To think money is mostly about luck, not effort?

[TheGreyShark]

I’ve been thinking about how much luck plays a role in financial success. Some people work incredibly hard and never get ahead, while others are born into wealth, stumble into the right opportunities, or just happen to be in the right place at the right time.

I personally feel like the money I have is due to luck, not effort. If I’d been born in different circumstances or made different connections, my financial situation would be totally different.

AIBu to think money is mostly down to luck rather than hard work? Or is effort actually the key factor?

YANBU
right place right time 🤷🏽‍♀️

It's a mix of luck, smarts and determination. Some people get handed a lot of their opportunities (eg family wealth and connections) or just dumb luck in picking the right business as it takes off. Brains gets you a lot of the way but you also have to be focused on wanting to make money. Some quite smart people can manage to make the right connections to help make themselves wealthy.

Semantics?

Successful entrepreneurs don’t just end up in that position by luck, they’ve been successful because of their actions, attitude to risk, intelligence and much much more.

That's the point. It'a lot easier to think about risks & take them if you have a safety net....

Strict budgetting. Starting point to everything. All my life since I started work 40 plus years ago. And trying to save as much as possible whenever possible

use pension pot savings when working. Sure when kids were younger that wasn’t possible. once they’d left home, I shoved as much of spare wages into it. Gave me ( by then as had reached higher rate tax band) governement paid 40% extra into my pot. That pot was taken as cash at retirement as within my 25% tax free lump sum. You will never ever get a better rate of return on saving then this tax free uplift. If and when you can afford to, do it . All the time the government gives this tax relief.

then, once that was yielded, and other savings I made especially after kids left home, ….

overpaid on mortgage as much as we could for its last few years when we were paying at incredibly low interest rates ( at one time we were paying less than 0.75% interest rate for years). Bear in mind we also paid 17% interest rate early in our marriage, and also at one point sold with negative equity. It’s about making hay while sun shines and using flexible mortgages.

then

Isa allowances maxed out - that’s more recent to max out since I yielded my lump sum , but I’ve always put money into isas even when I could have got more in non isas…I wanted to future proof if interest rates rose.

chasing high interest rate - I move savings frequently, look at them monthly currently as moving fast

plus
stocks and share investment within platform - balanced portfolio of funds with spread risk, low management costs ( eg tend to be trackers), reinvesting dividends within platform isas

Yep, it was a bit scary self investing at first, but keeping with trackers, long term view and established performance funds means I don’t actually move funds much at all. I’m sure I could make more if I spent more time “ trading” but I don’t have that confidence with short term high risk investing. This is all slow and steady stuff

So, none of this is rocket science. All of which MSE and other sites like Which guides will point to. Yes I’m a saver more than spender. I’m absolutely a long term thinker and planner and yes I’m detailed and numerate - I have my annual budget on an excel spread sheet and do a monthly “ finance” update. . Most of all I’m curious and figure stuff out by learning.

lve been like that since I married 36 years ago. My exh , despite his faults, was also like this, so we learnt together. Gaining wealth is long term if you don’t have silver spoon or inheritance to boost you there. Right now my investments, like everyone’s have taken a knock due to Trumps shinanighans…but I can sit it out and not get freaked out…I have cash in savings secured and interest rates are high still compared with years and years of earning 1% or less as standard. It swings and roundabouts.

Are surgeons lucky?

Could you have picked a job that had less correlation with socioeconomics 😆

I think age is important here & you will get very different answers from people over 40 vs those under. My work pension scheme is still quite good but it used to be excellent however it closed to newer entrants whilst I was still at uni....
House prices were just about still affordable in my part of London on a normal wage when I was at secondary school, I did/do work hard at school & work but the biggest determining factor of my future wealth is the fact I had big help to buy in London. I lived at home below market rent to save & then was gifted a large 6 fig sum. I would have been priced out if I had to rent & save no matter how hard I worked.

