"Success is neither magical nor mysterious. Success is the natural consequence of consistently applying the basic fundamentals." -Jim Rohn
One morning at my old corporate job, I remember walking to the elevator with my nose firmly lodged in Thomas Stanley's "The Millionaire Next Door."
A coworker of mine tapped me on the shoulder, and asked me what I was reading. I showed him it was a personal finance book.
"Is that for school or something?" he asked quizzically.
I shook my head. "Nope. It's just for me," I grinned.
He stepped back, impressed. "Wow," he chuckled. "You don't really see people doing that."
After reading thousands of pages from over a dozen of the most popular finance books available, I began to realize something.
Most of the principles for building massive wealth were the same.
Even though the recipe for building wealth has been the same for thousands of years, most people still won't pay attention.
But if you have the patience to study the age-old fundamentals of building massive wealth, you will likely succeed in building massive wealth.
(Disclaimer: I'm not what you might call financially "rich." I'm not the expert like these authors. I'm just the guy who became obsessed with personal finance after watching my family lose the house, the cars, and the business to bankruptcy.)
Here are the 7 books I'll be referencing, in no particular order.
- "The Millionaire Next Door: The Surprising Secrets of America's Wealthy" by Thomas Stanley
- "Think and Grow Rich" by Napoleon Hill
- "The Science of Getting Rich" by Wallace Wattles
- "The Richest Man in Babylon" by George Clason
- "The Total Money Makeover: A Proven Plan for Financial Fitness" by Dave Ramsey
- "I Will Teach You To Be Rich" by Ramit Sethi
- "Rich Dad Poor Dad" by Robert Kiyosaki
I've concluded that building wealth and becoming rich isn't that complicated. It's simple, really.
It's not easy, to be sure. Many people will never become "rich," even if they try their entire life.
But if you follow the fundamentals — the same foundational financial values that have been used by nearly every supremely-wealthy individual in history — you are likely to build great wealth.
"I am a rich man. And rich men don't do that." -Robert Kiyosaki
Like many now-wealthy individuals, Robert Kiyosaki from the "Rich Dad Poor Dad" books once found himself completely broke. In addition, his failed nylon wallet business had left him over $1 million dollars in debt.
Yet he still proclaimed he was a rich man. "I am a rich man!" he declared to his wife with baffling confidence.
He knew he could throw up his hands and give up on ever building wealth again. But he didn't.
"I am a rich man — and rich men don't do that!"
Despite the big "zero" in his bank account, his mindset of wealth remained stronger than ever. He has since gone on to amass hundreds of millions of dollars through his "Rich Dad Poor Dad" curriculum.
Building massive wealth rarely happens unless you have a firm belief that you can do it.
This is the entire premise of books like "Think and Grow Rich" and "The Science of Getting Rich." Building massive wealth starts from the mindset that you can succeed in doing so; if you do not believe you can, you almost certainly won't.
Of course, simply believing you'll be rich won't make it so. But it's nearly impossible to build massive wealth without believing you can.
Said author James Allen, "As a man thinks, so he is." Bruce Lee echoed this sentiment: "What you habitually think largely determines what you ultimately become. One will never get any more than he thinks he can get."
When building wealth, you are likely to receive what you believe you will.
"No one is ready for a thing, until he believes he can acquire it. The state of mind must be BELIEF, not mere hope or wish." -Napoleon Hill
Great news — an inner belief that you will build massive wealth is something anyone can cultivate.
Developing this identity ("I am rich") might be extremely difficult for individuals who grew up with "scarcity" mindsets in literal poverty.
But developing an "abundance" mindset that firmly believes you will succeed no matter what is a prerequisite for building massive wealth in nearly every case.
One of the main differences between rich and poor/middle class people is their perspective on wealth. The rich see massive wealth as inevitable. In their mind, success is assured.
Most people don't truly believe they'll ever build massive wealth. With that attitude, they probably won't.
Building massive wealth starts with your mindset. If you believe you can get rich, you're far more likely to succeed than someone who doesn't really believe it.
