On the Money Trail
 Top 7 Ingredients for Success
By Al Jacobs

Before describing the seven qualities that lead to success, we’d better make certain we’re talking about something we agree on.  Do we consider a fellow whose sole accomplishment is superb clarinet playing to be a success?  Probably so—in the musical sense.  And what about a highly effective third grade teacher who inspires her students to learn?   We have here an unquestionably successful educator.  However, for the purpose of this discussion, I’m narrowing the scope.  Success, as defined here, is financial success.  You may consider this too restrictive, and I’ll admit that I’ve known wealthy persons who by every standard except net worth were failures.  Nonetheless, the riches that a person attains is the way the world commonly keeps score of the winners and losers.  If nothing else, it’s a convenient yardstick by which to measure a person’s stature.

Now that we’ve established what constitutes success, let’s consider the factors that help bring it about.  But by bring it about, I mean the personal qualities that lead to wealth accumulation.  Inheriting a fortune, winning a lottery, or snagging a rich spouse—though not a bad idea if you can arrange it—is not what I have in mind.  Let’s look instead at character traits.

1.  Attitude.  How do you respond to the question: “Are you rich or poor?”  At first blush, most people probably estimate their bank balance and assets, then subtract out liabilities, and finally ponder the dollar amount in some fashion.  If that’s the way you think, you have the wrong concept of what poverty is all about.  It’s my belief that poverty is not a financial circumstance, but rather a mental condition.  Anyone who accepts the stigma that accompanies that demeaning description will probably never overcome the handicap that goes with it.  Let me say, simply, that I’ve been broke, but I’ve never been poor.

2.  Thrift.  A primary requirement in accumulating riches is to insure that income consistently exceeds outgo.  Though you’d think this fundamental relationship goes without saying, there is a world of opinion that seems to question whether two plus two really equals four.  Without a doubt, the finest enlightenment on this principle is found in The Millionaire Next Door, a 1996 book by Thomas Stanley and William Danko.  It provides outstanding guidance.

3.  Imagination.  The 19th Century German philosopher Friedrich Wilhelm Nietzsche said: “Life is a struggle for existence in which the fittest survive.”  Though he was a most unpleasant character, he occasionally got things right.  And what defines fitness?  It means that you conjure up solutions to whatever problems you face.   When a competitor’s actions threaten your livelihood, you contrive some way to come out ahead.  If confiscatory tax laws are enacted, you search for loopholes.  Competitiveness demands imagination.

4.  Awareness.  You’ve received your semiannual auto insurance bill in the mail.  Before cutting a $542 check, you dig from your files the prior bill showing a $428 premium.   A quick inspection reveals the reason.  Your deductible has been lowered from $1,000 to $500, requiring a $114 payment to avoid a $500 risk certainly not a wise expenditure.  A 3-minute telephone call to your agent restores the deductible and eliminates the premium increase.  The message is clear: If you are to prosper, you must pay attention.

5.  Skepticism.  A sign in a shop window tells the story: SALE!  ALL ITEMS 50% OFF.  The mob of enthusiastic buyers seems to lend credence to the popular theory: “Anything for half price is a bargain regardless of how much you pay for it.”  If your brain functions in this manner, expect to be taken advantage of regularly.  For self-preservation, subscribe to one of life’s more helpful rules: Ninety-five percent of everything is nonsense.

6.  Persistence.  Few worthwhile accomplishments occur quickly.  Earning a college diploma takes years.  Raising a well-integrated family can require decades.  Likewise, building a fortune is seldom an overnight accomplishment.  Be prepared to devote both time and effort to the endeavor.  And never forget that the winner in many a contest is the one that hangs on the longest.

7.  Luck.  Possibly luck is the single most important ingredient to success, but it is not dumb luck that I endorse.  Many years ago I clipped two sentences from a newspaper article, and while the subject of the article is long forgotten, as is the newspaper, the two sentences made a profound impact on me.  The text read simply: "Ed Callaway is a lucky man.  He arranges it that way."  The message requires no elaboration.

AL JACOBS has been a professional investor for nearly four decades.  His business experience ranges from real estate, mortgage, and securities investment to appraisal, civil engineering, and
the operation of a private trust company.  He is the author of Nobody’s Fool: A Skeptic’s Guide to Prosperity.   You may subscribe to his financial column, “On the Money Trail,” at no cost or obligation, by visiting www.onthemoneytrail.com.