The Difference by Jean Chatzky
Jean Chatzky says that all people can prosper in even the toughest economic times...if they possess the key traits and abilities that will set them apart. She calls these traits The Difference, and in her new book Jean describes how you can go from the person who lives paycheck to paycheck to the person who lives in comfort.  
The New Rich List

Back in the early 1990s, I was—for a short while—a reporter/ researcher for Forbes magazine. During my tenure there, I got a few plum assignments, including spending one weekend fact-checking the first interview Michael Milken had granted from prison and fact-checking another on the businessman who would eventually become New York's mayor, Michael Bloomberg. I suppose I did well enough because I was soon tapped to do a little legwork on Forbes's lists of billionaires and richest celebrities. 

The preeminent Forbes rich list, of course, is the Forbes 400: the list of the country's four hundred wealthiest Americans. It has been around since 1982, when just three families made up 13 percent of the list. There were eleven members of the Hunt family, fourteen Rockefellers, and twenty-eight du Ponts. In 2007, on the list's twentyfifth anniversary, these dynastic numbers had dwindled to almost nothing. There was one Rockefeller (David Rockefeller, Sr.), one Hunt (Ray Hunt), and no du Ponts. Fifty people fell off the list completely. Forty-five were newcomers—nearly half of whom had made their money in hedge funds and private equity (like Pete Peterson of Blackstone and David Rubenstein of the Carlyle Group); the others were a mixed bag, including Frank and Lorenzo Fertitta of the Ultimate Fighting Championship, a pay-per-view fight fest.

The point, notes Columbia University researcher Wojciech Kopczuk, is not just that wealth is less concentrated (the share of wealth in the hands of the top 1 percent of Americans has fallen by half over the last eighty years). The real point is that it has moved into a whole new set of hands. Over the past twenty-five years, as these families have lost their historical positions, a whole new set of people has gotten rich. Some are entrepreneurs that have made a splash. Others are high earners on Wall Street, in corporate America, at law firms or consulting companies. Still others bought the right stocks (or were handed the right stock options) at particularly opportune times. 

This is an incredibly optimistic sign—and it's not just coming from the pages of Forbes. According to the Harrison Group, a research firm in Connecticut, three-quarters of the wealthy families in this country—and nearly all of those who qualify as upper middle class— didn't start out wealthy. Eighty-three percent came from the middle class. They've accumulated wealth over fifteen years on average, which means that some of them got there in significantly less time than that. And here's a bonus: When you look at the wealth of the pentamillionaires (the folks with $5 million or more), only one-tenth of their money came from passive investments. They made the rest of it themselves.  
Survey after survey I pored over while researching this book shows that a shrinking percentage of today's wealth came through a bequest. Research from the Spectrem Group, based in Chicago, found that only 2 to 4 percent of today's millionaires became rich that most old fashioned way. This means you no longer have to be born into wealth. Despite the hurdles presented by the markets in 2008, the American dream is alive and thriving—and you have the ability to achieve it. 
Where Are Women in This Mix?

The tide for women is turning a bit more slowly—but it is turning, nonetheless. Remember, there are two ways for people to become wealthy: They can inherit money or they can earn it. (Some people might argue that marriage is a third proven way to get wealthy. I don't put it on the list because it can also take your financial life in the opposite direction. Nine percent of our survey respondents blamed divorce for a negative turn in their fortunes; 8 percent blamed marriage itself.) 

Interestingly, the fact that the ranks of the wealthy are more dominated these days by earned wealth rather than inherited wealth works against women. How? Think about the wealthy American families of yesteryear, the Rockefellers, Vanderbilts, Hearsts, and so on. They had children and their children had children and—on average—those children were likely to be 50 percent male and 50 percent female. So as the money passed from generation to generation, it created as many female millionaires as male ones. 

When it comes to earning money, however, men still hold the advantage. Women are making strides. Some 30 to 40 percent of women outearn their spouses. More women than men are entering college and graduate-degree programs. Some researchers predict that the average woman will outearn the average man by the year 2030. But for now, women still lag. In 2007, the number of cents a woman earned for each dollar a man earned jumped from 77—where it had been stuck for as long as I can remember—to 81. Progress, yes, but still not an even playing field. 

