Let’s say four people are dropped into the jungle. One person is dropped next to a road. The second is dropped way out in the middle of nowhere, 100 miles from civilization. The third is dropped onto a trail two miles from town, but has a broken leg. The fourth is dropped into the middle of nowhere and also has a broken leg. Each of these people has a different situation. The first person has a clear advantage over the others since he can just flag down a car. The second has a long way to go, but doesn’t have any physical limitations. The third has physical limitations, but doesn’t have that far to go. The last one is really up a creek, needing to travel 100 miles through jungle terrain with a broken leg. So which ones would you expect to get out? Which ones would you just tell to lie there and die because they don’t have a chance?
Regardless of their situation, there is one inescapable truth. Each of these individuals needs to start moving towards civilization, or building a shelter and finding supplies where they are, or they are going to die. Actions such as movement in a path that leads to houses and people will improve their situation. The first person might be able to get a lift and make it back first, but he will also die if he crawls back into the woods and curls up in a ball just as surely as any of the other people. The second person might have a long walk ahead of him, but he will be in the same situation as the first if he keeps making progress towards his goal. It will just be a tougher journey and probably take longer. The third person has some definite physical limitations, but he might actually be better off than the second person because at least he is near his goal. Few would give the last person much of a chance of surviving, but if he gives up, he definitely won’t make it. If he tries, it might be a Brobdingnagian feat to do so, but he could make it back alive.
The same is true of finances. Everyone is dropped into different situations. Some are born into wealthy families and have access to better schools and connections. Others are dropped into middle class households who are loaded with debt yet have all of the basic necessities. Still others find themselves in households that make little money yet have parents who work hard and encourage their children to work hard and succeed. Finally there are children dropped into situations where their parents are so preoccupied with themselves that the children don’t even get regular meals.
It is absolutely true that it is easier for the kids in the wealthy families, or even in the less wealthy but supportive families, to reach financial independence than it is for the child who is neglected. Still, if the wealthy child doesn’t bother to learn skills and better himself, and if he spends every dime he has frivolously, he will end up poor. If the neglected child goes to school and works hard to learn the materials, then uses that knowledge to meet the needs of others in exchange for payment, he can earn a good living. If he then takes a portion of those earnings and saves and invests, he can become financially independent. He might end up with only $500,000 after a lifetime of work, while the rich child might end up a multi-billionaire with the same level of effort, but that doesn’t mean he can’t better his situation and that the way to do that is to do the things that will better his situation – getting a good education and applying it, and handling money well.
An odd thing happens to some people who do succeed, particularly those who start out in a good situation, but even among those who start out in a middling or even bad situation. Rather than looking at the things that they have done to make themselves successful and realizing that they would not have succeeded if they hadn’t put in the effort, they believe that their success is due to factors outside of their control. They believe that they succeeded because they were “privileged” in some way and that others were responsible for their success. They often feel a sort of survivor’s guilt about their success and begin to believe that they and others who are successful are somehow responsible for the situation of those who are not. Somehow they are special and others are not special cannot achieve what they have achieved. Note that this attitude is prevalent among university elitist who think they are smart and all knowing and others are not.
This attitude is extremely destructive to others because it results in the assignment of low expectations. The person who is stuck out in the middle of the jungle with the broken leg is told he cannot make it and with the obvious implication that he should not even bother to try. Unless he has the personal drive needed to overcome this stigma, he may well lie there and die. These low expectations are not helpful and don’t drive him to do what is necessary to survive and thrive.
Yes, if you’re born a trust fund baby it will be much easier for you to be financially independent than if you are the daughter of a single mother who is in the projects hooked on crack. Even if you are a trust fund baby, you can still spend your way into poverty or destroy your life with drugs and bad decisions. If you are the daughter of a drug user in the projects, I don’t know for certain if you will be able to overcome your obstacles and make it to financial independence, but I know others have made it out. I just know that if you don’t things like take your education seriously and manage your money well, you will almost certainly not succeed. I do know that the things you do and the decisions you make will influence your outcome. I believe in you. Now believe in yourself.
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Disclaimer: This blog is not meant to give financial planning or tax advice. It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.