Wealth: everyone wants it, but few people actually know what they need
to do in order to get it. Becoming rich takes a combination of luck,
skill, and patience. You have to be at least a little lucky; you build
on that luck with your skillful decisions, and then you continue
weathering the storm as your wealth grows. There's no reason to lie to
you: getting rich isn't easy, but with a little bit of perseverance and
the right information, it's definitely possible.
Method 1 of 5: Saving Money
-
1
Pay yourself first.
This means before you go and blow your paycheck on a new pair of shoes
or a golf club you don't need, put money aside in an account that you
don't touch. Do this every time you get paid and watch your account
grow.
-
2
Make a budget (and stick to it).
Create a monthly budget that covers all of your basic expenses and
leaves a little bit of "fun" money aside. Sticking by your budget and
saving at least some money each month is a good way to lay the
groundwork for your efforts to get rich.
-
3
Downgrade your car and house.
Could you make do with an apartment instead of a house, or have
roommates instead of your own place? Could you buy a used car instead of
a new one and use it more sparingly? These are all ways to save a ton
of money every month.
-
4
Cut expenses.
Look at the ways you frivolously spend money and rethink everything.
For example, avoid going to Starbucks every morning. That $4 you spend
on designer coffee every morning comes out to $20 per week, or $1,040
over the course of a year!
-
5
Track down your expenses. To soar your efficiency on
cutting your expenses, it is vital to keep track of them. Pick one of
the numerous expense tracking applications there are around, like Money
Lover or Mint, and record every single penny that goes in and out of
your wallet. After 3 months or so, you should be able to know where most
of your money go and what can you do for that.
-
6
Spend your tax refund wisely. In 2007, the average American tax refund was $2,733. That's a lot of money! Can you use that money to
pay off debts or
create an emergency fund
instead of blowing it on something that will lose half its value the
second you buy it? If you invest nearly $3,000 wisely, it could be worth
ten times that much in as many years.
-
7
Break up with your credit card. Did you know that people who use credit cards for purchases end up spending more money than people who use cash?
That's because parting with cash is painful. Using a credit card
doesn't carry that much of a sting. If you can, divorce your credit card
and see how it feels to pay with cash. You'll probably end up saving a
boatload of money.
- If you do maintain a credit card, do things to reduce expenses. Try
to pay off the full balance each month and on time. That results in
interest-free credit. At the very least, make the monthly minimum
payment before the due date to avoid a late fee.
Method 2 of 5: Reducing Living Expenses
-
1
Try extreme couponing.
It's one of the best feelings in the world when you can get paid to
take home stuff you regularly use. If you do this right, you can
actually
get paid to coupon. At worst, you'll save a few extra
bucks that you can tuck away for a rainy day. At best, you'll get tons
of free stuff and will be richer in the process.
-
2
Buy in bulk.
It's not the easiest way to shop, but it's usually the most efficient.
If you can borrow or buy into a membership to a bulk retailer like
Costco, it can make real financial sense. In some cases, you can find
brand-name products for sale at serious discounts.
- If you're hungry and you like chicken, buy four pre-cooked Chickens
at Costco at the end of the day, when they go on sale. Sometimes they'll
drop from $5 each to $2.50 each, meaning that you get at least ten
hearty meals for about $1 each! Freeze any chickens that you don't eat
immediately.
-
3
Learn to can foods. Up to 40% of food in America goes to waste before it is ever eaten. Succulent
peaches,
blueberries, and even
meats
can be canned and stored for consumption later. Be smart about the food
that you buy. Actually eat it. Food wasted is money wasted.
-
4
-
5
Get a home energy audit. This will allow you to find out how many dollars are seeping out of your home in the form of lost energy.
- You can perform your own energy audit if you're the industrious
type, but don't hesitate to hire a professional to complete the audit
for you. It should cost anywhere from $300 to $500, which isn't cheap,
but it could help you save much more than that over time (especially if
you decide to re-insulate the home).
-
6
Go hunting or foraging for food.
You may need to invest in gear and permits, but if you already have
these, this is an inexpensive way to get your own food. If you're
ethically against the killing of animals, it's pretty easy to forage for
food, depending on where you live. Just make sure to forage only for
food whose origin and properties you are sure of. Getting sick or
poisoned is never any fun.
Method 3 of 5: Investing
-
1
Put money in the stock market.
Invest money in stocks, bonds, or other vehicles of investment that
will give you an annual return on investment (ROI) great enough to
sustain you in your retirement. For instance, if you have one million
dollars invested and you get a reliable 7% ROI, that's $70,000 per year,
less inflation.
- Don't get enticed by day traders who tell you it's easy to make a
quick buck. Buying and selling dozens of stocks every day is essentially
gambling. If you make some bad trades — which is unbelievably easy to
do — you can lose a lot of money. It's not a good way to get rich.