In terms of wealth and who has it, the number of women inheritors falling out of the ranks of the über-wealthy is—for now—greater than the number of women earners climbing into them. As Columbia's Kopczuk puts it: "Old wealth is split equally. New wealth is not. But as time goes on, we expect to see a more equal split in wealth as well as in income. The tremendous strides women have made in income already indicates we will."  
How Do You Get There?

This all brings up the questions that are at the heart of this book: Where do you fit in now? And how do you rise to the top?

I suppose that's fitting, as this entire book unfolded as the result of asking—and attempting to answer—one very large question: Why do some people seem to move relatively easily from a paycheck-to-paycheck existence into comfort or wealth, while others get stuck or—worse—fall back? 

I set out to answer that question by reading volumes of research— academic and otherwise—on the subject. Or I should say subjects: wealth, education, success, entrepreneurship, risk taking, and the bigger worlds of behavioral finance and positive psychology, which danced in, out, and around the question I was trying to frame. Many professors walked me through their work, explaining their theories and answering my questions. 

In the end, though, it wasn't enough. I wanted specifics of which behaviors, attitudes, goals, and personality traits mattered most. I needed to know how these elements combined to make The Difference. How many of these behaviors, attitudes, goals, and traits did you need to boost you from one category to another? What, if anything, held you back? 

That was when I joined forces with Merrill Lynch and Harris Interactive to develop our own survey instrument that would look— specifically—at these questions. For months, a team of eight to ten of us met regularly. We used the preexisting research as the foundation for our a twenty-minute questionnaire. Then we rewrote those questions, and rewrote them again. Finally, several months later, we administered the poll to more than five thousand individuals.   

The Research

The study, formally known as the 2008 Merrill Lynch New Retirement Study, delved specifically into four loosely constructed categories: nonfinancial behaviors, financial attitudes and behaviors, goals (both financial and life), and personality. We asked hundreds of questions about topics including—but not limited to—the following: 

FINANCIAL ATTITUDES AND BEHAVIORS: Are you where you want to be financially? Why or why not? What has been the most important factor in reaching your financial status? How do you handle your credit cards? Do you or do you not budget? Do you look up to people with more money than you have? Have you worked with a financial adviser? How do you feel about stocks? Bonds? Do you feel entitled to a good standard of living? 

GOALS: What financial goals have been absolutely essential for you as an adult? Save more? Reduce debt? Which goals have you been able to accomplish as an adult? Can you envision a day where you won't have to work to meet your financial needs? Do you see a retirement where you will work part-time? Start your own business? 
PERSONALITY: Are you satisfied with your family life? Religious life? Sex life? Financial life? Are you driven to make a lot of money? Are you hardworking? A multitasker? Grateful? Confident? Happy? Optimistic? Stubborn? Creative? Street smart? Outgoing? Competitive? A leader? Ambitious? Popular? A risk taker? Do you have the ability to overcome a bad situation? Are you passionate about your work? Do you finish what you start? Can you easily read other people? Do you feel it is okay to break some rules? Have you compromised your personal principles to succeed professionally?  

NONFINANCIAL BEHAVIORS: How many times have you changed occupations as an adult? Do you work more than others? From home? On vacation? How often do you vote? How much television do you watch? How much time do you spend online? How often do you exercise? How often do you read books? Newspapers? Do you participate in extreme sports? Or meditate? How much sleep do you need? How often do you socialize and with whom—friends, family, neighbors, colleagues? People you enjoy? People who could advance your career? Have you made personal sacrifices to climb the ladder of success? Do you give back to your community? Often? As often as you can? 

It was a huge undertaking. And that was not all. We asked about political affiliation, left and right handedness, birth order, and whether participants were the children of parents who read to them at night. If we had an inkling that something might be important, we tried to find some way to add it to the soup. And as you'd expect, some of the issues raised by these questions turned out to matter a lot, others not so much, some not at all. 

We got the results back in early 2008. But anyone who has ever conducted a large-scale survey knows that the initial data run was just the beginning. For the next half year, the data was processed, cut, interpreted, and reinterpreted. I continued to ask questions. Harris continued to look for the answers. Along the way, David Robinson, associate professor of finance at Duke University—an expert in the field of behavioral finance—volunteered to weigh in. He was insightful and tireless, and with his help, the story in the data revealed itself even more.   
The Top Twenty  

As noted in the introduction, the research revealed four distinct groups of people: the wealthy, the financially comfortable, the paycheck-to-paychecks, and the further-in-debtors. Unfortunately, the breakdown below reveals that most Americans are still struggling. 

