General Question

The_Inquisitor's avatar

How do people become so rich?

Asked by The_Inquisitor (3163points) November 22nd, 2009

I live in ‘small city’ (it’s not a big city, that’s for sure, but it’s also not small enough for us to know everybody), don’t call me stupid, but I never knew that my city would have ‘rich’ folks living in it. I found out that there were 2 kids in my school who are rich and live in mansions. How do people get so rich in the first place?

No criticism please. :P

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63 Answers

The_Inquisitor's avatar

Shushhh, lol. Well, it’s not obvious enough (for me), that’s for sure. What kind of hard work? I know some of them own franchises, but how did they start off?

Aethelwine's avatar

Brains or luck.

it’s the brains that know how to keep the money.

Dog's avatar

Just because a person lives in a large home does not mean they are “rich”.
Chances are they have a lot of debt.

Even if they do have wealth they likely earned it which means they are hard working.
(of course some can be from wealthy families but that is pretty rare these days.)

Keep in mind that despite where a person lives or what they drive they are people first and can be just a much a friend as the person who lives next door. :)

MrGV's avatar

Hard work and determination or super lucky.

dpworkin's avatar

Who said, “Behind every great fortune lies a crime”?

faye's avatar

Some people worked hard, some had rich parents, some got into real estate before it tanked, and some are blood suckers.

The_Compassionate_Heretic's avatar

There’s a huge difference between being rich and being wealthy.
Wealth is passed on through generations like with the Hilton family and affords opportunities that rich people don’t have.

The riches of rich people are short lived such as with athletes.

People who are born into wealth need never work for anything.
I work in a company who has a managing partner who was born into wealth and his money secures his place in the business despite the fact that he doesn’t do any work. This is not an exaggeration. My position puts my in such a spot that I know what people are doing and not doing.

This wealth allows him the power to be an open racist and he uses epithets directly to his subordinates regularly. He hates African Americans and Mexicans and makes no bones about saying so.

Many complaints have been raised against him by minority employees but because he has so much of his parents money invested in the company, none of the other managing partners dare take any action against him despite the illegal manner in which he acts daily.

This is what wealth affords people.

The_Inquisitor's avatar

@Dog, the person when I just met them, mentioned that he/she was rich. I started laughing and assumed that it was a joke, but to see that he/she was serious. And the first thing that popped into my mind was “So… you live in a mansion then?” and the reply was ‘yes’. Then I was just utterly amazed. I then found out from another friend of mine, that somebody else was ‘rich’. Those are the words they used, I have not seen their house either.

The_Inquisitor's avatar

But the people born into wealth, how were their parents wealthy to begin with?

I think the real question that I am wanting to find out is “Can I become wealthy?” Kind of a stupid daydreaming thing that I have been thinking of for the past few days.

The_Compassionate_Heretic's avatar

@curiouscat Unless you are born into wealth, you will not become wealthy unless you have a revolutionary idea and/or practice that brings in wealth.

rangerr's avatar

I was born into a wealthy is that right right word? family of government workers.
The money comes from high-paying government jobs.
I get money from my parents, but I also work.
I don’t know if that made sense, but tonight is a pain reliever night so it’s not my fault.

@The_Compassionate_Heretic Just nailed it on the head, though.

The_Inquisitor's avatar

@The_Compassionate_Heretic, I see, well then, I hope I win the lottery someday then. lol…

Aethelwine's avatar

@The_Compassionate_Heretic You can also be seriously injured while working and sue for millions. This happened to my husband’s boss. keeping the money is a different story :P

kevbo's avatar

While there’s an element of propaganda to it regarding the housing boom, the Rich Dad, Poor Dad books provide some explanation to this question.

The dad of a family who’s son I was close friends with when I was young went from working at a gas/service station to owning the station to owning many stations and also owning a dry cleaning business. Today, he buys his gas stations for cash (like $1 million cash) and then goes to the bank to finance the property and get his money back. His family lives in a 10 or 25 thousand sq ft house (one or the other don’t remember). So basically, he worked his ass off and became an astute business owner.