- Instead, learn to invest for the long run. Choose good stocks with
solid fundamentals and excellent leadership in industries that are
primed for future growth. Then let your stock sit. Don't do anything
with it. Let it weather the ups and downs. If you invest wisely, you
should do very well over time.
-
2
Save money for retirement.
Keep saving. It seems that fewer people are saving adequately for
retirement. Some feel they may never be able to retire. Take advantage
of tax-deferred retirement plans such as IRAs and 401Ks. The tax
treatment they embody will help you save faster for retirement.
- Don't put all your trust in Social Security.
While it's a good bet that Social Security will continue to work for
the next 20 or so years, some data suggest that if Congress doesn't
radically alter the system — either by raising taxes or reducing
benefits — Social Security won't be available in its current form. It is
probable, however, that Congress will act to "fix" Social Security. In
any event, Social Security was never designed to be the only resource
for retirees in their later years. That makes it all the more important
that you save and invest for the future.
-
Invest in a Roth IRA.
A Roth IRA is a retirement account to which working individuals can
contribute an annual sum of $5,500. That money is then invested and
gathers compound interest.
If you wait until retirement age to take money out of your Roth IRA,
the money that you withdraw isn't taxed, because it was taxed at the
time you first earned it.
-
Contribute to a 401(k) account.
This is an account set up by your employer where pre-taxed
contributions can be invested. Your employer may choose to match all or
part of your contributions. This is probably the closest thing you'll
get to "free money" in your life! Contribute at least enough to take
full advantage of the match.
-
3
Invest in real estate. Relatively stable assets like
rental properties, or
potential development land
in a steadily growing area is a good way to build wealth. As with any
investment, there are no guarantees. Many people, however, have done
quite well with real estate. Such investments are likely to appreciate
in value over time. For example, some people think that an apartment in
Manhattan is almost guaranteed to increase in value over any five-year
period.
-
4
Invest your time. For example, you might like having
free time, so you give yourself a few hours a day to do nothing. But if
you were to invest those few hours into getting rich, you could work
towards having 20 years of free time (24 hours a day!) with early
retirement. What can you give up now in exchange for being rich later?
Investment advisor Dave Ramsey likes to tell his radio audience, "Live
like no one else today so that you can live like no one else tomorrow."
-
5
Avoid purchases that are likely to depreciate rapidly.
Spending $50,000 on a car is sometimes considered a waste because it's
likely that it won't be worth half that much in five years, regardless
of how much work you put into it. As soon as you drive a new car off the
lot, it depreciates about 20%-25% in value and continues to do so each
year you own it. That makes
buying a car a very important financial decision.
-
6
Don't spend money on stupid stuff. It's hard enough making a living. But it's hard
and
painful when the things you spend your hard-earned cash on are
financial black holes. Reevaluate the things you spend money on. Try to
figure out whether they are truly "worth it." Here are some things you
probably don't want to spend that much money on if you plan on becoming
rich:
- Casinos and lottery tickets. The lucky few make money. The rest of us lose it.
- Vices such as cigarettes. Heavy smokers can only watch their money go up in smoke.
- Huge markups like candy at the movie theatre or drinks at a club.
- Tanning booths and plastic surgery. You can get skin cancer for free
outside if you'd like. And do nose jobs and botox injections ever look
as good as promised? Learn how to age gracefully! You're not the only one getting older.
- First-class plane tickets. What are you getting for that extra
$1,000? A hot towel and another 4 inches (10.2 cm) of leg room? Invest
that money instead of throwing it away, and learn to sit with the rest
of us!
-
7
Stay rich.
It's hard to get rich, but it's even harder to stay rich. Your wealth
is always going to be affected by the market, and the market has its ups
and downs. If you get too comfortable when times are good, you'll
quickly drop back to square one when the market hits a slump. If you get
a promotion or a raise, or if your ROI goes up a percentage point,
don't spend the extra. Save it for when business is slow and your ROI
goes down two percentage points.
Method 4 of 5: Enrichment Through a Career
-
1
Excel academically.
Whether it's a four-year college or vocational training, some
successful people pursue further education beyond high school. In the
early stages of a career, your employers have little by which to judge
you besides your educational background. Higher grades usually lead to
higher salaries.
-
2
Choose the right profession.
Look at salary surveys which indicate average annual incomes for
specific professions. Your odds of getting rich are diminished if you
pursue a career in teaching as opposed to a career in finance. Here are
some of the highest paying jobs in America:
- Doctors and surgeons. Anesthesiologists make a whopping $200,000+ per year.
- Petroleum engineers. Engineers who work with gas and oil companies
can make a very good living. In most cases they make upwards of $135,000
per year.