The wealthy (W): 3 percent of the population
The financially comfortable (FC): 27 percent of the population
The paycheck-to-paychecks (PTPs): 54 percent of the population
The further-in-debtors (FIDs): 15 percent of the population

What Makes The Difference?

The individuals that fall into these groups vary, of course, in terms of their income and their assets. But these discrepancies in income and assets aren't driving the bus. They're not leading the charge. The individuals in these groups are fundamentally different. 

As I said, we tested for hundreds of factors. Yet in the end there were twenty factors that rose to the top as key elements. These twenty—literally—make The Difference. Those who "have it" share the following: 

Financial Attitudes and Behaviors 
• They feel stocks are worth the risk. 
• They devote money to personal savings or a 401(k) each month. 
• They save regularly for emergencies. 
• They have invested for retirement. 
• They have reduced outstanding debt. 

• They want to be financially comfortable during their working years. 
• They aim to retire comfortably. 
• They always knew what they wanted to do (for a career). 
• They made it a goal to accumulate $1 million. 
• They want to own a home.  

• They are confident. 
• They are happy. 
• They are optimistic. 
• They are competitive. 
• They are leaders. 

Nonfinancial Behaviors  
• They have a college degree. 
• They socialize with friends at least once a week. 
• They exercise at least two to three times a week. 
• They read newspapers regularly. 
• They are married. 

The good news is that you don't need to have all of these factors. The Ws have more of these factors than the FC, who have more than the PTPs, who have more than the FIDs. It's a continuum. But you do need, on average, ten factors (your choice) to make your way into financial comfort—and twelve to make your way to wealth. In contrast, only half of the PTPs and FIDs have more than three of these factors.  
The Movers

Finally, working with Duke's David Robinson, I analyzed the data in another way. 

Of the five thousand individuals in the sample, there was a significant group who were at one time falling deeper into debt but who have since climbed up into the top two categories. I call these 620 individuals the "movers." 

From this analysis, we were able to confirm the importance of the Top Twenty. For example, we saw that individuals who said the word "confident" described them at least "slightly" were significantly more likely to move into comfort or wealth than those who said it did not describe them at all. But we also saw, using this analysis, the emergence of several other important characteristics: gratitude, popularity (connectedness), and the willingness to work hard and take appropriate risks. 

We also—quite importantly—learned that several things can hold you back. You won't be surprised to hear that stubbornness is on this list. But how about creativity? Robinson and I spent many hours mulling that one and came away believing it's a particular type of creativity that is the problem. It is not conceiving ideas and following through. People who can do that are likely to have said the word "creative" described them "slightly" or "well," and you'll see it helps rather than hurts them. But believing oneself too creative to play in the world of the mundane—these are the people likely to have said "creative" describes them "very well" or "completely"—that is problematic. "If your stubbornness or creativity consumes you," Robinson noted, "those traits become a detriment." Which leads me to a word on moderation. 

As you read through these facts and figures, you will no doubt notice that whether we're talking about being happy, hardworking, grateful, or creative, their presence in your makeup is beneficial ... to a point. If they describe you "slightly," you get a small bump. "Well," a bigger bump. "Very well," the biggest bump. But "completely"? You fall back a bit. 

In moderation, all of these attributes are positive and lead to wealth. In full, perhaps not so much. Consider happiness. You'll read more about this in chapter 5, but research has shown that the most blissful individuals don't have enough drive to go for the big job, the big paycheck, the brass ring. They're too satiated, too complacent. That same pattern is mirrored throughout. 

As you read through The Difference, in particular the profiles of individuals who embody The Difference traits, you'll see that they are— by and large—a balanced group. They are not consumed by one attribute or another but pay attention to many aspects of their lives. They are happy. They are socially connected. They vote. They exercise. They are glowing examples of moderation. I enjoyed spending time with them—and hope you will as well.  
Meet the Neighbors  

In the next few pages, I want you to meet the neighbors. Read carefully. Your goal is to get a sense of both who you are today and who you want to be tomorrow. Where do you fit? What attitudes and personality traits do you share? What goals and behaviors do you want to adopt? 

