen successful companies. He has become a wealthy man, but his interest in making money has never waned.
He makes his money effortlessly. Or so it seems. I admire that about him. I like talking to him about his recent deals. His excitement gets me excited.
He makes money by starting successful businesses and investing in real estate. (Those are my primary vehicles, too.) But also by buying and selling exotic cars, boats, antiques and watches. Every time I see him he is driving a new car. One month it’s a Bentley. The next month it’s a Ferrari. He buys slightly used cars and enjoys them and then turns them over for a profit.
Bernard has become an expert in barter and countertrade. He never pays full price for anything. He knows how to get the best price for everything. And he loves the game.
That, by the way, was always the case. Even before he became wealthy, he enjoyed the best that life has to offer for pennies on the dollar.
Raw intelligence is not the issue. If it were merely a matter of intelligence, every genius would become a wealthy man.
Bernard would be an IWB even if a disaster made him poor. Give someone without this mindset a million bucks overnight and they’d likely spend themselves poor within a year. Give Bernard a minimum-wage job and I’m confident he’ll be making money hand over fist again in a matter of months.
The Instinctive Wealth Builder
What are the characteristics of an Instinctive Wealth Builder? Here are some observations I’ve made from studying Bernard and reading about great wealth builders like Steve Jobs and Henry Ford.
A “normal” person is concerned with his ego. When dealing with a problem he doesn’t really understand, he pretends he understands. He doesn’t try to find out what anyone else thinks. An IWB asks questions incessantly. He has no ego when it comes to learning. He knows that knowledge is power.
A “normal” person has a consumer mentality. He looks at a hot new product and thinks he would like to own one. An IWB thinks “How can I produce something similar?”
A “normal” person is wish-focused. He daydreams about making gobs of money. An IWB is reality-based. He sets a goal, formulates a plan, and acts.
A “normal” person, when confronted with a challenging idea, thinks of all the reasons it might not work. An IWB disregards the problems until he has a clear vision of how it might succeed.
A “normal” person resists change. An IWB embraces it.
A “normal” person accepts the status quo. An IWB is always looking to make things — even good things — better.
A “normal” person reacts. An IWB is proactive.
A “normal” person looks at a successful business owner and thinks That guy’s lucky. Or That guy’s a shyster. An IWB thinks, What’s his secret? And How can I do that?
Most importantly, an IWB likes living like a millionaire. He doesn’t shortchange himself when it comes to comfort and luxury. He thinks, I can have my cake and eat it too.
You can start your transformation by assessing your own thought processes. Be honest. Identify the millionaire mindset qualities you don’t have and try to develop them.
Not All Wealth Is Financial...
I remember when I made the decision to become wealthy. It was 1983. I was taking a 14-week Dale Carnegie course. And one of our first challenges was to identify our 10 top goals. We then had to narrow them down to five, then to three, and finally pick one as our primary goal.
It was easy for me to pick my top 10. But thinning the list was tough. I wanted to accomplish many things. I wanted to be a novelist, a poet, a teacher, a philosopher, a humanitarian, and a perfect specimen of health and fitness. I wanted to be rich, too.
The task proved to be almost impossible. And it wasn’t until I was called upon to announce my choice to the rest of the class that it came to me. I realized that if I were rich, I would have the freedom to do all those other things.
That changed my life. For one thing, it changed the way I thought about my work. Before, business decisions had been complicated. But when I made “becoming rich” a priority all I had to ask myself was, “Which choice will make me richer?”
Back then, my entire focus was on financial wealth. But as my net worth increased, I started to make decisions based on other forms of wealth — knowledge, friendship, and emotional satisfaction. What the financial expert and my friend Alex Green calls “spiritual wealth.”
Strangely enough, focusing on these other, more lofty, objectives, didn’t limit or diminish the rate at which I was getting richer. On the contrary, it increased. (This is one of the counterintuitive laws that seem to govern the quantum world of wealth building.)