- Attorneys. Lawyers top out at just above $130,000 per year, making this a lucrative field if you can put in the time.
- IT managers and software engineers. If you're good at programming
and a whiz at computers, consider this very well-compensated field. IT
managers regularly make $125,000 per year.
-
3
Choose the right location.
Go where the good jobs are. If you want to pursue finance, for example,
there are far greater opportunities in big cities than in rural,
low-populated areas. If you want to build a startup, you'll probably
want to consider going to Silicon Valley. If you want to make it big in
the entertainment industry, go to LA or New York City.
-
4
-
5
Change jobs and employer.
Once you've gotten some experience under your belt, consider finding a
new job. By changing your environment, you can increase your pay and
experience different corporate cultures. Don't be afraid to do this
several times. If you're a valued employee, it's also likely your
current company may offer you a raise or other benefits if they know
you're looking at leaving.
Method 5 of 5: Going Mortgage Free
-
1
Refinance your home mortgage. Refinance to a lower
rate or to a 15-year loan instead of a 30-year loan. This way you only
pay a few extra hundred dollars per month but you will save yourself
much more than that in total interest.
- For example: A $200,000 mortgage on a 30-year loan will cost you
another $186,500 in interest payments, so you are actually paying a
total of $386,500 over the course of 30 years. On the other hand, if you
are willing to pay a few extra hundred dollars a month (for example,
$350) by refinancing to a 15-year loan (usually at a lower interest
rate), you could pay your mortgage off in only 15 years, and the best
part is you would save yourself a whopping $123,700 in interest. That's
money in your pocket. Talk to a loan officer about your options.
Tips
- Pay off your highest-interest bill first and then focus payments on
the next highest-interest bill until you are completely out of debt.
This plan will cost you the least in interest. An alternative method is
to pay off the smallest loans first. This allows you to see progress
being made by quickly eliminating some of your bills.
- Look for every opportunity to make money. Sell items you don't use anymore, no matter how small.
- Keep your credit record clean. Having a low credit score will make it hard to qualify for loans or a line of credit.
- If you find yourself wanting something expensive in the quest for
immediate gratification, divert yourself with a small indulgence rather
than giving in to the large one. Walk away from the designer suit or
purse, but buy an ice cream cone or catch a movie instead. The $8 movie
ticket is a lot less expensive than the $800 purse but may give you the
same feeling of doing something "just for you."
- Borrowing money is acceptable when it's going to be used for acquiring income-producing assets.
- Try to cook at home and do the daily chores yourself. Avoiding
professional services such as laundry and domestic help can save you
lots of money.
- Do clothes shopping in the fall or spring when there are often more good sales.
- Buy
only what you need, not what you want. Stop buying on impulse, and stop
playing catch up with the Joneses. Buy things you really need, not what you merely want. Be wise with your money––if you don't need it, don't buy it. Make careful choices.
- Write
down all of the things you buy and all the prices, and see where your
money is going. Often when people do this, they are amazed to learn
exactly how they spend their money.
- If you frequent bars and clubs, skip the trip once in a while. Go one week, skip the next two.
1Pay yourself first. This means before you go and blow your paycheck on a new pair of shoes or a golf club you don't need, put money aside in an account that you don't touch. Do this every time you get paid and watch your account grow.
2Make a budget (and stick to it). Create a monthly budget that covers all of your basic expenses and leaves a little bit of "fun" money aside. Sticking by your budget and saving at least some money each month is a good way to lay the groundwork for your efforts to get rich.
3Downgrade your car and house. Could you make do with an apartment instead of a house, or have roommates instead of your own place? Could you buy a used car instead of a new one and use it more sparingly? These are all ways to save a ton of money every month.
4Cut expenses. Look at the ways you frivolously spend money and rethink everything. For example, avoid going to Starbucks every morning. That $4 you spend on designer coffee every morning comes out to $20 per week, or $1,040 over the course of a year!
6Spend your tax refund wisely. In 2007, the average American tax refund was $2,733. That's a lot of money! Can you use that money to pay off debts or create an emergency fund instead of blowing it on something that will lose half its value the second you buy it? If you invest nearly $3,000 wisely, it could be worth ten times that much in as many years.
7Break up with your credit card. Did you know that people who use credit cards for purchases end up spending more money than people who use cash? That's because parting with cash is painful. Using a credit card doesn't carry that much of a sting. If you can, divorce your credit card and see how it feels to pay with cash. You'll probably end up saving a boatload of money.
1Try extreme couponing. It's one of the best feelings in the world when you can get paid to take home stuff you regularly use. If you do this right, you can actually get paid to coupon. At worst, you'll save a few extra bucks that you can tuck away for a rainy day. At best, you'll get tons of free stuff and will be richer in the process.