Where wealth is concerned, individuals aren't stuck in little boxes. You don't start out wealthy, stay wealthy, and end wealthy. Likewise, if you're struggling with debt today, as so many people are, you aren't destined to be there six months or two years from now. These four categories aren't types as much as they are works in progress. People move from paycheck-to-paycheck to financially comfortable, from financially comfortable to wealthy. Sometimes they even fall back, before rebounding to a position of security. 

The advice that follows is largely prescriptive. If you'd like to know how to bounce back with the resilience of a person who is financially comfortable, or how to see the glass as three-quarters full like a person who is wealthy, you'll find exercises to help you do just that. Let's take a look at these groups a little more closely—starting with the people you most want to be. 

Meet the Wealthy 

Confident. Driven. Intuitive. Resilient. Only 3 percent of Americans are truly wealthy. But there is no doubt it's good to be one of them. On average, they have investable assets (not including home equity) of nearly $2 million, but we also categorized them as wealthy if they had achieved significant wealth at a younger age: 

• $1 million or more for ages 55 or older 
• $750,000 or more for ages 45–54 
• $500,000 or more for ages 35–44 
• $250,000 or more if under age 35 

What made them wealthy? The vast majority didn't get there overnight. Nor did they get there because someone died or handed them a check. In fact, nearly nine out of ten said their wealth developed over time. They credit a combination of the Top Twenty factors for their success. Some are attitudes or attributes that seem to make up their personality; others are habits that support wealth. Both are needed to build a life of lasting wealth. When you have the habits without the personality, you are likely to be financially comfortable, but it's less likely you'll become truly wealthy. When you get the attitudes without the habits, the picture is even less rosy. We have all met that person who is able to get job after job but never climbs the ladder. Without solid financial habits, paycheck-to-paycheck is usually where they get stuck.
Seven Traits of the Wealthy Personality 

OPTIMISM. Optimism is an expectation that good things are going to be plentiful. The wealthy generally have the sense that life will bring good rather than bad outcomes. That doesn't mean they believe that good things will be omnipresent, but that they will outnumber the not-so-good. 

RESILIANCE. The wealthy are confident in their abilities to overcome bad situations—on the job, in their personal lives, with their finances. Many have triumphed over dismal financial starts. And, unlike most of the population that hops from job to job, career to career, the wealthy are much more likely to stick with what they start. 

CONNECTEDNESS. The wealthy are people magnets. They are connected to people in all aspects of life—they have circles of family, friends, colleagues, and acquaintances. One sign of a wealthy person is that others are willing to work for him or her, sometimes for less than they are worth on the open market. 

DRIVE. The wealthy want to succeed. Some want that success to arrive in the form of money (and that's OK). But most are quite passionate about the careers they choose to pursue. Not succeeding at these pursuits is, quite frankly, not an option.

CURIOSITY. The wealthy are likely to have gone to college. But it's not just classroom education that sets them apart. They are always learning, consistently reading books for pleasure and newspapers to keep up with the world. This may be a habit learned in childhood; most wealthy individuals report that their parents read to them when they were young. 

INTUITION.  The wealthy somehow know precisely whom they should be dealing with and whom to walk away from. And they listen to those gut instincts. 

CONFIDENCE. When the wealthy take a calculated risk—such as starting a business or buying investment real estate—they don't see it as much of a risk at all.  
Four Habits of the Wealthy   

WORK HARD. The wealthy work harder—and sleep less—than other people. They are more likely to mix work with their downtime, sacrificing personal time for professional success. But because they tend to be passionate about what they do, it's less likely that they see it as a chore. 

SAVE HABITUALLY. Wealthy people certainly have the funds to be crazy spenders, but most are not. In fact, some seven out of ten say that saving more money has been an "absolutely essential" financial goal as an adult. They typically pay off their full credit card balance each month. 

INVEST SOUNDLY AND AGGRESSIVELY. The wealthy are more likely to invest in stocks or stock mutual funds. They understand that even in down markets they need to take risks in the market in order to make their money work as hard as they do. They are also more likely to invest in real estate (above and beyond buying their own homes). 

GIVE BACK. The wealthy are grateful and they show it by giving back to their communities, to organizations they believe in, and to people they care about. 

Interestingly, although the PTPs and FIDs are likely to blame their financial troubles on bad luck, the wealthy say they didn't get there by virtue of a lucky break. They got there by landing a good-paying job and sticking with it. Or by creating, as an entrepreneur, a good paying job for themselves. 