I am going to assume that you are reading this because you have not yet achieved your wealth-building goals. However well you have done for yourself, you want to do better, right?
So how can you train yourself to see every situation as an opportunity and take the correct actions?
How to Spot Opportunities
Let’s begin with the obvious opportunities: business meetings and transactions.
Before every business “event” — large or small — I take a few moments to ask myself four questions:
“In what way is this an opportunity for me to become more wealthy in terms of money, knowledge, friendship, and emotional satisfaction?”
“What is the potential of this opportunity?”
“What are the possible problems with this opportunity?”
“What can I do to seize this opportunity?”
Note how I don’t ask “Is this a wealth-building opportunity?” That’s because every situation is a wealth-building opportunity. Let me give you an example of how this works.
Recently, my real estate partner told me about a house he thought we should buy. It sold for $279,000 at the top of the market and is now being advertised for less than half of that. He had done some investigating and figured there was a good chance we could steal it for $75,000.
It didn’t take me more than a few seconds to ask myself the above four questions.
The answer to the first question was easy — this was a chance to increase my financial wealth.
The answer to the second question was threefold:
I could probably make about 6–8% on the $15,000 we would put down.
If I banked the deal, I would make another 5% on the $60,000 mortgage.
Sometime in the future, the house will probably sell for considerably more than we’d be paying.
So the immediate potential is good — much better than keeping my money in the bank. The long-term potential is promising also, though less certain.
That brings us to the third question: “What are the possible problems with this opportunity?”
Well, we could get less rent than we expect. But we’ve been investing in rental real estate for 30 years. And given what we know about the local market, that is highly unlikely. Even if we underestimate the rent by a factor of 25%, we will still be cash positive. Not only that, but if the property never appreciates, it would still be a good deal.
So the only question left was No. 4: “What can I do to seize this opportunity?”
The answer to that one, too, was easy. I wrote out two checks — one for my 50% share in the deal and the other for the mortgage.
Time will tell how it plays out, but I predict it will make me wealthier. This is just one of many opportunities that come across my desk every day — I’m telling you about it now to show you how I think about each individual one.
Taking Action
Train yourself to ask these four questions — keeping in mind that every situation, big or small, is an opportunity for you to become richer.
Develop the temerity to evaluate the downside as well as the upside. And this is extremely important. Many wealth builders get so caught up in the potential of an opportunity that they can’t see the costs and the risks.
And finally, learn to figure out a course of action that will minimize or eliminate the downside and maximize the upside.
This is critical. Probably 80% of good wealth-building opportunities are lost because the people involved don’t take the time to come up with an action plan. They see a situation as a chance to become richer. They understand its value. But then they decide to wing it. Winging it seldom works.
One of my former protégés — a multimillionaire entrepreneur today — once told me that he thought developing and implementing action plans was my greatest strength. “I’ve been watching you for many years,” he told me. “And I’ve noticed that you always find a way to have everyone agree to do things the way you want them done.”
The truth is I don’t care whether things are done the way I want them to be done. I only want them to be done. Successfully done. That’s why I insist on an action plan to implement every wealth-building opportunity.
Look at every situation you find yourself in as an opportunity to make yourself richer. And I do mean every situation, even the most mundane. This includes:
The first thought you put in your mind when you wake up each morning
What you listen to on your commute to work
How you greet your boss and fellow workers
What you talk about at the coffee machine
The expression on your face and the firmness of your grip when you shake hands
The conversation you initiate with the person next to you on a plane
Whether you buy a brand-new car or a used one
How your voice sounds when you answer the phone
How you prepare for a meeting
Whether you buy your clothes at Saks or Marshalls
Whether you go out to lunch or eat at your desk
The time you get to work in the morning
Whether you pay for or split the tab at lunch.
Some of your opportunities will be small and some large. But by asking yourself the four questions I mentioned above, you will bring your batting average way up.
If you make it a habit to approach every situation this way, it will soon become automatic. And before you know it, you will have seized hundreds — even thousands — of wealth-building opportunities... each one making you a littler richer.