How To Get Rich In 11 Steps
Everyone wants to get rich.
Fewer people know how to do so.
We like to see people get rich, so we’ve put together this 11-step guide to getting rich for you. Read on to learn how to join the ranks of the wealthy.
What Exactly Does “Rich” Mean?
Dictionary.com defines being rich as:
Having a great deal of money or assets; wealth.
While true, that’s a bit of a vague definition.
What is “a great deal” of money or assets?
To someone in abject poverty, a meager $30,000 salary would be equivalent to Bill Gates.
Yet someone who pulls in a six figure salary every year might not feel rich at all; in fact, they might be living paycheck-to-paycheck in spite of earnings $100,000+!
The truth is, the exact definition of “rich” differs from person to person. If you want to get rich, you have to find out what that means to you.
Do you want to join the ranks of the world’s billionaires, buying yachts and super cars and attending exclusive “rich people” parties?
Or do you just want enough to retire comfortably and live an exciting, stress-free lifestyle in your golden years?
Maybe you want to make enough to just get by and travel the world on a shoestring budget with just enough to get by. Some people do classify themselves as rich if they do this, believe it or not; they aren’t tied down to anything, meaning all their time and money belongs to them.
Or perhaps you’d like to earn enough to quit your 9-5, launch your own small scale business, and have more free time to pursue hobbies and interests.
Our point is that rich means different things to different people.
You’ll have to define exactly what it means for YOU to be rich. Although we did just discuss how rich means different things to different people, we’d guess that your definition probably involves a fair sum of money.
And so keep reading to learn how to get rich.
1.) Get In The Right Mindset
Successful individuals in any difficult endeavor will agree that mindset is responsible for a large part of your success.
That includes getting rich.
Yes, it does sound cheesy what with all the “mindset” books and other content all over the place that rehash the same vague points, but there are concrete mindset shift you need to move towards riches.
The rich don’t live in the short-term; they’ve always got their eye on the future. You could say that’s precisely why they’re rich – they are thinking further ahead than the average person. Doing so means they can maximize the time spent on any particular goal, as well as anticipate problems that come up while they’re working towards those goals.
This means going beyond the “can I pay my bills this month?” questions and asking yourself the “how could 4x my income in the next few years?” questions.
Long-term thinking also means setting aside instant gratification. You’ll notice that the richest people on the planet almost exclusively drive cars under $100,000 when they could own the entire car manufacturer.
Just look at Mark Zuckerberg: he’s worth around $70 billion and most of the cars he’s driven haven’t even crested the $40,000 mark!
That’s not to say you can’t enjoy your riches and buy a new Ferrari when you can afford it, but the reason these moguls drive these cars is because of the mindset instilled in them early in their career: a long-term mindset.
How welcoming are you of change? Those who refuse to adapt to change usually get left behind or at least struggle to keep up.
But the rich adapt to change. In fact, they welcome it. Positive change is, well, positive, while negative change provides them a learning experience and a chance to grow personally and professionally.
This is much like what we learn about making money as a kid. If you can continually learn from change, then you will be in a much better place. If you did not learn to adapt when you were younger, then it will be much harder as a now adult.
Start viewing all change as opportunities instead of misfortune.
As much as you’d like to, you can’t do everything yourself. You can bootstrap everything yourself at first, but eventually you reach a point where you need to outsource or delegate stuff to someone else.
Many get apprehensive about this, worrying that something will go wrong if they don’t have at least a hand in it.
Well if that were the case, we wouldn’t have employees working for entrepreneurs, now would we?
Learning to outsource the things you aren’t best at, especially when you’re building a business, is the key to scaling your wealth.
See, the rich do what they’re best at and delegate the rest to others who are experts in the task being delegated. Their time is worth more than the money they spend delegating and outsourcing.
For example, do you think Bill Gates does his own personal income taxes, let alone taxes for his businesses?
No! His time is worth so much more than the many thousands he spends on accountants.
Not to mention those accountants are experts in the subject of tax. They’ll get the job done faster and better than Bill Gates could himself anyways.
2.) Find A Mentor Who’s Done It
Ever heard of Tai Lopez? You know, the “Lamborghini in my garage” guy? That man is constantly talking about the importance of mentors.
And he has a point.
Mentors are extremely helpful in basically any pursuit you can take up.
First of all, they’ve already done it. Who better to help you get rich than someone who got rich themselves?
Preferably, your mentor should’ve started in a similar situation as you’re in currently. The closer their “pre-riches” situation matched yours, the more relevant their guidance will be to your situation.
