As the Stoic philosopher Epictetus once said, “Wealth consists in not having great possessions, but in having few wants.”
Kudos to Epictetus, but most of us have more than a few wants. Even though everyone defines wealth and success differently, most of us enter at least some degree of financial and material success into our success equations.
Which means most of us don’t feel rich. Or on track to someday be rich.
Yet that might not be the case. What appear to be red flags could be signs you’re already wealthier — or at the very least on the right track toward building wealth — than you imagine.
Here are a few examples.
1. Your investments don’t generate huge returns.
(Especially when you compare your results with those of your friend — because we all have that friend — who constantly reminds you how he — because it’s always a he — made a killing on Bitcoin.)
“That” friend aside: While it’s fun to assume differently, most of us have relatively little control over the rate of our investment returns. Even if you adopt the Warren Buffett lifestyle and spend hours each day poring over financial reports, the difference you’ll be able to make on your investment return is likely to be small.
But what you can control — at least to a far greater degree — is how much money you save.
The faster you build your savings, the faster you achieve a critical mass of wealth — and the greater the effect even marginal gains in investment return will have on your principal.
Take your 401(k): For at least the first 10 years, how much you put into retirement savings makes a much greater difference than the rate of return on those savings. When you have $20,000, earning 10 percent instead of 5 percent “only” increases your savings by $500.
But when you have $500,000, that 5 percent difference adds $25,000 to your account.
So if you’re trying to build wealth and aren’t earning multidigit returns, spend a little time expanding your financial knowledge so you can become a better investor.
Then spend a lot more time finding ways to save more money by spending less. Or by earning more, especially since starting a side hustle is relatively easy.
Because you can’t control what the markets will do, but you can control you — and what you do with the money you spend. And make.
And have.
2. You don’t earn a huge salary.
It’s easy to assume money — especially having more money — will make you happier.
Yet a 2009 Journal of Positive Psychology study found that that after a certain point, affluence is a terrible predictor of happiness. And while a relatively recent study appeared to debunk the famous 2010 Princeton study that showed once you reach a salary of $75,000 a year, further increases in income don’t have an impact on emotional well-being, a closer look tells a different tale. As you might expect, it all depends on where you sit.
If you make $20,000 a year, a $5,000 raise feels huge.
If you make $100,000 a year, a $5,000 raise is great, but not life-changing.
And then there’s this: While high earners reported feeling happier with their lives in general, they also reported feeling far more stressed about time.
As my Inc. colleague Jessica Stillman sums up the study, “The same amount of money buys a lot more happiness for someone on a modest income than for a top earner, and while money gives you options, it’s hardly a silver bullet for happiness at any income level.”
What will make you happier? Doing work that you enjoy. Doing work that leaves you feeling fulfilled and satisfied. Doing work that allows you to feel more in control of your own destiny.
Achieve that, and you’re already rich, regardless of how much money you make.
Because then earning more money will only change the degree of your happiness and fulfillment — not its fundamental nature.
3. Your small business doesn’t generate huge profits.
Pick a number; say you someday want to have $10 million in the bank. Achieving that level of wealth requires a lot of saving and a ton of time: Sock away $100,000 a year at a 7 percent average return and it will still take you more than 30 years to have $10 million.
As an employee, you’re unlikely to be able to save that much money every year. In all likelihood, you will never become incredibly wealthy by working for someone else.
But you do have a shot if you own your own business.
According to the IRS’s analysis of the 400 largest gross incomes in America, salaries accounted for a small percentage of a wealthy person’s earnings. Same for stock market returns.
Owning a small business — or multiple businesses — accounted for four times as much income as salary.
And here’s the kicker: Selling a business, or some of its assets, is what generated huge financial windfalls.
That’s how the rich got rich: They built incredibly successful businesses.
And while your business may never reach the Gates or Buffett or Cuban or Branson level, still: As an entrepreneur, at least you have a shot. When you work for someone else, your upside is limited and eventually capped at the amount someone else decides to pay you.
When you own your own business, your upside is only limited by your ambition, work ethic, persistence, and desire to constantly learn and grow.
But here’s the thing: You can’t get lucky unless you’re in a position to be lucky.
Work for someone else, and luck could be a promotion you might not have deserved.
Work for yourself, and luck could mean finding yourself in the right place, at the right time, with the right skills and mindset to seize an opportunity you would have otherwise missed, allowing you to turn a successful small business into a hugely successful business.
And even if you don’t get lucky, you’ll still feel fortunate to be controlling your own destiny while doing something you love.
Which, on its own, makes your life much, much richer.