This is paper wealth in most cases.

yes, on paper I gained from property values increasing, but I live in my house, I need that roof over my head and gain nothing in terms of available money whether it’s worth 100,000 or 400000

if I sell my nest property I buy is going to cost more too relatively, even if I downsize further..

the ONLY times value of property market increases actually means something other than a paper value is when you’re trying to buy you’re first house…and get on ladder ( clue in name) …or when you sell your last house when you have to go into nursing home ( and that cash is spent at £1600-2000 a WEEK on care home costs) or your relatives sell it when you pass away and inherit. That part is luck…whether you end up with dementia

I do wish people would engage their brains on this…property values are relative for most people who have one property that is thiehome. They can’t “ realise” that asset, it’s unavailable, paper wealth.

and we weren’t so lucky during 1980s when many people lost their homes, ended up with negative equity due to falling house prices when interest rates were at 17% …

this is trite thinking, inter generational blame game. The real issue is the massive increase in wage inequality that has happened since 1990s, plus sale of council house stock….in 1970 nearly 29% of population lived in council homes , many with secure homes for life that were “ their “ homes at low rents. In 2022 just 17% live in social housing, much privately owned by housing associations etc that take a profit from higher rents these tenants now have to pay. This is not luck. This was a deliberate plan by thatcherites to make property the bedrock of investment portfolios ..turn property into a money making venture for wealthy investors.

and if you have a pension you’re paying into, you are also “ benefitting” from that right now…look at where you’re pension is invested..some of secure investment will be in property.

blame the right people here. I’m older generation with a house I own outright. Its absolute value means nothing until I get put in nursing home or I die. I can’t access that money in meantime - it’s the roof over my head.

I actually think it's really dangerous to over state the role that luck plays on life. I'm not saying it's irrelevant but I think very few people have their outcomes determined by luck. We all have a huge influence over what happens to us and this includes the financial aspect of life.

How I see it is that we are all in a race. Some start further back from others and have more barriers to overcome. Some will start with advantages and be helped along the way. Ultimately though, you have to run your own race as best you can and the more effort you put in and wise decisions you make, you increase your odds of finishing the race well. If you give up and expect other people to carry you then you are never going to win and you will become bitter as you see people race ahead of you.

I don't think I agree that it's luck,but it is linked to graping opportunities when they come.

My husband and I as an example both studied at uni for 7 years and worked hard at school before that to ensure we had the grades we needed to enable us to study where and what we wanted.

Left Uni and into our professions I'm and architect he is a surgeon. Continued to work hard and learn what we needed for our own ambitions. I wanted to own my own practice, he wanted to grow and become brilliant.

I set up my practice with 2 friends from uni, it took a lot to do, was scary, led to lots of questioning ourselves, delaying starting a family, lots of dedication in terms of time and commitment.

Now years later we have 5 children, live in a beautiful house in London and life looks good. No one now sees our earlier stress, long 7 days per week working and signing up to rental leases for my practice that committed us for millions for the next 10 years. They also don't see the tough decision we both need to make daily at work, the stress and worries and negative things we have to deal with at work. The succession planning we are doing now to ensure the practice doesn't close and we are all left paying very high insurance costs.

No one actually in my experience accumulates or holds onto money for nothing it takes focus, determination and often large risks.

Anyone can choose to become a lawyer, banker, dr, dentist, IT expert, accountant etc. let’s be honest here, the vast majority of people either choose a shit paid job for some idealistic or lazy reason, aren’t smart enough (good enough grades) or don’t think they are able for one of the well paid industries.

Thats not really luck at all. It’s just bed choices or apathy.

Unless you talk about WHY they make those crap choices. Luck does come in with the parents you were born to.

Why is it? No one wants to lose money, if you live in 1m house would you want to risk 500k of it to start a business? If you are comfortably earning 100k per year would you want to risk leaving that and earning nothing for three years?

Risk is a hard choice for everyone and actually there is a school of thought that risk is actually easier if you have nothing to lose.

@Marshbird of course people gain from increased property wealth even if it's just the one house they have. They can borrow against it to buy a BTL as many have done or use money to improve and increase the value further or help their dc onto the ladder. And of course many people move to a different, cheaper area when buying their next property so it doesn't have to cost more. Most people don't go into care homes.

I do wish people would engage their brains on this

Same...,

and we weren’t so lucky during 1980s when many people lost their homes, ended up with negative equity due to falling house prices when interest rates were at 17% …

No one said that was lucky. Interest rates of 17% are not to dissimilar to the 5/6% rates of today because of the higher prices. But no MIRAS today. And many today are in negative equity because in many areas flats have stagnated in price.

this is trite thinking, inter generational blame game

It's not trite or a blame game to acknowledge that many older people have been lucky with house price gains. Why do you want to pretend it isn't a thing? Acknowledging something doesn't mean you are blaming someone.