The_Compassionate_Heretic's avatar

@jonsblond That’s not my recommended strategy.
You are correct that wealth involves knowing how to keep your money.

The_Inquisitor's avatar

@kevbo, I believe that that was the answer I wanted to hear. =D

DominicX's avatar

I was born into a wealthy family. We are wealthier than anyone I know or have gone to school with (high school, that is. I don’t know too much about the wealth of people I go to college with). My dad made his money as a venture capitalist, investing in technological companies. He did not grow up wealthy. His dad was a handy-man and house-painter. My dad worked for an energy company at first and was doing fine, but after becoming a venture capitalist, he just made the right decisions and soon became a multi-millionaire. Investments are risky, but sometimes, they can bring you great wealth.

I knew a wealthy kid at school whose dad was a vice president of some computer company. He started out at the bottom and continued to work his way up.

Those are just a few examples. Obviously some people are born into it and some cheat their way to to the top, but other times it takes a lot of work and jobs like CEOs, venture capitalists, surgeons, attorneys, those are things that tend to bring a lot of money.

The_Inquisitor's avatar

@DominicX, nice. Great Answer. :P I find that very interesting.

gailcalled's avatar

My grandfather came over at 18 from Lithuania in 1888, speaking six languages but not English. He sold second-hand clothes, then dubbed himself Professor Finkel and peddled eye glasses from a goat cart, and eventually patented this with two friends.

While living in the shtetl of Serey, Lithuania, he had learned the tool and die business from the local locksmith. (Grandpa’s full name was Benjamin Finkel, if that rings any bells about gene pools.) He parleyed that skill into a little business in the Bronx and then a mama bear business and then a papa bear one. Then it went public on the American Stock exchange and finally was bought out by a giant corp.

DominicX's avatar

Also, for those who are insisting there’s a difference between “wealthy” and “rich”, there’s not. They mean the exact same thing. In fact, the word “wealth” is in the definition of “rich”.

kcmyl's avatar

You can get rich by working hard and a little bit of luck, but you can only get super rich by working hard and a ton of luck.

Judi's avatar

Real Estate and Risk.

timothykinney's avatar

The fundamental point is to profit off the work of others. One person working as many hours as they can will only generate so much income. But as soon as they convince a large group of people to give them money they can become much richer. This is usually done by:

1) Selling a product. If it is very popular you can become quite rich even if the profit per unit is small.

2) Hiring employees. For every hour they work, you make some profit above what you pay them. The more employees, the more profit.

But this is just the earnings side. You also should:

1) Make your assets outweigh your liabilities. ie, make more money from your business than you spend on your house and car.

2) Invest. Strive to at least beat inflation. Everything else is gravy.

3) Reinvest. Keep that money making compound interest.

4) Live frugally (unless you’re filthy rich).

Darwin's avatar

My father worked very hard, was very smart, but was also lucky. He went from being the first of the American branch of his family to go to college, to being Vice President of a major oil company. He is now rich.

The real secret to his riches is that he never spent more than he earned, and actually, always spent less than he earned. He could have had a giant house like the one down the street that has 22 bedrooms (it was at one time the house belonging to the president of Conoco) but he figured 6,000 feet and four bedrooms plus a MIL suite was more than enough. He could have had fancy cars, but he preferred a Toyota that ran very nicely for 10 years.

He also paid attention to the stock market and moved his investments as needed to maximize gain and minimize loss.

However, as kids we never knew we were rich. First of all, when I was little we weren’t. Then when we were, it was more important to my parents that we learn how to be frugal and earn our own way. It finally dawned on us that we might be rich when we realized that my mom went to China with Barbara Bush and the president of Venezuela (pre-Chavez, thank you very much!) came to a party at our house.

Parrappa's avatar

You work hard. Being successful, however, is very different from being rich.

