It seems only yesterday we were talking about meme stocks, stonks and Bitcoin hitting $100K with laser eyes and "to the moon". How times have changed. Consumers have abandoned high risk high return assets and schemes for safe and tested places to store their cash. We went from defi to FDIC insurance in a matter of a few months.
How can consumers and the financial services companies that serve them possibly make sense of such market? and what can they do to prepare for the next pivot? An almost two decades old approach might help.
Get Rich Slowly was a phenomenon in its time and continues to be an influential movement in investing and money management. Created in 2006 by J. D. Roth it promoted a simple yet effective way to become rich, or at least not poor. Crucially it was an effective antidote to and the opposite of the get rich quick promises of so many alternative approaches, both then and now.
Its message is no less relevant today and is much copied, expanded and eulogized by many others. If you Google “Get Rich Slowly” you get several hundred million results.
The message might even be more relevant today as it was in 2006 — before the iPhone, Bitcoin, TikTok or ChatGPT. Influencer culture and the social media was just taking off. The pressure to look “successful” and the apparent path to achieve it is now so oversold it's almost a meme in itself.
If you believe the research 75% of Gen Z and young Millennials aspire to be influencers as a career choice. Only 14% want to be a doctor or nurse. COVID has also caused many to re-evaluate their relationship with money. Bad things happen to good people and becoming financially resilient to these shocks whatever they might be has been given new urgency and focus. Get rich quick will always work for some lucky few — but statistically, your chances of becoming a successful influencer or TikToker are remarkably slim. The best way to guarantee to get rich quick continues to be to inherit it.
Conversely, if you follow the rules of Get Rich Slowly your chances of becoming rich or at least financially resilient are very high. By all means, give it a shot to become a star but have a plan B.
So we wanted to look again at the philosophy behind Get Rich Slowly and review it in the light of 2023.
We at Unifimoney believe in the Get Rich Slowly approach and want to put the tools to do this in more hands than ever before. Technically impossible in 2006 but not so today. Smartphone penetration, ubiquitous connectivity, fractional investing, lower costs, access to tools, education and resources previously the preserve of professional investors means that implementing the Get Rich Slowly model is easier than ever before and accessible to all.
In 2012 J. D. Roth wrote about the 15 tenets of Get Rich Slowly in Forbes providing a great basis for a revisit in 2023.
1. Money is more about mind than it is about math. That is, financial success is more about mastering the mental game of money than about understanding the numbers. The math of personal finance is simple — spend less than you earn — it’s controlling your habits and emotions that are difficult. One of the key issues at play and the one most exploited in advertising is a bias we all have called hyperbolic discounting. The tendency to perceive the value of rewards as being less the further away they are to being realized. We are very bad at deferred enjoyment.
2. The road to wealth is paved with goals. Without financial goals, you have no direction. If you have no direction, it’s easy to spend money on things you’ll regret later. But if you’re saving for a house, your daughter’s college education, or a trip to Europe, your goal will keep you focused, making it easier to spend on what’s important and ignore the things that aren’t.
Goals based financial planning was created specifically to help achieve this. New tools like those from OnTrajectory (a Unifimoney partner company) exist to help make this easier.
3. To build wealth, you must spend less than you earn. Basic math, yes, but it’s important. Successful personal finance is all about building a positive cash flow. By decreasing your spending while increasing your income, you can get out of debt and build wealth.
No arguing with this one — it’s an immutable law of getting and staying rich.
4. Saving must be a priority. Before you pay your bills, before you buy groceries, before you do anything else, you should set aside some part of your income. If you have to start small, start small. Even $25 a month is good. As you earn more and develop better habits, save as much as possible. (My wife saves nearly a third of her paycheck!)This one has not dated well. Saving in today's market and for the foreseeable future will not under any circumstances make you rich.
Take this scenario from Personal Finance Club one of the many personal finance sites that in many respects reflect the original Get Rich Slowly creed.
Personal Finance Club compares the return of saving that 20% in high-interest savings account vs investing it over 40 years. The top high-interest savings accounts are paying around 0.8% currently. The average stock market return is 10% per year. Inflation has ranged broadly between 1–3%. After 40 years of saving you would have saved $375,371 — not adjusted for inflation — that amount will be buying you very much less in 2060.Had you invested that money you would be holding a forecasted $3,540,750. In 2006 Robinhood and Wealthfront did not exist, that had to wait 7 more years. Investing in the stock market as a retail investor was very much rarer and more expensive than it is now.Unifimoney advocated for saving and getting a decent return on your money — not just in high-interest savings accounts but all your money including in your checking accounts. The average person earning more than $160K a year has $42K in a checking account earning next to no interest. That money can be put to better use.
5. Small amounts matter. Your everyday habits have a huge impact on your financial success. Frugality and thrift help build good habits and make a real difference over time. Plus, there are tons of opportunities to flex your frugal muscles.Yes — small amounts are crucial, but not because they teach better behaviours. It's all about compound growth. Small amounts whether saved or lost over time add up to an awful lot. Invest $3.50 a day from age 26 by the time you retire you would have amassed a portfolio worth over $500K.