Secondly, they hold you accountable. Getting rich is simple, but it’s easy to fall off the wagon. Temptations are everywhere, and a hardened mentor can help you weather the storm.
But an often underrated benefit of mentors is that they serve as an example that your lofty financial goals are achievable. It’s incredibly motivating to know someone who’s achieved the same difficult task as you, especially if they started from your position or worse.
3.) Create A Financial Roadmap
Financial roadmaps are not budgets. They’re actually bigger-picture, although your budget will help you follow your financial roadmap.
A useful financial roadmap considers several things:
- Goals – Short-term all the way up to the longest-term goals. Where do you want to be next year? How about 5, 10, 20, or even 50 years?
- Current financial status – Assets, debt, income, expenses
- Lifestyle – What lifestyle do you live now? What lifestyle would you like?
- Emergency fund – Have 3-6 months living expenses saved up in case of tragedy such as a car accident or job loss. You need to know what a month of living expenses looks like for you and/or your family.
You’ll want to update this plan about once a year with new information so you can adjust your efforts accordingly. We suggest getting a financial advisor; they can help you plan everything out as well as provide advice for reaching your goals faster.
4.) Become Conscious Of Your Spending
Rich people live below their means. It might not seem like it when they own mansions and private jets, but they can afford those.
Think about it: how could you build wealth when you spend as much or more than you make? You can’t.
So it’s time for you to become conscious of your spending habits. Want to know how to do this?
Track every single dollar that leaves you possession for a month straight. It’s kind of annoying at first, but the information you gather is quite enlightening.
You’ll be surprised at where your money is going, as well as HOW MUCH money is going that way.
Keeping an eye on your spending is critical to the next step towards getting rich, learning how to make a budget.
5.) Learn Budgeting/Create A Budget
Once you’ve tracked your expenses for a month or so, you’ll have a solid idea of your average spending habits.
Using that information as well your current income, it’s time to make a budget.
Budgets align your goals with your spending habits. By keeping your pulse on the your monetary outflow, you can adjust spending as needed to stay on track.
A good budget isn’t too restrictive, but it still ensure you’re bringing home more than you’re spending. It’s realistic, but not completely carefree.
There are several budgeting methods you can follow:
- 50/30/20 rule – 50% spending on necessities, 30% on “fun money”, 20% saving/investing/building wealth. Very easy to follow, doesn’t require tracking several accounts. As long as you stay within these percentages, you’ll succeed.
- Pay-Yourself-First – Like 50/30/20 but looser. Set aside a fixed amount for debt payoff or investing every month, make do with the rest.
- Envelope System – Put your monthly amount for each expense into a separate envelope. Once the envelope runs out, you don’t get any more money for that expense. When all else fails, putting your back against the wall this way will “force” you into good financial habits.
As you can see, it’s perfectly ok to spend money on fun stuff. Every budgeting method lets you do it.
After all, there isn’t much point to tracking your money if you can’t enjoy any of it.
Just make sure to stick to your budget and resist temptations.
6.) Slash Your Expenses
This part’s simple. When you’ve made your budget, all your wasteful spending will be wide open.
Some of these will be harder to cut than others. For example, a subscription you forgot you had is an easy couple extra bucks a month when you cancel it. If you want make this part even more simple, check out our Trim review to slash expenses on autopilot.
But some expenses will be harder. Do you go out to eat 3 nights a week? For now, 1 night could do just fine.
Again, you don’t have to live a miser’s lifestyle. Just make sure you keep your priorities straight. If you really want to get rich, remember: a long-term, delayed gratification mindset is key.
You can go out to dinner 7 nights a week when you’re rich if you so desire.
7.) Start Tracking Your Net Worth
Your net worth consists of everything to your name, both assets and debts. Assets minus debt is what gives you your net worth. This is an important metric to track
Knowing how much debt the average person has, it’s safe to say you’re probably starting your journey to riches with a negative net worth.
However, you probably don’t know that if you’ve never tracked you net worth before. Tracking your net worth is important because it gives you a snapshot of your financial health. You can use your net worth to identify problems before they blow up, as well as check your progress towards your goals.
As you acquire more assets and liabilities, your financial situation will get more complicated. It’s possible to track everything in a spreadsheet, but you’ll have to pull information from all your different asset and debt accounts.
Budgeting sites like Personal Capital or Mint are again of great use here.
Mint and Personal Capital lets you link your assets and debts, so you can track your net worth right on its site.