I encourage you to work hard, prove yourself academically and physically, and if you grow up and aren’t incredibly rich, you can at least consider yourself successful. Look at Einstein for example…

Darwin's avatar

Einstein used to buy my mother vanilla ice cream cones during her work breaks in Princeton. At least he had enough money to do that.

SeventhSense's avatar

@Darwin
Good point. One of the richest men in the world Warren Buffet still has his same meager office that he started with in Nebraska.

From his playbook:
Buy when most people are fearful and be fearful when most everyone says the market is only going up.

It takes great discipline and integrity to make decisions based upon sound economic principles. There is no “feeling or instinct” involved. He will study a company for years before he actually invests in it and there is no substitute for proven data. And of course it helps to have a system that is the standard of your industry. But if you don’t, copy it.

Judi's avatar

@SeventhSense ; and although I knew that, I still bought those two freaking houses and am lopsided in both now! It is so hard not to get caught up in the frenzy.
It is so important to be honest with your kids in these kinds of eonomic times. I hope my kids will learn form my mistakes.

SeventhSense's avatar

@Judi
At least you have some equity. I have unsecured debt and no real estate. The best thing I own is a nice truck.and even that is still the banks :(

Judi's avatar

@SeventhSense ; Not in these two houses. I owe way more than their worth. I’m in central California and one house is $200,000 lopsided.

SeventhSense's avatar

But you live in one..I live in one of the strongest markets but I can never afford a house in NY unless it has issues. I could never give up the beach though. At least I can drive my truck on the beach in Montauk. Life is good. :)

Judi's avatar

@SeventhSense ; This month anyway!

Supacase's avatar

I also live in a small city (just under 300,00 when you include the two cities and four counties that make up the “metropolitan area” – 93,000 in the city proper) and am surprised by just how many wealthy people there are here. There are definitely poor and middle class, but there does seem to be an inordinate amount of rich people. I can’t figure out what there is to do here that makes this at all possible. Very puzzling.

The_Inquisitor's avatar

@Supacase, that is exactly how I feel as well. =S

SeventhSense's avatar

How do you get this rich?. This sixty acre estate in Bridgehampton NY is worth 75 million dollars!

@Supacase
They probably own all the Commercial Real Estate

The_Inquisitor's avatar

@SeventhSense, wow, that’s jaw dropping. Well, that got me fantasizing some more about being rich. lol.

Darwin's avatar

@Supacase – Many may appear to be rich, but you may discover if you really looked that they are one paycheck away from bankruptcy.

rangerr's avatar

@SeventhSense Out of that entire picture, I admired the checkerboard lawn in the distance.

drdoombot's avatar

I have a close family relative who has been a millionaire many times over and lost it just as many times, due to a decadent lifestyle. However, that money was earned through fraud.

I have a distant relative-in-law who made millions defrauding the Medicaid system in New York. I think the DA was pursuing a case against him a few years ago, but he beat the charge.

Back in the early 20th century, my grandmother’s great-uncle, an extremely wealthy man, escaped right before the communist revolution with horse wagon filled to the top with gold. When he died in France years later, the government held onto his wealth for twenty-five years, waiting for his next of kin to show up and claim it. They were all behind the Iron Curtain, so no one ever showed.

I have other distant relatives who did the impossible: they managed to smuggle some of their wealth out of the former Soviet Union when they were allowed to emigrate in the 1980’s (most people leaving the country, including my own immediate family, were forced to leave their wealth behind). They were a step ahead of most in NYC, since they had money to invest, so they opened one of the larger jewelry stores in the Diamond District. They must have had some shady dealings though, because one of the sons got shot in broad daylight on 6th Ave in Manhattan, and they never found the shooter.

Psychedelic_Zebra's avatar

Wealth is usually inherited, and according to the rule of thumb, the business tanks by the third generation. Around here, that seems to hold true, especially with trucking companies.

The best advice on getting rich I have ever heard was to never spend your own money.