"You must walk to the beat of a different drummer. The same beat that the wealthy hear. If the beat sounds normal, evacuate the dance floor immediately! The goal is to not be normal, because as my radio listeners know, normal is broke." -Dave Ramsey
This was one of the most eye-opening paradigm shifts I had in all my reading.
Don't listen to the majority.
That's because the majority of people aren't wealthy. Most people are broke, in debt, and have poor financial behaviors. Most people overspend, don't save, don't invest, and don't develop their financial intelligence.
Why on earth would you ever follow their advice?
"One of the reasons that millionaires are economically successful is that they think differently." -Thomas Stanley
Think of the most common financial advice you've heard over the years. It probably includes recommendations like:
- Save your money
- Get a good job with a good paycheck
- Diversify your portfolio
- Be frugal
- Don't take big financial risks
- Your home is your biggest asset
- Pay off your credit card every month
But according to the world's most influential financial books, this advice is usually bogus.
Traditional advice is actually what prevents people from attaining great wealth. The ideas are usually based on risk-avoidance and fear. They're too small. Archaic. Outdated.
Wealthy people don't touch this stuff.
One of the most common characteristics of massively wealth individuals is that they typically go against the tide of mainstream financial behavior.
Irving Kahn, a 109-year old hugely successful investor once quipped, "I would recommend that private investors tune out the prevailing views they hear on the radio, television and the internet. They are not helpful."
Warren Buffet agrees. "A good investor has the opposite temperament to that prevailing in the market."
While everyone is panicking, the wealthy are taking advantage. Ramit Sethi once said, "Fear is no excuse to do nothing with your money. When others are scared, there are bargains to be found."
Truly wealthy people ignore traditional advice.
In fact, wealthy people's behavior is commonly considered risky, impulsive, or even dangerous by the majority. Yet, they're the ones with the fortune, not us.
In short: if you want to build massive wealth, don't listen to traditional advice.
"I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful." -Warren Buffett
"Savings without a mission is garbage. Your money needs to work for you, not lie around you." -Dave Ramsey
Most people will only ever work for money. They don't know how to make money work for them.
"The Richest Man in Babylon" explains that every "gold coin" (or dollar) is like a worker. That worker has the ability to magically produce more workers, if you know how. One worker/dollar could potentially develop hundreds of more "workers" for you.
Every dollar is like a little seed that can grow and sprout more dollars. This is the essence of having "money work for you."
This picture really struck me. That meant for every fast food meal I bought, I was giving away 4 or 5 little "workers" that could never make money for me again. Same for buying coffee and other doodads.
Furthermore, even if I put my money "safe in the bank," I was actually wasting my money's potential. Ramit Sethi wisely points out, "Because of inflation, you're actually losing money every day your money is sitting in a bank account."
Every dollar I wasn't "planting" was a waste of a seed that might eventually blossom into a massive money tree. Why would I throw away my seeds?
I became reluctant to throw away my seeds and instead learn how to plant them to reap the benefits.
This is the entire premise of passive income and investing. Most people will never know the glee of waking up in the morning to discover they've made hundreds or thousands of dollars from passive income while they were sleeping.
In this sense, the man who earns $2,000/month entirely from passive income is more enviable than the man who makes $10,000/month in job income.
The first man still has all his time left to build more passive income. The second man, while earning more job income, must spend most of his days working for it. He is limited by the physical boundaries of his energy and by time itself.
Said Robert Kiyosaki:
"The rich get richer by continually reinvesting asset profits back into assets."
Most people don't know how to make money work for them. But if you want to build massive wealth, you need to plant your dollars.
(For those who are confused about what "passive income" is, here are some examples: capital gains, dividends, residual income from business, affiliate links, rental income from real estate, intellectual property, and royalties. I'd recommend checking out Pat Flynn at Smart Passive Income for more).
"Live like no one else now, so later you can live like no one else." -Dave Ramsey
This is the premise of Thomas Stanley's incredible book, "The Millionaire Next Door." His team surveyed hundreds of millionaires, and discovered most of them led simple, frugal lives.