It's also important to note that many of the truly wealthy individuals—the millionaires—in our study didn't describe themselves as wealthy. Instead they described themselves as "financially comfortable." Wealth, it still seems, is relative. You're less likely to see yourself as wealthy, even if you live in a huge home on a big plot of land with millions of dollars in the bank, if the neighbors to the left and the right of you have tens of millions in the bank. Likewise, you're less likely to see yourself as wealthy if you run a successful small business, when the other members of your social set run successful midsize ones. Of course, the rest of America—and most of the world—indeed views you as wealthy. 

With wealth, you get a greater degree of contentment with the other aspects of your life. Although study after study has shown that wealth in and of itself can't buy you real happiness or inner peace (and my own research noted that people who believe it can are less satisfied with their lives as a result), as you climb the ladder of financial success, you do become more satisfied with many parts of your existence: your family life, social life, health, religious life, even your sex life. 

Are you extremely satisfied with your sex life?  
• Wealthy: 37 percent yes
• Financially comfortable: 30 percent yes
• Paycheck-to-paychecks: 21 percent yes
• Further-in-debtors: 16 percent yes

Now, who wouldn't want a little piece of that?  
Meet the Financially Comfortable  

Like the wealthy, the 27 percent of Americans who are financially comfortable are standing on solid—well above average—financial ground. On average, they have investable assets of $240,000—a number that rises with age. 

Their good habits have put them there. The financially comfortable are even more likely than wealthy individuals to make—and stick to—a budget. In other words, they're careful about how much they spend. They're similarly careful about how much they borrow. Nearly 70 percent pay off their credit cards in full every month, and the rest either pay more than the minimum or don't use cards at all. Three-quarters devote a chunk of household income each month to personal savings. That's striking in an America that for the last decade has been saving nothing at all. 

These are people who, like the wealthy, are in a good place—not just financially but in life. In large part, money does not stress them out. A scant 2 percent—a number so small it could be a result of statistical error—say money causes headaches in their lives. Only a handful say they'd have any trouble whatsoever paying a large medical bill if it hit unexpectedly, or staying afloat if they lost their household income temporarily. Although they're not as satisfied with their social lives, health, or sex lives as the wealthy are, they're just as satisfied with their family life, which makes sense, since they are more likely to be family focused, but less so on friends, colleagues, or neighbors. 

With all of those positives, why haven't the financially comfortable become wealthy? They're missing a few solid pieces of the wealthy personality. They're less optimistic. Less likely to take a risk at an advantageous time. Less likely to reach out of that inner, familial circle to make a connection with someone who holds the keys to getting ahead. As a result, they are a little less grateful as well. 

Don't get me wrong. Financially comfortable is not a bad place to be. It's a place most Americans should aspire to. But once you reach it, digging into your soul and unlocking The Difference will allow you to reach heights—in wealth, success, and happiness—that perhaps you never realized were possible.
Meet the Paycheck-to-Paychecks  

A life where you can buy what you need but never what you want. Where after paying for housing, food, and clothing, you have very little left to pay for anything else. Where gas-price hikes make you ask: "What do I have to give up today to put enough in the tank to make it back and forth to work?" 

This is reality for more than half of all Americans. More than half! Some 54 percent say they're stretching it, living from one paycheck to the next. They're making ends meet, but they're struggling to do it. Any unexpected expenditure could tip the balance in the wrong direction. A large medical bill. A hole in the roof. And it's taking a toll. One-third say their financial situation is causing a lot of stress in their lives. 

Why are they here? What separates the paycheck-to-paychecks from the financially comfortable and the wealthy? Both personality and habits. But in this case, the habits are the driver. Sure, sometimes the catalyst is something out of your control, such as a health problem or job loss. But our research showed that overspending is the key reason that people slip from a position of financial security into a paycheck-to-paycheck existence. Consider how many people are on precarious ground because they bought houses they couldn't afford to live in or maintain. How many are on shaky territory because they bought one too many pricey cars, took yet another expensive vacation, or fashioned an image fueled by wearing the right clothes, eating in the right restaurants, or walking the right dog? 

