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Why You Need to Be Optimistic to Build Wealth

Updated: Jun 4


Building wealth is a long and challenging journey. It requires hard work, especially when you are starting out. Once you work hard and get a little bit of money, you need to make smart decisions with that money.


Working hard and making smart decisions is only the beginning. You will also need discipline and patience. There will be a lot of setbacks along your wealth-building journey.


Anyone can build wealth if they work hard, make smart decisions, and have what it takes to stick to your plan for the long haul. The entire process requires a leap of faith that all of your hard work and planning will pay off one day.


That is why you need to be optimistic if you want to build wealth.


You need optimism to invest in yourself

Unless you are expecting a large inheritance, the most important factor that will determine how much wealth build is your income. You don’t have to be a top income earner to build wealth, but what is undeniably true is that the more money you make, the easier it is to build wealth.


Increasing your earning power raises your margin of error.


The simplest way to increase your earning power is to invest in yourself. Economists would say you are investing in your “human capital.” What that means is that you are making an investment in learning and mastering new skills that will help you earn a higher wage from employers or assist you in creating a successful business.


Often times, there is a tremendous amount of risk involved to invest in yourself.


Take getting a college education as an example.


Going to college means taking on a lot of risk. Tuition has never been more expensive, and the average college student graduates with $37,000 in student loans.


A college degree is also an investment.

  • Men with bachelor’s degrees earn $900,000 more lifetime earnings than male high school graduates.

  • Women with bachelor’s degrees earn $630,000 more than female high school graduates.

  • Men with graduate degrees earn $1.5 million more lifetime earnings than male high school graduates.

  • Women with graduate degrees earn $1.1 million more lifetime earnings than female high school graduates.

You need to be optimistic to invest in a college education. This is especially true if you have to take on student loans. There is no guarantee that this investment will pay off. It will depend on what you do with the opportunity.


Going to college or investing in yourself in any way requires you to bet on yourself. Making that kind of bet involves a lot of optimism.


You need optimism to build a financial plan

Once you build a high income, what you do with your money will determine your ability to build wealth.

  • If you are clearing $3,000 per month and spending $3,000 per month, you’ll never build substantial wealth.

  • If you double your income but also double your spending, you’ll never build substantial wealth.

Earning more money gives you a higher margin of error, but you still need a financial plan in place to build wealth.


That means:

  • Setting financial goals.

  • Tracking your spending.

  • Repaying your debt.

  • Saving money.

  • Creating a budget that locks in your financial goals.

Creating a financial plan requires a lot of work. It also involves an enormous amount of patience and discipline. Paying off debt and building wealth can take years or even decades.


That’s why it also requires optimism. You need to believe in your ability to stick with the plan and see it through to the end.



You need optimism to invest

As part of your financial plan, you will allocate a certain amount of money each month towards investing. To build wealth, you need to do more than stick your money in a savings account. You need to invest your money in assets that you expect will provide you significant returns above inflation.


There are three proven investments that build wealth.

  1. The stock market.

  2. Real estate.

  3. Owning a business.

No one would invest in the stock market or buy real estate if they weren’t optimistic about the long term prospects of the economy.


Investing in a business requires a heroic level of optimism when you consider that nearly half of all new businesses fail before their 5th year.


Anytime someone makes an investment or starts a business, they are declaring their optimism about the future, whether they realize it or not.


Optimism is most important when you don’t have any reason to feel optimistic

When times are tough, like when you lose your job, or the economy goes into recession, it can be difficult to feel optimistic. During these challenging periods, it’s easy to believe that the difficulties you are experiencing right now will last forever.


I’m here to tell you that whatever struggles your going through right now is simply your present circumstances. It does not have to dictate what’s possible for your future.


You need to have optimism during tough times.


I graduated from University during the bottom of the financial crisis into the worst job market in a century. I had very little reason to feel optimistic:


  • I was deeply in debt.

  • My family had just lost my childhood home to foreclosure.

  • To help my family pay the bills, I was borrowing extending my personal line of credit, which put me deeper in debt.

  • I was working a job that I hated and didn’t pay me enough to cover the bills every month.

One day, one of my University professors suggested that I should enroll in a Masters’s program in economics.


It was a difficult choice.


Even though I was unhappy with everything that was happening in my life at the time, I was clinging to my paycheck during a period of such economic uncertainty. Giving up that paycheck, and going back to school was a gamble.


What if I completed my degree but couldn’t find a job? Or worse, what if I flunked out of the program?


Eventually, I decided to bet on myself and enroll in the program. That decision was made purely on optimism.


  • I was optimistic that I could successfully complete the program.

  • I was optimistic that completing the program would help me land a better paying and more fulfilling career.

I was right on both counts.


That decision to be optimistic and bet on me was easily the most pivotal moment in my life.


  • I moved halfway across the country.

  • A year later, I had completed the program and received my degree.

  • I landed my first “career-job” in public policy before I graduated.

  • My income is more than twice what it was before completing my masters.

  • I met the woman who is now my wife and the mother of my son.

  • We bought our first house.

  • Then a second house.

  • We began investing.

  • I started a side-business.

We created a happy life and began building wealth. All of which started with a choice to be optimistic at a time where it would be easy to be pessimistic.


You need to be optimistic to build wealth

Every major decision along the road to building wealth involves risk.


  • If you decide to get an education and take on student loans, you are taking on risk.

  • If you decide to invest your money in the stock market or in real estate, you are taking a risk.

  • If you decide to start a business, you are taking a big risk.

The reason anyone decides to move forward with a risky decision is that they are optimistic. If you were pessimistic and believed the worst outcome would come true, you would never take any risk. As the saying goes, “no risk, no reward.”


The most important time to be optimistic is when times are tough, and you look at your circumstances and find no reason to feel any optimism.


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