People often ask me, how do I become rich? Sadly, the answer is not a simple one. You could strike oil in the back yard, dig up a diamond or try your luck on the pokies. That or you can work harder and smarter with your money than the next person.
I prefer the latter. Why? Because I’m able to implement my range of saving money strategies to not only become smarter with my money, but also lay the foundations of becoming wealthy, or as others would refer to it as; rich. Please note I am not wealthy or rich, though I am doing everything in my power to one day become that.
People who are wealthy seldom just get given the money (some do, but most don’t) – instead, they earn it. Ashton Kutcher (love him or hate him) did a rather inspirational speech at the Teen Choice Awards – he explained that if you want to become somebody or something, you need to get off your arse and work towards it. Actors don’t become famous because of luck and sitting around; they work themselves to the bone to get noticed and be the best at their trade.
So with this in mind, what do you actively need to do in order to become rich? What are the steps to becoming rich? For me, it’s about taking every point below and living and breathing it each and every day.
Here’s how to become rich.
You need to become tight about every single dollar.
Rich people are notoriously tight (or were). The way to become wealthy is to question every single dollar you spend. Some of the wealthiest people in the world will still only pay their exact portion of the dinner bill while out at a restaurant.
To become rich, you need to be cognizant of money at all times. Never forfeit a cent for convenience. Remember, when you see a wealthy person spending extravagantly – think to yourself that it’s because they are now rich, not trying to become rich. They too have watched their money closely.
Pablo Picasso was a millionaire, yet he would often sign the back of his cheques after an expensive dinner so that the restaurant owner would frame the cheque instead of cashing it. Sneaky!
You need to always follow up on money owed to you.
If you lend money to a friend or family member, always remember to get it back. Never let a dollar go unnoticed. I personally am terrible at this and feel awkward asking someone for the money I lent them.
You work hard for your money so why give it away only to never be repaid? Limit your friend-lends and if you do lend a dollar, be quick to note it and always retrieve it.
You need to use money to make more money.
Rich people don’t have a dungeon full of $2 coins that they swim in (like Scrooge McDuck). They have their money in investments, accounts and diverse portfolios of income-producing investments.
Money sitting still in a savings account is safe, however, it can barely keep up with inflation. Rich people always invest their money and chase solid returns without exposing themselves to silly amounts of risk.
If you don’t know what to do regarding investments (like me and most others) – see a financial planner. Rich people do also, you can’t be the jack of all trades in life.
You need to be savvier with your money than everyone else.
To become rich, you need to be more patient and more savvy than the next person. Take the extra time to hunt down bargains, find better deals and avoid paying full price.
I can’t tell you how many times I have taken the time to compare products, hunt down deals and generally find something at a reduced price. Over the years, it has probably saved me $10,000 or more. Rich people don’t make dumb financial decisions, they maintain their savviness on every single dollar, as should everyone.
You need to think two steps ahead.
Don’t think about what you want today. Today you might want a cup of coffee, a few drinks after work and a copy of CLEO. Are these things really that important to your life and your future plans? The answer is no.
Focus on the next two steps ahead. Think long term. Imagine what you might want in your life in say 10 years time. Perhaps you want to own your house outright, without thinking ahead you will never achieve the actual desire. Your tastes may also change, a fancy BMW now might seem like the fun and wise thing to do, though in 10 years time you may end up regretting it and wishing you kept the Toyota Yaris for a few more years and invested the rest.
You need to be consistent in your approach.
You need to employ all of these techniques, day in and day out to become wealthy. Saving money, earning money, growing money – it all comes from hard work. Stay consistent and remember, every decision, no matter how small, has consequences to your finances.
Don’t binge on saving money one week and then splurge the following. Stay consistent everyday with your money even if it means not been as smart, give yourself a small buffer as it’s better to employ these tactics everyday for years then on again and off again.
You need to take the odd risk.
I am not telling you to make dumb or risky investment decisions. But people who become rich often do so because of gutsy and well calculated moves.
They opened the business that they knew would work against everyone elses advice. They invested a regular portion of their income in a diversified portfolio.
As stated at the start of this article, you can’t sit on your bum and expect money to magically appear in your wallet.
You need to rinse and repeat the above many times over.
The steps to becoming rich are not a clear cut guide. They are really just common sense and require a determination to stick to your goals, save money and grow your money. The trick to all of the above is seeing yourself as not like everyone else. If you were like everyone else, you would buy big screen TVs every couple of years and upgrade the car for no reason.
Opt instead to make good decisions at every step of the way and you will be on your path to becoming rich.