2Buy in bulk. It's not the easiest way to shop, but it's usually the most efficient. If you can borrow or buy into a membership to a bulk retailer like Costco, it can make real financial sense. In some cases, you can find brand-name products for sale at serious discounts.
3Learn to can foods. Up to 40% of food in America goes to waste before it is ever eaten. Succulent peaches, blueberries, and even meats can be canned and stored for consumption later. Be smart about the food that you buy. Actually eat it. Food wasted is money wasted.
4Reduce your utility bills. Electricity, gas, and other utilities can deeply impact your monthly budget if you let them. So don't. Be smart about ways to keep your home cool during the summer and warm during winter. You may even consider investing in or building solar panels to channel the sun's natural energy into electricity. Keep your utilities low, and watch the money you save start to mount.
5Get a home energy audit. This will allow you to find out how many dollars are seeping out of your home in the form of lost energy.
6Go hunting or foraging for food. You may need to invest in gear and permits, but if you already have these, this is an inexpensive way to get your own food. If you're ethically against the killing of animals, it's pretty easy to forage for food, depending on where you live. Just make sure to forage only for food whose origin and properties you are sure of. Getting sick or poisoned is never any fun.
1Put money in the stock market. Invest money in stocks, bonds, or other vehicles of investment that will give you an annual return on investment (ROI) great enough to sustain you in your retirement. For instance, if you have one million dollars invested and you get a reliable 7% ROI, that's $70,000 per year, less inflation.
2Save money for retirement. Keep saving. It seems that fewer people are saving adequately for retirement. Some feel they may never be able to retire. Take advantage of tax-deferred retirement plans such as IRAs and 401Ks. The tax treatment they embody will help you save faster for retirement.
3Invest in real estate. Relatively stable assets like rental properties, or potential development land in a steadily growing area is a good way to build wealth. As with any investment, there are no guarantees. Many people, however, have done quite well with real estate. Such investments are likely to appreciate in value over time. For example, some people think that an apartment in Manhattan is almost guaranteed to increase in value over any five-year period.
4Invest your time. For example, you might like having free time, so you give yourself a few hours a day to do nothing. But if you were to invest those few hours into getting rich, you could work towards having 20 years of free time (24 hours a day!) with early retirement. What can you give up now in exchange for being rich later? Investment advisor Dave Ramsey likes to tell his radio audience, "Live like no one else today so that you can live like no one else tomorrow."
5Avoid purchases that are likely to depreciate rapidly. Spending $50,000 on a car is sometimes considered a waste because it's likely that it won't be worth half that much in five years, regardless of how much work you put into it. As soon as you drive a new car off the lot, it depreciates about 20%-25% in value and continues to do so each year you own it. That makes buying a car a very important financial decision.
6Don't spend money on stupid stuff. It's hard enough making a living. But it's hard and painful when the things you spend your hard-earned cash on are financial black holes. Reevaluate the things you spend money on. Try to figure out whether they are truly "worth it." Here are some things you probably don't want to spend that much money on if you plan on becoming rich:
7Stay rich. It's hard to get rich, but it's even harder to stay rich. Your wealth is always going to be affected by the market, and the market has its ups and downs. If you get too comfortable when times are good, you'll quickly drop back to square one when the market hits a slump. If you get a promotion or a raise, or if your ROI goes up a percentage point, don't spend the extra. Save it for when business is slow and your ROI goes down two percentage points.
1Excel academically. Whether it's a four-year college or vocational training, some successful people pursue further education beyond high school. In the early stages of a career, your employers have little by which to judge you besides your educational background. Higher grades usually lead to higher salaries.
2Choose the right profession. Look at salary surveys which indicate average annual incomes for specific professions. Your odds of getting rich are diminished if you pursue a career in teaching as opposed to a career in finance. Here are some of the highest paying jobs in America:
3Choose the right location. Go where the good jobs are. If you want to pursue finance, for example, there are far greater opportunities in big cities than in rural, low-populated areas. If you want to build a startup, you'll probably want to consider going to Silicon Valley. If you want to make it big in the entertainment industry, go to LA or New York City.
4Get an entry-level job and work your way up. Play the numbers game. Apply to many places and subject yourself to lots of interviews. When you get your job, stick with it and get the experience you need to advance.
5Change jobs and employer. Once you've gotten some experience under your belt, consider finding a new job. By changing your environment, you can increase your pay and experience different corporate cultures. Don't be afraid to do this several times. If you're a valued employee, it's also likely your current company may offer you a raise or other benefits if they know you're looking at leaving.
1Refinance your home mortgage. Refinance to a lower rate or to a 15-year loan instead of a 30-year loan. This way you only pay a few extra hundred dollars per month but you will save yourself much more than that in total interest.
