6 reasons that prevent Russians from getting rich

2024 Author: Malcolm Clapton | [email protected]. Last modified: 2023-12-17 03:44

The echoes of the Soviet egalitarianism, mistrust of financial instruments and an unreasonable approach to spending are to blame.

Too many people in Russia live paycheck to paycheck. They do not have savings, and if they do, then they merge anywhere. This problem is deeper than it seems. I have identified six main reasons why Russians have money problems.

1. Education in the paradigm "money is evil"

For almost 100 years, money in Russia has been associated with negativity. From an early age, children were told that money is evil.

The Soviet state declared its enemies the so-called parasitic strata: former landowners, entrepreneurs, bankers. Their property was taken away from them, forced to leave the country and even killed. During industrialization, a negative image of a "kulak" - a well-to-do peasant was formed in the public mind.

The USSR took upon itself all the worries about the money of its citizens. Equalization began, it was difficult to earn more than the norm. And even if you make money, you still have to figure out how to spend this money. The entrepreneurs were called speculators, they were condemned by both society and the law.

In such conditions, it was impossible to form financial literacy among the population, and there was no need to. In the course were the installation "Keep your head down", "Be like everyone else."

Then the Soviet Union collapsed, in 1992 free enterprise was declared, economic reforms began: capitalism came abruptly to a financially illiterate country.

A period of rapid capital accumulation began, and with it - rampant crime. And when that time passed, they began to glorify him in films and TV shows like "Brigade". Wealth became associated with crime and blood.

Bottom line: throughout the Soviet era, money in Russia was something shameful, and in the nineties and two thousand it was also dirty and bloody. This could not but affect the upbringing of you and me and millions of Russians. But now is a completely different time! It's time to switch to healthy capitalism, in which money is a tool to ensure a quality life for yourself. And certainly there is nothing shameful about them.

2. An indispensable desire to earn a lot at once

In 1994, "MMM" happened to Russia. Millions of Russians took their money into a pyramid scheme because they fell for the promise of easy money. The country had only just changed course, and such a widespread belief in a financial miracle is understandable.

But more recently, a story happened with the Cashbury company, which also offered high profitability for almost no reason. The main thing is to bring money. The pyramid naturally collapsed, and the organization stopped paying its investors.

A basic rule of financial literacy: the higher the return, the greater the risk. And the more risks, the more carefully you need to approach the choice of the instrument in which you invest.

I recommend focusing on three parameters:

1. Security- how reliable the selected tool is. It is very important to understand how it works here. If the Cashbury depositors tried to figure out where these incomes come from, there would be much less desire to invest there.
2. Liquidity- how quickly the asset can be converted into cash.
3. Profitability- what percentage of annual investments bring.

These characteristics should be taken into account in this order: profitability is only in third place.

3. Fear of using any financial instruments

Financial illiteracy has two extremes. We have already discussed the first one - the desire to earn a lot at once. The second extreme is not to do anything with money at all and think that all financial instruments are too complicated and not for us.

Statistics confirm the fear of Russians to use financial instruments.37% of people who have savings keep them in cash rubles. That is, money simply lies and burns up in inflation. 42% of the respondents keep money on deposits.

The number of those Russians who invest in securities looks depressing - there are only 0.77% of them. For comparison: in China, 10% of the population invests, in the USA - 52%.

It's not scary to invest money, it's scary to invest it in tools that you don't understand. If you are afraid that something will happen to your savings, study the basic theory: what is inflation, how banks work, bonds. You will immediately understand that if you invest in reliable tools, then the risks are minimal.

4. Irresponsible approach to your prosperity in the future

The average pension in Russia is a little more than 14,000 rubles a month, and even without numbers, it is clear that our pensioners rarely live in abundance. Nobody wants to count every penny in old age, but for some reason the majority does nothing to avoid it.

In the article "What to do now to receive passive income in old age" I talked about a way to put together capital for a secured pension. The method is pretty simple, but it takes discipline.

Who can you hope for if not yourself? For the state, which in 35 years will begin to pay decent pensions? On children who will take under their wing? It's more like a shift in responsibility.

5. Income does not keep up with expenses

I myself have made this mistake for 10 years. After graduation, I worked as a hired employee for some time, and then went into business. I have always made good money, but at the age of 30 I found that I hadn't really accumulated any assets.

And so many! Earned 50 thousand rubles, went on vacation once a year to Turkey. I started earning 100 thousand rubles - a vacation twice a year in Spain. How much I earn, so much I spend.

It is normal that as income rises, life becomes more comfortable. But you need to look not so much at earnings as at the growth of personal capital.

I like one formula that shows how much savings you should have. It counts in two steps:

1. Divide your age by 10 to get the odds.
2. Multiply this ratio by your annual income.

For example, Artyom is 28 years old and he earns 1 million rubles a year.

2.8 × 1,000,000 = 2,800,000 rubles - that is how much capital he should have. Not necessarily in money: securities, real estate and other assets convertible into money also belong here.

6. Reassessing your financial capabilities

If a person just spends all his money, this is so-so, and when he also gets into debt, this is a real financial sin. It’s sad to watch someone with a perfectly ordinary income take out a loan to buy the latest iPhone. And then draws up a new credit card to pay off the old one.

I even came across such a story: a person with a salary of 50,000 rubles a month, by some miracle, received a bank loan for a BMW X5. Two months after the purchase, I borrowed from a neighbor for winter tires, and a year later the bank took the car.

Adequately assess your financial capabilities, no matter how much you want to buy a cool car right now or go on vacation in Bali. Otherwise, the pleasure in the moment will turn into serious problems for you and your family. It makes sense to take loans only for really necessary purchases. And you must always carefully plan where you will get the money for your monthly payments.

The advice is banal, but there is no science in matters of living within one's means. Unfortunately, many do not follow even these simple rules and drive themselves into debt.