8 Key Signs That Trying To Get Rich Is Keeping You From Becoming Wealthy
Written by
Cindy Lamothe
Edited by
Gary Dudak
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Almost everyone wants to be rich, or at least have access to what the rich have. Fancy cars, luxurious vacations, fancy clothing brands — it can make anyone think they’ve reached financial success.
However, according to Abid Salahi, finance expert and co-founder of FinlyWealth, the distinction between being rich and wealthy is crucial, yet often misunderstood.
“Richness typically implies high income or flashy possessions, while true wealth represents financial stability, freedom, and long-term security,” he explained. “Many people unknowingly sabotage their path to wealth by chasing the appearance of richness.”
Below are several key signs that the pursuit of riches may be preventing you from reaching genuine wealth accumulation.
Lifestyle Inflation
One telltale sign, according to Salahi, is rapidly increasing your spending as your income grows. “This prevents the accumulation of assets that generate passive income — the cornerstone of true wealth.”
For instance, he said that immediately upgrading to a luxury car after a salary bump might feel rewarding, but it’s a wealth-killer in disguise. “Instead of building wealth, you’re perpetuating a cycle of high expenses that keeps you dependent on your income.”
Wealthy individuals, he explained, often maintain modest lifestyles even as their net worth grows, allowing them to reinvest surplus income into wealth-generating assets.
High-Risk Investments
Salahi equally noted that chasing get-rich-quick schemes or putting a large portion of your portfolio into speculative investments shows a focus on short-term gains over sustainable growth. “Wealthy individuals typically favor diversified, lower-risk strategies that compound steadily over time.”
For example, he said someone trying to get rich might put a significant portion of their savings into a single cryptocurrency or penny stock, hoping for explosive growth. In contrast, a wealth-minded individual would spread investments across various asset classes like stocks, bonds, real estate, and perhaps a small allocation to higher-risk investments.
“This balanced approach provides more stable, consistent growth and protects against catastrophic losses.”
Neglecting Financial Education
“Those fixated on getting rich often skip the crucial step of educating themselves about personal finance and investing,” said Salahi.
He noted that real wealth-builders continuously learn and adapt their strategies based on sound financial principles. This might involve reading finance books, attending workshops or consulting with financial advisors.
“For instance, someone chasing riches might unthinkingly follow investment tips from social media influencers,” he said. “At the same time, a wealth-builder would take the time to understand market fundamentals, tax implications, and long-term economic trends. This knowledge allows for more informed decision-making and better long-term outcomes.”
Excessive Leverage
Using too much debt to finance a lavish lifestyle or risky investments is a common trap, said Salahi. While the wealthy may use leverage strategically, they’re careful not to overextend themselves.
“Sustainable wealth comes from living below your means and investing the difference,” he explained.
For example, maxing out credit cards to maintain a luxurious lifestyle or taking out large loans for speculative investments can lead to financial ruin if things go south. In contrast, wealthy individuals might use leverage to invest in income-producing real estate or to grow a business, always ensuring they have adequate cash flow to cover debt payments and a safety net for unexpected events.
Ignoring Tax Efficiency
According to Salahi, focusing solely on pre-tax income while disregarding tax implications is the wrong. “Wealthy individuals strategically manage their tax liabilities through legal means, maximizing their after-tax wealth over the long term.”
This might involve strategies like tax-loss harvesting, utilizing retirement accounts or structuring investments to take advantage of long-term capital gains rates. For instance, someone chasing riches might focus on high-paying jobs or investments without considering the tax burden.
In contrast, Salahi noted that a wealth-builder would consider the after-tax returns and structure their finances to minimize tax liabilities legally.
Short-Term Thinking
“Those pursuing riches often make decisions based on immediate gratification or short-term gains,” Salahi explained. “Wealthy individuals, however, think in terms of decades or even generations.”
This long-term perspective, he added, influences everything from career choices to investment strategies. For example, a rich-minded person might frequently job-hop for salary bumps, while a wealth-builder might stay in a lower-paying job that offers equity or invest time in building a scalable business.
“The latter approach might not yield immediate results, but can lead to exponentially greater wealth in the long run.”
Neglecting Insurance and Estate Planning
Focusing solely on accumulating assets while ignoring protection strategies is another common mistake of those trying to get rich. “Wealthy individuals understand the importance of safeguarding their assets through appropriate insurance coverage and estate planning,” said Salahi.
This might include liability insurance, life insurance and setting up trusts. “Without these protections, a single lawsuit or unexpected event could wipe out years of wealth accumulation.”
Focus on Income Over Net Worth
“People chasing riches often fixate on increasing their income, sometimes at the expense of building net worth,” Salahi continued. “While a high income can be a tool for building wealth, it’s not wealth itself. True wealth is measured by net worth — the total value of assets minus liabilities.”
Wealthy individuals, on the other hand, focus on growing their asset base and ensuring their net worth increases year over year, even if it means sacrificing some immediate income. “True wealth isn’t quick money. It takes patience, discipline, and a long-term mindset,” he concluded.
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