Have you every wondered why some people are wealthy and others are not? Have you wondered ‘will I ever be rich’? People have several definitions of being ‘wealthy.’ Someone may think he or she is wealthy because he’s or she’s healthy or that she’s living a comfortable life. You’ve probably heard the saying: health is wealthy. Being wealthy or rich encompasses all of these things.
But most importantly, being wealthy means that you have a substantial amount of money and assets. And therefore you have a lot of options in life, like retiring early. There’s nothing wrong with that. There’s, in fact, something wrong if you have poor money management or poor way of thinking about money. If that is the case, you should learn about how to become wealthy.
From living below your means to having multiple sources of income, here are 9 secrets on how to become wealthy. If you are serious about learning how to become wealthy, it makes sense to work with a financial advisor to help you develop a solid investment and financial plan.
How to Become Wealthy From Absolutely Nothing: 9 Secrets
1. Be Your Own Boss Or Have Multiple Sources of Income.
The biggest secret on how to become wealthy is to be your own boss. If you spend your whole life working for someone else, the odds of being wealthy is slim to none.
Again, there are exceptions. If you are a successful attorney in a big law firm, or a successful CEO of a major corporation, etc, you can become wealthy. But if you are a 9 to 5, minimum-wage worker, with no other sources of income and no investments, you will never be wealthy.
Millionaires know that having their own business is how you become wealthy. They know that they must create multiple streams of income. They know that one source of income is not going to cut it.
If your job is your only source of income, there are some side hustles you can do to bring home extra money. One of them is to start a blog.
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2. Focus on Earning More Money Than Saving
Don’t get me wrong, saving your money and not spend every piece of it is very important to building wealth. However, focusing only on savings and neglecting earning is not the way to go.
The secret on how to get wealthy is to focus more on earning. The rich too save their money, but they recognize that the key to getting wealthy is to focus on earning.
If you focus only on living frugally, on coupons, you might lose major opportunities like investing in the stock market or in real estate. These two are proven wealth-building vehicles. You have to have multiple streams of income and make your money work for you.
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3. Invest Aggressively.
One of the best ways to earn more money over time and build assets is to invest your money aggressively. Investing in mutual funds, just like saving in a high yield savings account, has some benefits. Namely, your money has very little or no risk.
But it will not make you wealthy. You will most likely get wealthy in investing in the stock market or in real estate. Even though investing in individual stocks come with high risk, we all know that it has the potential to make you rich.
Before you start investing in stocks, however, you should do a few things. First, learn how the stock market works. Investing in stocks is risky business.
While stocks are profitable investments and return great rewards in terms of capital appreciation and dividends, they also can go down in price. So not only you have to have the stomach to take the risk, you also have to know what you’re doing. That means, taking the time to learn the basics. Or hire a professional to pick the stocks for you.
Second, prior to investing in stocks, you should have money for emergency. At least 6 months of living expenses should be put away in a money market account, a high yield saving account or certificate of deposit. Once you have that money, you’re ready to go.
4. Start Investing Now
As any well-qualified financial advisor would tell you, the earlier you start investing, the more likely your money can grow, thanks to ‘compounding interest.’ This is another secret on how to become wealthy.
When it comes to growing your money, time and compound interests are your best friends. See, the more time you spend without investing, the less likely you will be rich. If you are in your early 20’s or late 30’s, you should start now, even if you have very little money to invest.
That’s why an investing app called Acorns has been popular among beginner investors. Acorns takes your spare change from your regular transaction and save it and invest that change for you in a range of exchange-traded funds (ETFs). It rounds up all your transactions to the nearest dollar. And once the spare changes stack up to $5, Acorns will invest it for you. Plus, Acorns will give you a $5 bonus just for signing up.
While it is possible to invest with smaller amounts, in order to generate meaningful returns you need a base of at least $5000.
5. Have a Positive Mindset!
Some people, because of their culture, upbringing, or religious beliefs, think that they will never be rich. They believe that being wealthy is a privilege awarded to a select few, or the lucky. They believe that well, no one in my family is wealthy, so I will never be wealthy.
Yet one thing they fail to realize is that, most wealthy people were once poor and hard-working individuals.
Everyone has the same opportunity to acquire wealth. True, some might face greater roadblocks than others. But the opportunity is there for everyone to grab.
The poor also believes that being rich is evil. If you have this kind of thinking, you will never be rich. The secret on to become wealthy is that, you must believe that you have every right to be rich. You must set high expectations. Also, you must think of money as a friend and not as the enemy. You must be willing to step out of your comfort zone.
6. Live Below Your Means
If you buy things you cannot afford, you won’t get rich. Some people believe that if they start earning more, or get a big raise, they are justified to give themselves a lifestyle raise. This is a big mistake and is not how to become wealthy. Successful people, before they became wealthy, live modestly. They don’t spend their money on frivolous things.
7. You Don’t Buy Things on Impulse
If every time you are at the store (whether it is a shopping mall or a grocery store), you see something that you like and immediately buy it, you might be an impulse shopper. You will never be rich if you buy things on impulse. Wealthy people do not buy things on impulse. If they want something, they budget for it. They bring a list with them when they grocery shop. They use cash and leave their credit cards at home.
8. Take Advantage of Free Money, namely 401k
The question of how to become wealthy is not even that difficult to answer, because sometimes we just pass up free money, namely an employer 401k. If an employer 401k is available to you, why not take advantage of it.
Many employers match your contribution to a 401k, so you get pretax investing, tax-deferred compounding, and an extra bonus from your employer.
We simply cannot beat it, because your contribution comes right off the top of your paycheck before taxes, all of your earnings compound tax-deferred, and many employers match your contribution, and your contribution is automatically deducted from your paycheck; you never see it and you never have to make the decision of not to invest.
9. Have Great Work Ethic
The rich or the wealthy did not become wealthy or rich by accident, unless of course they won the lottery or inherited a large sum of money. The path to become wealthy requires hard work, persistence despite failure, discipline and courage. Successful and rich people know early on that becoming rich is not easy. If you want to build wealth and be successful you have to have a good work ethic.
How to Become Wealthy Recap:
To become wealthy, you must have a great work ethic, live below your means, have multiple sources of income. You should also invest aggressively in stocks and real estate to reap the benefits. But most important of all, you have to have a positive money mindset. Moreover, how to get rich can’t just be a short term thinking; it requires a long term commitment and hard work.
2 Essential Tips to Grow Your Savings
1. Open a high yield savings account. Having an online, high yield savings account allows you to save money and earn over 15 times the national average in interest. Check out CIT Bank online savings account, which has a 2.45% APY. Learn more.
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