It's a vicious cycle. Once you overspend, it's tough—if not impossible—to tap into the habits that move people into the range of the financially comfortable. Once you overspend, you cannot save habitually. Credit card debt is a savings killer, and only 22 percent of paycheck-to-paychecks can pay off their balances every month. 

But while overspending doesn't leave much to invest, it doesn't leave zero. More than one-third of these people participate regularly in their company's 401(k) or some other retirement plan. This automatic investing is clearly responsible for the somewhat surprising fact that paycheck-to-paychecks have investable assets, on average, of $83,000. If the number sounds higher than you'd expect, that's because it's skewed by what I like to call the "six-figure PTPs." These are the high earners— the managers, lawyers, entrepreneurs—who still can't seem to make ends meet. The folks who feel broke despite the fact that they're bringing in $100,000-plus a year. Fully half of paycheck-to-paychecks, however, have less than $25,000 to put to work to grow their futures. 
Being in this position does not inspire confidence. Or happiness, resilience, risk taking, gratitude, or any of the other attributes of the wealthy personality. Even when they do have assets to invest, they're not investing them the way you must to become wealthy: aggressively enough to beat taxes and inflation. Three-quarters say the stock market feels too risky for them. One-third can't even envision a day when they won't have to work to meet their financial needs. 

Again, this is not a life sentence. If you're in a paycheck-to-paycheck position, learning—and then practicing—optimism, resilience, appropriate goal setting, and prudent risk taking will put you in position to find your passion in life. Once you find that passion, you'll no longer feel the need to overspend to fill the emptiness in your soul. In fact, because you're more self-satisfied, you'll be inspired to take care of yourself in other ways by saving more, investing appropriately, and annihilating that credit card debt. Likewise, saving more, building up that retirement account balance, investing it for growth, and watching the balances on your monthly credit card statements dwindle will put a smile on your face and make you feel you can conquer the world. 

Meet the Further-in-Debtors  

Finally, there are those people who can't even tread water. They're already in a hole, but instead of making their way out, they're tunneling down further. Some 15 percent of Americans say they're sinking further into debt each month. 

It's a dire picture. Less than one-quarter of further-in-debtors save anything each month or make a contribution to a retirement plan such as a 401(k), which is why 56 percent of them have less than $10,000 in investable assets to their name. Three-quarters say if they had a large medical bill tomorrow, they would find it difficult to pay. Not surprisingly, they're both unhappy and insecure. Nearly half get physical symptoms like insomnia, heartburn, stomachaches, or headaches when they think about their finances. 

What do they blame for their situation? Bad luck. 

What do I blame? Hubris. 

The paycheck-to-paychecks overspend and know they're doing something that's not in their own best interest. The further-in-debtors overspend without a thought because they feel entitled. They deserve the nights out, the new clothes, the latest technology. How do I know? Our research gave me a peek into their budgets. A full third devote a decent chunk of their budget to entertainment or extras—nonessentials as far as I'm concerned. Far fewer devote any money at all to saving for tomorrow. 

Can they change? Can they turn the situation around? Absolutely. They need to embrace as many of the components that make up The Difference as they can. And they'll need to use the arsenal of tools in the chapters that follow to keep themselves on the right track.  
Moving On Up  

In my last book, Make Money, Not Excuses, I wrote about an epiphany I had—a good fifteen years into my finance career—when I realized there are only four things standing in the way of any one individual and financial security. 

1. You have to make a decent living. 

2. You have to spend less than you make. 

3. You have to invest the money you're not spending so that it can work just as hard for you as you are working for yourself. 

4. You have to protect yourself and this financial life you're building so that a disaster—large or small—can't come along and take it all away from you. 

I am absolutely right on these four points. Absolutely. Positively. Without a doubt. 

But what I have also come to realize is that these four steps are a bit of an unbalanced equation. There are two sides to living any financial life. The left and the right sides of the ledger. The assets and the liabilities. The money coming in and the money going out. Numbers 2, 3, and 4 are all about the money going out. 

Spending less than you make? Most people in this country are not. We have been, for the last two decades, living on a diet supplemented (if not on paper, then at least with a little mental accounting) by the fat values of our tech-laden stock portfolios and then, when those petered out, with the rising values of our four-bedroom Colonials. As a result, Americans have been saving an anemic one-half of 1 percent of everything we earn. That's eight times less than the percentage of our income we spend every year eating out. Yet, it is fairly simple to right your ship by tracking your spending, cutting out needless expenditures (big and small), and reducing the interest rates you're paying on your debts. 