But compound growth also works against you. Deposit interest that is lost (albeit a hidden loss through lower APY than you should be getting), unredeemed credit card rewards and benefits, high investment costs — they all add up and become a very significant opportunity cost over time that can never be recovered.
6. Large amounts matter, too. It’s good to clip coupons and to save money on groceries, but it’s even better to save on the big stuff like buying a car or a house. By making smart choices on big-ticket items, you can save thousands of dollars at once.
7. Slow and steady wins the race. The most successful folks are those who work longest and hardest at things they love to do. So try to find ways to make frugality fun, and recognize that you’re in this for the long haul. You’re making a lifestyle change, not looking for a quick fix.
We prefer to make achieving financial resilience easy and automatic rather than fun. So easy that it’s like paying for an Uber i.e. you hardly notice it at all. Rather than waking up in the morning and regretting your unconscious spending the night before you wake up to celebrate your unconscious saving and investing instead.
8. The perfect is the enemy of the good. Too many people never get started putting their finances in order because they don’t know that the “best” first step is. Don’t worry about getting things exactly right — just choose a good option and do something to get started.
9. Failure is okay. Everyone makes mistakes — even billionaires like Warren Buffett. Don’t let one slip-up drag you down. One key difference between those who succeed and those who don’t is the ability to recover from a setback and keep marching toward a goal. Use failures to learn what not to do next time.We try to take ensure that this does not happen, automation takes out a lot of the problems with Get Rich Slowly in that it requires a sustained behavioral change and substantial manual labour. Remove these and the process becomes a lot easier and with a lot higher probability of success.
10. Do what works for you. Each of us is different. We have different goals, personalities, and experiences. We each need to find the tools and techniques that are effective for our own situations. There’s no one right way to save, invest, pay off debt, or buy a house — and don’t believe anyone who tells you there is. Experiment until you find methods that are effective for you.
11. You can have anything you want — but you can’t have everything you want. Being smart with money isn’t about giving up your plasma TV or your daily latte. It’s about setting priorities and managing expectations, about choosing to spend only on the things that matter to you, while cutting costs on the things that don’t.Always good advice. Enjoy that plasma TV.
12. Financial balance lets you enjoy tomorrow and today. You don’t have to choose between spending today and saving for tomorrow. You can do both. Strive for moderation in all things: Pursue your goals, but don’t forget frugality; be frugal, but don’t forget your goals.
Again solid advice. The average person is constantly suffering from loss of value in unnecessary fees, lost interest and rewards and easy to recover wasted costs. That money alone can be put to work without any impact on daily life and could add up to a significant amount.
13. Action beats inaction. It’s easy to put things off, but the sooner you start moving toward your goals, the easier they’ll be to reach. It’s better to start with small steps today than to wait for that someday when you’ll be able to make great strides. Get moving.
The sins committed by mass affluent consumers in personal finance are largely sins of omission, not commission. It's what they don't do that hurts them and over the long term. Automated, passive investing solves for this effortlessly.
14. Nobody cares more about your money than you do. The advice that others give you is almost always in their best interest, which may or may not be the same as your best interest. Don’t do what others tell you just because they hold a position of authority or seem to have a persuasive argument. Do your own research, get advice from a variety of sources, and in the end, make your own decisions based on your own goals and values.We agree, always do the research but you don’t necessarily have to do the work as well. Advances in technology have made researching personal finance easier in many ways but technology has also created the tools to make managing money much easier.
15. It’s more important to be happy than it is to be rich. Don’t be obsessed with money — it won’t buy you happiness. Sure, money will give you more options in life, but true wealth is about something more. True wealth is about relationships, good health, and ongoing self-improvement.“No wealth can ever make a bad man at peace with himself.” Plato
The world is a radically different place from when Get Rich Slowly was created. Technology and our use of it has changed beyond all recognition. But we think the opportunity to harness technology to make putting into practice the ideas of J. D. Roth and make it easier than ever, almost effortless, to become rich slowly is now more achievable than at any point since it was first created.
Important Disclaimers The above does NOT constitute an offer, solicitation of an offer, nor advice to buy or sell specific securities. The opinions listed above are not the opinions of Unifimoney Inc. or Unifimoney RIA, Inc. but represent the opinions of independent contributors. These contributors may or may not hold positions in the stocks discussed. Investors should always independently research any stocks listed and form their own opinions, while recognizing that any investments made may lose value, are not bank guaranteed and are not FDIC insured.
The above does NOT constitute an offer, solicitation of an offer, nor advice to buy or sell specific securities. The opinions listed above are not the opinions of Unifimoney Inc. or Unifimoney RIA, Inc. but represent the opinions of independent contributors. These contributors may or may not hold positions in the stocks discussed. Investors should always independently research any stocks listed and form their own opinions, while recognizing that any investments made may lose value, are not bank guaranteed and are not FDIC insured.