One of the things people are missing is luck, which plays a part in opportunities.

I got a lucky break getting my first job in a small business. But then got paid off a year later as the business was struggling to pick up work.

DH was lucky to have got an apprenticeship with a much bigger more stable company. Who at the time believed in promoting from within.

And it can be the same for graduates from the same course.
If ones lucky and gets a start with a company whose ethos is promoting from within they'll go further than a business who wants to buy in experience.

And different divisions within a company can be very different. Different managers make different decisions.

The first 5 years I was with my current company people were always being promoted.
Change of MD nobody has been promoted in the last 5 years. Loads of people with long service 20, 30, even 40 years have left to go elsewhere as they were being completely overlooked.

So why are some of the same generation poor / not home owners?

I don't think it's luck but wise choices. I have made bad career choices to stay long term in jobs that weren't financially rewarding, minimal payrises every 5yrs or so whilst the boss got richer. I've now chosen to stay in a company that does reward it's employees which has finally brought my pay and benefits in line to what they should have been all along.

once you get wealthy even stupid and lazy people can start to multiply their wealth exponentially …or they can afford to pay an expert financial and tax consultant to do something cleverer.

Rich stupid people (inheritance?) make very bad choices and often end up losing it.
its rarely just luck. My DH has come from absolutely nothing and from being very career focused (which is distinct from working hard), pursuing a role he is deeply passionate about and good at, in an area that is well remunerated- he is wealthy now. he’s been clever about investments too

@Marchitectmummy I'm not sure what point you are making? A safety net isn't borrowing half of your house it's using family money for initial capital or knowing if you run out of savings you won't lose your home because family can step in.

So why are some of the same generation poor / not home owners?

Not every part of the country has seen huge equity gains. Why would you think that?

I’ve known a lot of extremely clever people who would have had completely different lives if they had been born to different families.

And extremely mediocre people who did extremely well due the families they were born into.

Having a good boss at the right time can make or break a career.

Having family who are able to help you see the breadth of career opportunities out there.

Personality plays a huge part too.

Even ‘working hard’ will depend a lot on personality and energy levels and how much sleep you need.

We are all born with different personalities and some people cannot just ‘work on leadership skills’

Luck plays a huge role. Well done for recognizing it OP.

Let's not forget within that same generation millions will also have been unlucky.
Leaving school going into big heavy industries thinking they had a job for life that quite simply just don't exist any more.

Mining
Steel and ironworks
Ship building
Car manufacturers
Hundreds of smaller factories doing clothes everything from knickers, to overalls, Levis jeans, electronics factories.

There was a time in the 80s when it was constantly on the news, hundreds of jobs to go here, hundreds of jobs to go there,

That decimates towns and villages up and down the country. When the bigger employers closes than has a knock on effect on other business too. People have less money and to go out so the local pub has a down turn in business, etc etc.

The point I am making is that I don't agree with your statement, which is illustrated with my points. Neither of the statements are about generational wealth.

My in-laws bought in Hackney because they couldn't afford much else & it was cheap as it was rough back then. House is worth 2m now because of the incredible gentrification. Someone who bought in another rough part of the country that hasn't seen huge gains is that because they didn't work hard?

The point I am making is that I don't agree with your statement, which is illustrated with my points.

You don't agree that it's easier to start a business and take risks if you have a safety net? Fair enough.

Luck plays a part, but honestly this sort of thinking is why a lot of people feel stuck with their (crappy) lot in life and don't bother working to try and escape the poverty cycle.

I'm lucky in that I am able bodied and sound of mind so was able to go to university and study for a degree- but being the first in my family, out of my peers I grew up with wasn't easy. I worked several jobs to keep afloat and faced a lot of animosity and horribleness from people back home. Quite often when I go back a lot will say how lucky I am to have a nice house and not be struggling, which yes I am, but it wasn't handed to me on a plate. I will never inherit a penny and have known its been up to me to change my future. I suppose i was maybe lucky that I did secure a bursary in third year because my addict brother dying invoked pity from the panel.

Life would certainly have been easier and I would have felt a lot luckier if I'd been handed money or had money growing up that's for sure, and being born into a wealthy family is down to luck.