Investing the money you don't spend? That's not something most of us are doing sufficiently, either. First, of course, you have to find the money. Then you have to deal with a convoluted system of accounts ranging from 401(k)s to IRAs to Keoghs to SEPs, figuring out which is the right one for you and how to fill it with the right mix of stocks and bonds once you open it. But again, this is a situation fairly easily remedied with a series of automatic monthly transfers from paychecks into retirement accounts, from bank accounts into 529 plans, from checking into savings. And once the money's there, if you don't care to spend your time picking stocks, you don't have to. Find a target-date retirement fund (sometimes called a lifecycle fund) geared to the date you plan to stop working full-time and call it a day.  
Protecting everything you've built? Strike three. To this day, two-thirds of Americans don't have the most basic of legal documents: a will. Or enough life insurance to take care of the people they love, should something unforeseen happen. But, again, this can be remedied relatively quickly and inexpensively. (Term life insurance prices have gotten so competitive, I just replaced my five-year-old policy with a new one and am saving hundreds of dollars a year.) 

What sets numbers 2, 3, and 4 apart is that although you may be fully capable of mastering these skills—and you may have one or more of them under control—they are things you can do sufficiently only after you have taken care of number 1—that is, after you have the money rolling in. And therein, as the Bard would say, lies the rub. Try as hard as you like to follow my advice—and I've been told I make understanding how to accomplish 2, 3, and 4 very easy—to track your spending, save automatically, and reduce your outstanding debt. Try to allocate your assets to perfection and pick winning stocks or mutual funds with low expense ratios. Try to secure your future with the right amount of term life insurance coupled with a well-rounded estate plan, a will, durable powers of attorney, and health-care proxies. Try all of this, but if you don't have the money—and you can't figure out a way to get the money—you are going to fail. 

A Swiftly Shifting Paradigm  

The good news, the very good news, is that this is a situation that can change—and quickly. Ten years ago, one in ten of the people who today describe themselves as financially comfortable were slipping further into debt each month, and four in ten were living paycheck to paycheck. In other words, half of the financially comfortable made their way not only out—but up. Ten years ago, 16 percent of the individuals who today describe themselves as wealthy were mired in debt. Only 13 percent were wealthy back then, which means that for a full 87 percent of them—nearly nine out of ten—wealth has been a recent phenomenon. 

And it doesn't always take ten years to make the leap. Those individuals who transitioned from living paycheck to paycheck into a life that's financially comfortable said it took an average of seven to eight years. Moving from financially comfortable to a life of wealth took just over eight on average. And making the big leap—from paycheck to paycheck to wealth itself—took about ten. That's the number of years Friends spent on the air. It's about the same time that a successful president spends in the White House. It's equivalent to the career life span of an NFL running back. In the scheme of things, it's a blink of an eye. And most people—no matter what strata they're living in right now—believe making that leap is possible. Are you one of them? Read on.  
Your Choice  

What do you need to do to find The Difference in your own life? Two things. First, you have to make the decision that this is a course you are going to embrace. You have to choose The Difference, just like you choose to exercise, eat healthier, quit smoking, read nightly to your kids. You choose The Difference; it does not choose you. The power is in your hands. 

And once you choose it, you need to do something. I recently had a long and inspiring conversation with Don Green, who, for the last decade, has run the Napoleon Hill Foundation. I asked him what separated Napoleon Hill';s fine work—most notably Think and Grow Rich—from latter-day works on the law of attraction. He told me that Napoleon Hill believed that first you had to see what you wanted; you had to envision the good things to believe you could actually accomplish them. If you were not able to even see them in your own mind, then you would project to the world an attitude of no confidence, desperation, failure—and failure would then be inevitable. But Napoleon Hill also believed, and this is what set him apart, that once you saw those good things, then you had to take specific actions to make them a part of your reality. 

I agree. 

The Difference is as much about doing as it is about believing. It's about making your own luck, not taking no for an answer, and paying attention to the things you're doing—both right and wrong—so that you can accomplish more with fewer sidesteps in the future. Believing alone won't make it happen. All the wishful thinking you can muster won't make it happen. Doing makes all the difference in the world.   

The 8 traits Jean says matter the most    

Take these quizzes to discover if you have The Difference 


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