"Many people who live in expensive homes and drive luxury cars do not actually have much wealth," Stanley reveals. "Then, we discovered something even odder: many people who have a great deal of wealth do not even live in upscale neighborhoods."
Stanley found some fascinating trends:
- A typical American millionaire never spent more than $399 on a suit for himself.
- Over 95 percent of millionaires have 20 percent of their income entirely in stocks.
- 85 percent were "self-made" and didn't work a typical 9–5 job.
You can read the book for more examples. But the principle is clear:
Building wealth usually looks simple, even boring.
Stereotypes like jewelry, cars, and houses just aren't normal.
Dave Ramsey agrees in "The Total Money Makeover." "The typical millionaire lives in a middle-class home, drives a two-year-old or older paid-for car, and buys blue jeans at Wal-Mart," he jokes.
It's easier to accumulate wealth if you don't live in a high-status neighborhood.
Trying to look like the lawyers, doctors, and hedge fund managers, and startup founders around you gets expensive. And since most people don't have the discipline to avoid people-pleasing, they waste their wealth on impressing others.
"Keeping up with the Jones'" is real. In fact, trying to simply "look rich" could make you go bankrupt.
"Most people think millionaires own expensive clothes, watches, and other status artifacts. We have found this is not the case." -Thomas Stanley
When you don't have superfluous materialism and appearances to distract you, you're actually more capable of building massive wealth.
"This is the process by which wealth is accumulated; first in small sums, then in larger ones as a man learns and becomes more capable." -The Richest Man in Babylon
Often, the richest and wealthiest individuals were the ones that started the earliest and waited the longest.
Every single one of my books have agreed: building wealth takes time. Often, the largest growth happens at the end.
Warren Buffet has a net worth of over $77 billion. But did you know he never had more than $3 billion dollars by age 59? (Still a lot, I know). He made more in 12 months at age 60 than he did in the previous 59 years. (Here's an interesting chart of his progress).
Wealth often comes suddenly, after waiting. It takes time. The key is to get started, and develop patience to play the long game.
"The single most important factor to getting rich is getting started." -Ramit Sethi
Most people prevent themselves from building wealth because they keep wasting their efforts on short-term efforts.
This is how individuals routinely become filthy rich through investments and the stock market. They waited, often when it appeared their investment was lost. They didn't panic and sell. Then, they struck the gold no one else was patient enough to wait for.
Money is a long game — do you have the patience to play?
"It is human nature to want it and want it now," says Dave Ramsey. "It is also a sign of immaturity. Being willing to delay pleasure for a greater result is a sign of maturity."
Ironically, many people who might magically inherit a vast fortune would have no idea how to manage it.
"It is not about making money; the problem is managing money" writes Robert Kiyosaki.
Ironically, a swift and sudden fortune in the hands of an incapable individual would probably destroy them.
Said George Clason in "The Richest Man in Babylon," unearned gold either makes wanton spenders who develop insatiable tastes, or hoarding misers who know they don't possess the ability to replace it.
You need to learn how to own massive wealth responsibly. That takes time and personal investment.
Just as your money needs time to grow, you need time to mature and learn how to successfully own that much money without losing it or letting it corrupt your values.
"Wealth is more often the result of a lifestyle of hard work, perseverance, planning, and, most of all, self-discipline." -Thomas Stanley
"Ordinary people work very hard for little money, clinging to the illusion of job security and looking forward to a three-week vacation each year and maybe a skimpy pension after 45 years of service." -Robert Kiyosaki
Let's imagine two individuals. They both want to be life coaches, and they both want to be rich.
The first individual creates a life coaching business from the ground up.
Although he has impressive profits, he is busy all the time. His income is directly tied to how many hours he works, and he can only work so much.
The second individual also creates a life coaching business, but she hires other coaches to do the work. Pretty soon, all her clients go to her hired coaches, and she gets a cut from each client. She only works when she wants to, making money while she sleeps.
This is the power of owning versus working.