That’s how our political masters do it, and they even get automatic pay raises every year without even voting for them. Public servants my ass!

JLeslie's avatar

Rich to me means you have a lot of money (which varies by person what you think a lot is). Wealth to me means you have enough money to never work again; you can live off interest and have little worry about financial matters. I think the minimum now would be around $3million to be able to live off of your money, but even that seems low possibly, depending on your spending habits.

My father said to me last year that for the first time he feels wealthy. He is retired with a good pension, everything he owns is paid off. His health care is taken care of and he travels for free quite often and stays very inexpensively on base a lot of the time. He also makes extra money from an internet business that he enjoys doing. He has no worries about money, although he is not rich. His total wealth is less than a million dollars.

Some people have seen me say this before, holding onto money is a BIG part of it, as others here have mentioned. Money gets money. Money doubles every 15 years at 5% interest (so 1 million by age 50, means you will have 2 million by 65 if you never save another penny). SAVE. Also, always pay off your credit card bill in full. Credit card debt is just plain stupid, unless you have a horrible thing happen and it is necessary involving health or some other extreme circumstance.

If you take risks you might get wealthy, maybe not, fairly quickly. But you can also acquire a lot of money slow and steady, the tortoise can win the race. My friends who have saved, only purchased things when they really could afford them, now in their 40’s live a pretty good life financially and can buy pretty much what they want.

Lastly, certain industries just pay better. If you are in a small town it might be much harder to get rich.

Darwin's avatar

My grandfather was a millionaire three different times, but he was flat broke four times. He left my grandmother $10,000 and the house. She and my father parlayed that into $500,000 plus all of her living expenses for 20 years.

Damn_Tony's avatar

My mom once told my sister that if she wants to be rich, she has to be a b!^#$. Not sure if that helps…

ratboy's avatar

People become excessively rich by selling their souls to the devil.

PooperDood's avatar

Live on a budget. Also take the course by Dave Ramsey and you’ll know how. ;)

dpworkin's avatar

My girlfriend’s grandfather was approached by a dear friend of his who offered him a 50/50 partnership in a new candy company. Grandpa, being a careful fellow, thought about it, but decided to turn Mr. Hershey down.

gemiwing's avatar

@curiouscat So you were just talking and this person said ‘I am rich”? Poor form.

janbb's avatar

@pdworkin Darn right he was – Hershey’s chocolate stinks!

dpworkin's avatar

@janbb What are you, close to 10k?

janbb's avatar

Dollars, lurve or chocolate (Cadbury’s or Dove, please) bars?

JLeslie's avatar

I second what @PooperDood says, Dave Ramsey is great.

I am amazed at how many people think rich people are immoral and must have done something bad to be rich. Instead of thinking most people with money worked really hard. Does that make you feel better if you don’t have a lot of money? This explains so much to me.

Judi's avatar

@pdworkin ; That’s why I said “Risk.” It is the right balance of careful budgeting and self sacrifice, and willingness to jump out there and take a risk.

The_Inquisitor's avatar

@gemiwing, of course not, I was just summing up the story, and thought that what I wrote would suffice. That would be so strange for someone to state “I am rich”. We were talking about teachers and then he/she said that a particular teacher was mean to him/her because he/she is rich… and that’s how it was brought up.

PS: Sorry for using he/she and him/hers. Sometimes I like to keep information to myself and let stories go vague, just in case someone I knew came across it and figured out it was me.

JLeslie's avatar

Just to continue with my thought…if the language in your household is rich people are bad people, then if your children grow up with this how will they feel good about being prosperous? It seems to sabatoge the idea of upwardly mobile, and sacrificing so your children can have a better life.

