Let’s face it, we all love tales of self-made men and women, ordinary people who, through a combination of talent and sheer hard work, have overcome challenge after challenge to become wealthy and successful. Similarly, when we succeed in our own lives, we naturally feel a sense of personal pride. But let’s be honest, we don't become wealthy or successful on our own.
Of course, skill and effort generally play a very large part. But behavioural science suggests that we tend to underestimate the role played by environmental factors and by other people in what we have achieved.
One of the best books about money I’ve read this year is The Soul of Wealth by psychologist Daniel Crosby. In it he explores what wealth really is and provides practical suggestions for how to change your thinking and your actions to lead a wealthier life.
Wealth is often built collectively
A really insightful point the author makes in the book is that true wealth is often built collectively. “Socioeconomic factors, such as race, gender, and even class,” he writes, “still play crucial roles in how our financial lives unfold. The advantages of quality education, access to healthcare, and being around smart and motivated people early in life can separate the haves from the have-nots.”
It’s especially important, Dr Crosby says, for wealthy people to show humility, to acknowledge the role of luck and chance in where they are today, and also to practise gratitude.
It’s easy to forget, particularly when we’re busy or feeling stressed, quite how much we have to be grateful for. Simply by being born in a wealthy country like the UK in the late 20th century we have already won what Warren Buffett once called the “ovarian lottery”.
Of course, our parents play a a critical role in how our lives turn out, as do our partners. But all of us can think of people, whether it’s friends or relatives, teachers or mentors, who in some way or other have helped us to become wealthy.
A conversation can change a life
Sometimes lives can change as the result of a chance encounter. That’s exactly what happened to my friend and fellow financial educator Andrew Hallam. At the age of 19, Andrew got talking to a mechanic at the bus depot where was doing a summer job. The man, who was in his late 40s, had built an investment portfolio of more than a million dollars. He didn’t need the salary, but he chose to carry on working as a mechanic because that’s what he enjoyed.
Andrew recalls: “He sat me down and he said to me… ‘If you become financially literate, you can end up having much more money than most of the people that are earning double and triple your salary over time. And so he showed me how compound interest worked… I realised that the more money I could invest the faster I could reach financial independence.’”
That one conversation had a pivotal impact on Andrew Hallam’s life. He stopped wasting money on things he didn’t need and invested it instead in low-cost index funds. By the age of 40 he too was a millionaire, which has enabled him to do what he really wants to do, namely travel the world, explore different cultures and meet new people.
Andrew also works to educate young people about money and investing and helping them become wealthy like he did. He’s written several books and he gives regular lectures. It earns him little or no money, but he has enough money as it is. What it does give him is a chance to give back, and to help other people. It’s also a way of expressing gratitude for the life-changing advice that mechanic gave him in the bus depot all those years ago.
In helping others, we help ourselves
Daniel Crosby would certainly endorse what Andrew Hallam is doing, not least because, as a psychologist, he is aware of the benefits of gratitude and helping others for our own mental and emotional being.
“Practising gratitude and giving back,” he writes, “helps you and benefits future generations so that more people have the chance to reach their financial goals.”
So is there someone who hasn’t had the luck that you have had who you can help to become wealthy? Is there a young person you know who could use some career advice perhaps, or some tips on managing their money or how to save and invest? Or could you offer to talk to children at a local school or college?
As Dr Crosby says, the French songstress and actress Edith Piaf put it best: “When you reach the top, you should remember to send the elevator back down for the others.'”
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