If you limit your earnings based on hours worked, you'll always hit a ceiling. You're just one person. But if you own the enterprise, you remove all limits. Massive wealth becomes possible.
Building wealth almost always involves owning multiple streams of income — businesses, passive income, side-projects, royalties, stocks, investments, etc.
When you own, you can keep adding to what you own with very little time commitment. Tony Robbins owns nearly 30 companies, yet he barely spends any time on them. He hires others to do the work for him, while he gets a cut. This is typical behavior of the wealthy.
Owning also means lowering taxes on your wealth. Taxes are one of the greatest leeches of wealth. The less tax you have, the more money you keep.
In most places, income tax is about 25–50 percent (it's like giving the government your entire paycheck from January until June). But many people don't own; most of their money comes from their job income.
Owning assets like real estate and investments often have far lower taxes. Many investments have less than 20 percent tax. Passive income might have no tax at all.
According to Thomas Stanley, "To build wealth, minimize your realized (taxable) income and maximize your unrealized income (wealth/capital appreciation without a cash flow)."
Poor people don't invest. They don't own. They work harder and harder for income that is more and more taxed.
This is not how to build massive wealth. Owning is.
"Your level of success will rarely exceed your level of personal development, because success is something you attract by the person you become." -Ryan Holiday
You will only become as rich as you know how to.
Your financial intelligence (in both words and numbers) is perhaps the single most powerful stimulant for building wealth.
"If you want to build the Empire State Building, the first thing you do is dig a deep hole and pour a strong foundation," explains Robert Kiyosaki. "If you want to build a house in the suburbs, you pour a six-inch slab. The problem with most people who want to get rich quick is that they're trying to build the Empire State Building on a six-inch slab of concrete."
To build wealth, you need a deep, strong foundation of financial knowledge and literacy. Developing massive wealth actually isn't that rare, but sustaining that level of wealth is.
This is an important for someone like me who got a "D-" in Accounting (after getting an "F" the first time). If I want to build great wealth, I need to make some serious investments in my financial literacy. Fortunately, there is an abundance of courses online at places like Udemy.
"Rich people are rich because they are simply more literate in more financial areas than others." -Rich Dad
Most people don't have the first clue about "complicated issues" like budgets, cash flow, or taxes. But if you want to build massive wealth, you need to "get learned," as my cousin would say.
If you don't know how money works, you'll never build wealth.
Most poor and middle class individuals will never take it on themselves to learn even the fundamentals of building wealth. They don't invest in education or personal growth. They don't read finance books, take online courses, or even learn how to create a budget.
Their continued financial illiteracy ensures they — and their family — remains poor until they die.
In the words of Robert Kiyosaki, "Illiteracy, in both words and numbers, is the foundation of financial struggle."
Every book I read agreed that building wealth required powerful commitments to personal growth, learning, reading, and becoming educated on how money works. Wealth is impossible without the knowledge.
Most people will continue to blame external factors for their financial drought — the economy, their job, their parents, Wall Street, etc. They don't take responsibility for their own financial education, and so remain poor.
This isn't always easy, especially for beginners. But if you want to build massive wealth, you need massive commitment to developing financial literacy.
"I had to quit telling myself that I had innate discipline and fabulous natural self-control. That is a lie. I have to put systems and programs in place that make me do smart things." -Dave Ramsey
"The sun that shines today is the sun that shone when thy father was born, and will still be shining when thy last grandchild shall pass into the darkness." -The Richest Man in Babylon
The recipe for building massive wealth has been the same for hundreds and thousands of years.
Wealth is a mindset. Don't follow traditional advice — it's usually not helpful. Make your money work for you. Keep going, even if it gets boring. Work to own, and never stop investing in your education.
Following these fundamentals won't guarantee wealth. But these are the same principles preached in nearly every important finance book.
If you want to build massive wealth, you'd do well to practice them carefully.
Anthony Moore is the founder of StuffGradsLike.com where he coaches 20 and 30 somethings to achieve success in career, finances, and passion.
Like this story? Like CNBC Make It on Facebook