8.) Pay Down All Bad Debts
After taking a look at your net worth, you’re now aware of all the bad debt you’re carrying. This bad debt does nothing but entitle the lender to a portion of your paycheck.
Plus, you’re virtually burning your dollar bills with each interest payment.
And so, it’s time for the bad debt to go.
You want to pay these off as aggressively as you possible without leaving yourself unable to pay your bills. The sooner you’re free of bad debt, the more of your money is YOUR money and the sooner you can finally start BUILDING your riches.
The good news is after slashing your expenses, you’ll have a lot more cash to pay down this debt.
9.) Maximize Your Current Earnings
You’re not rich yet, but your financial situation is much better than before now that you’re saving hundreds (or maybe thousands) of dollars on wasteful spending and useless debt.
Finally, it’s time to take your focus off saving and shift it to earning.
Which is exactly what the rich do; they care more about the latter than the former.
Before you go building a business, you’ll want to maximize your current income stream. If it’s a 9-5, try to squeeze out any raises or promotions you might be eligible for. If you can’t, try to snag a better-paying offer from another company.
Already an entrepreneur? Start outsourcing any functions you can so you can grow your business and boost your revenues.
Eventually, you will hit a ceiling.
10.) Build New Income Streams
The richest people in the world don’t have 1 income stream; they have several.
Well, you’ll experience diminishing returns at some point. Your first stream will require too much investment relative to its return to keep growing.
On top of that, multiple income streams are more secure than one income stream. Would you rather have a job that pays $100,000 per year, or 10 businesses that each profit $10,000 a year?
Losing that 1 job means all your income is gone, whereas losing 1 business only knocks out 10% of your income; that’s much easier to recover from.
And lastly, income streams (barring a 9-5 job) are assets, directly increasing your net worth.
So instead of trying to add to your wealth, you need to multiply it by building more income streams.
The easiest way to do so is by starting an online business. You can build an online business an hour a day after work if you have to; all you need is wifi and laptop for most online business models. You could also consider getting an online job. While not building your own thing, this is an easy way to add another stream of income.
Eventually, you’ll have built up enough income streams to provide you basically any lifestyle you want within reason.
But did you know you can take advantage of compounding with your income streams?
Keep reinvesting some of your income back into your income streams for growth. This’ll result in even more income, which can then be reinvested, etc.
See, compounding isn’t just for investing in the stock market.
Speaking of that…
11.) Invest, Invest, Invest
At this point, you’re already rich by any conventional standard. However, don’t rest on your laurels just yet; you want those to invest your large income streams so they work for you even harder.
We’re talking about investing in securities like stock, not investing in your income streams as you should be doing that already.
See, your businesses alone could theoretically grow to the point where the selling them at retirement would give you enough money to live the most lavish retirement ever, not to mention the actual income from running those businesses.
However, anyone with even a lick of finance knowledge would tell you that putting all your eggs in one (or in this case, a few) baskets is worse than spreading them among many.
You’ll want to diversify your assets by investing in things like stocks, bonds, real estate, and other assets that aren’t your own income streams.
In theory, you’d have built your income streams (or maybe even passive income streams) in a way that gives you tons of time to research the best investment choices yourself.
But as you learned along your journey, time is more valuable than money. Rather than invest your time into learning how to invest, you should invest your money (of which you have plenty) in a good financial advisor.
Getting Rich Is Simpler Than You Think
Getting rich is one of those things that’s simple, but not easy.
The steps to getting rich are quite clear; we just laid out a surefire plan to do so! In that respect, getting rich is simple.
Easiness is a different story. See, most people fail at getting rich because they give up along the way. They fail because they aren’t able to accept that they’ll have to put in a decent effort every single day for many years.
It’s like lifting several hundred pounds in the gym. It’s simple to be able to do so; pick the weight up and put it down. Repeat that process several times, and you’ll be able to do it eventually.
But therein lies the problem. Hitting the gym consistently for years is HARD work. It takes discipline. You’ll be sweating it out in the gym while your friends are out having fun.
However, if you put in the work day in and day out, there will be a day when you can lift that weight you never thought possible all those years ago.
In the same fashion, getting rich seems impossible at first. Budgeting, investing, tracking expenses, building a business…
All of that is tough to do, especially when temptations await you at every turn along your journey.
But if you show up every day, do your “reps” regardless of how you’re feeling or what’s going on outside of your finances, and learn to enjoy the process, you’ll one day wake up swimming in more money than you know what to do with.
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