SeventhSense's avatar

@rangerr
I agree and I admire the land on the east end of Long Island like few other places. I often fish the surf (pic is Amagansett,NY) all over Long island taking my truck on the beach and have to laugh when I realize that I enjoy more than many billionaires in their own backyard.
@JLeslie
Well you know I struggle with this one and I don’t think that the rich are any more evil than some poor folks. It just seems that the uberwealthy are often indifferent to the suffering of many. And again even the middle class are indifferent and stingy but somehow it seems more obscene when you have millions. I don’t know. When you have a home that could house a third world village and it just you and your spoiled kids, I find something about that hard to swallow. Although, I’d be the first to gush over an amazing estate. I would just have a hard time with it.

I think that one has to have an incredible ego and obsession with the accumulation and the continuation of wealth which sadly keeps one from the very enjoyment of the life they sought in the first place. I’ve spent some time with that crowd on occasion and I just find them strangely detached and empty. It’s funny but I enjoy their acquisitions more than they do for their artistic merit or craft. The rich often know the cost of everything and the value of nothing.

I don’t think that it’s a coincidence that the hero or heroine in the movies is often the soulful maid, the artist, the worker and these represent true love and the Uptown girl/guy is a truly sad figure.

But I think that there’s been a lot of progress of the famous using their fame to be an asset to society- the Bonos, Madonnas, and Pitts are ridiculed but they are actually doing something good. So maybe it’s OK to have a couple nickels as long as they don’t make your palms sweat because you’re gripping them so tight.

JLeslie's avatar

@SeventhSense Well, I would agree that the there is a line that can get crossed, a greed line, that shows a lack of integrity or as I have said many time failure to follow the golden rule. Corporate executives and big business making million and billions when others in the company make little, or they could charge less to the consumer, many many examples I could come up with. So the super duper uber rich I can see questioning their great wealth.

But, I find that in America today there is talk of educated people being called elitests like it is a bad thing, and I have learned that people think making over $250K a year is rich. I think that is a fantastic income, and agree technically it is considered lower-upper socioeconomically, but most people making $250K $300K are just hard working people.

I know people who have families who say things like, “you think you are better than us,” to their children siblings, or cousins, who want an education or have earned more money. I am not talking very rich, just as people move up from one class into another.

And you talk about gripping your money tight. Do you only apply that to the super rich millionaires? On almost every question on fluther about money I answer SAVE SAVE SAVE as advice. Practically synonomous with keep a tight grip.

beachwriter's avatar

I am self-employed and have seen the whole spectrum from nearly bankrupt to wealthy. Trust me, wealthy is better. It took talent, hard work, focus and relentless determination. A good education and good money management skills are necessary, too—don’t carry a credit card balance or buy a car on credit.

“Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.” —Charles Dickens

SeventhSense's avatar

“Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.” —Charles Dickens
There is no comparison to the time at which that was written and the current time.
There’s a big difference between that and this:
Annual income 205 K, annual expenditure 198K, misery because one believe’ themselves to be a failure because they are not making a million and saving 100,000.

The stretch between the upper class and lower class as JLeslie has pointed out has increased exponentially as accurately predicted by Alvin Toffler in the Third Wave. Anytime this has happened in the past there has been a huge “correction”. The nearly worldwide “depression” that was precipitated by the immense greed and rampant irresponsibility of banking cartels and then their subsequent bailout by the toil and blood of American and worldwide citizens will not be tolerated forever. History has shown this to be the case. And for this reason terrorism will only increase because this “free market” has as its foundation the subjugation and ignoring of the mass of humanity.

lathielaw's avatar

they had a desire to do so, and a passion to fuel that desire .Hard work is rarely necessary. If you are truly passionate about something, it will manifest right before you. This has been proven, time and time again. Its the “secret” of the rich.

talljasperman's avatar

I think using what money you have better and you will be trusted with more…and more.

Inspired_2write's avatar

In really rich families (Rockefellors) they tend to keep track of there spending habits by writing them down .
They tend to save more rather than spend more.
I met a young man whom had only one old lawn mower that went around to Condo associations and offerred his services. He kept getting more and more referrals which culmulated in only four years to a large landscaping company with bigger and better equiptment.

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