Alright, this is a second take on one of our articles “How to Build Wealth?” However, we’ll take a different and, not-so-different perspective to generate substantial income through the early stages, well into the developing phase and the advanced mode to get rich, quickly and realistically.
And, becoming rich in the modern world is way different and has a refreshing methodology, unlike what it was decades ago. Of course, some of the traditional ways of getting rich are still practised.
Starting Early is the Key
“The Early Bird Catches the Worm” fits the mission to get rich, perfectly. The earlier you put your money to work, longer the time it has to grow. Speaking specifically of starting your savings early, the 20s is the ideal phase to do so. It doesn’t matter whether you are just launching your career or whether you have got your big break. Doing it now is all that matters.
Financial steps taken in your 20s directly impacts your financial status in your 30s and dictates where you stand financially in your 40s and beyond. Here are the top 15 financial steps to incorporate right away:
Devise a plan of action
Thoughtful planning and sticking to a budget put you in the driver’s seat, ready for long-term haul. Setting a meaningful budget encourages you to live within or even below your means. This practice also keeps bad debt at bay while you build your emergency fund and maintain a cash reserve. Only the cash reserve should cover all your monthly and recurring expenses.
Maximize your earning potential
You have to make such career decisions that help you earn more and get rich. See if its time you deserve a raise. Check out other career opportunities with higher pay. You could work on an extra project or two, if possible. Whatever you are doing, keep looking for ways to hike your earnings by a good margin.
Create multiple sources of income
Becoming rich only on one source of income is next to impossible. You should have more than one income stream if you are serious about getting rich. Do a part-time job or start freelancing. You can also start a home-based business or sell something if you can create it.
Generate passive income
This is something that pays you regularly for some work you once did or through some assets. This can include renting a space if you have one, getting a royalty for your works, advertising on your blog and many others.
Reduce your living expenses
Living an unassuming and modest life contributes to your goal of becoming rich. Keep your living expenses to the minimum and use the surplus to generate wealth. Cut down on unnecessary expenses, including your monthly bills. You can also try public transportation to commute across the city.
Avoid the temptation
This is a second take on the previous point. The temptation to live life king-size can induce us to spend and spend more. However, most of these expenses are unnecessary and only lead to financial insecurity. All this excess money can be used to reinvest and accumulate wealth. This further includes:
- Control your socializing expenses
How often and where do you go out during weekends? Socializing with friends on a regular basis can prove to be costly. Food and drinks in big cities can really be expensive and, they burn a hole in your pocket. Combat this by limiting your outing to once a month and also check out for places that are good yet reasonable.
- Don’t be a slave to brands
Make sure to buy a particular brand only if it has major distinct qualities. Remember, not everything that is branded and expensive is worth your money. This can be especially true in the case of apparel and electronics. Take time to explore different brands and reasonable ones and see if they have similar features.
- Don’t drive everywhere
If you need to go somewhere that is some minutes away by foot, then do it. Walk to wherever possible. Driving your car to the nearby grocery store and other stores in the vicinity will only drain your money on fuel.
Avoid very cheap items
Well, just because you shouldn’t splurge on expensive and branded things doesn’t mean you can settle for extremely cheap items that are substandard. Why? Such items usually don’t last long and, you need to keep replacing them often. The result? You spend way too much on that particular item without even realising it. By doing this, you definitely will not save money.
Start a business
Becoming an entrepreneur is a sure shot way to create wealth-building opportunities. Usually, in business, you have an unlimited potential to earn than just having traditional long-term investments. You can start an enterprise in your area of expertise or in something you are passionate about.
Keep a long-term vision
Take full advantage of your organization’s 401(k) plan and make regular contributions to it. You could also start investing in Roth IRA to enjoy tax-free income subject to conditions. Planning for the long-term from the start gives you the maximum benefit of the compound interest.
Make friendship with risk
To become rich, you should to step out of your comfort zone and explore opportunities through uncertainty. Having a secure job and a steady pay check may be safe. But it’s the calculated risks that you take that decide your wealth. Get rid of the fear and explore various possibilities to achieve your dream.
Automate your finances and savings
There are chances you will procrastinate or even forget what needs to be done when it comes to finances. You may also give into temptation and overspend. The wise way to avoid all this is to automate your savings. You can set up automation for recurring expenses and also fund your emergency account.
An experienced mentor with an ample amount of experience can give you invaluable inputs regarding finances. He/she can be a guide and give advice whenever you find yourself in a dilemma. The advantage is, they can put themselves in your shoes and see what lies beyond.
Develop the right attitude about money
By far, this is the most important factor among all other financial rules. How much you earn and save to generate wealth depends on your attitude about money. What are your beliefs regarding money? Develop the right attitude about money and have the belief that you can become rich.
You have to see the bigger picture and possibilities beyond the average. Develop the integrity and use your creativity to go beyond failures as you push yourself towards richness.
Always be a learner
The rich and successful people are the best learners. They always look for avenues to learn new things and update themselves with extensive information about finance and other important factors. They adapt themselves to change and, they strengthen their financial process through new opportunities.
Set realistic goals
Having realistic, achievable goals inspire and motivate you to develop a sense of purpose. Don’t allow the stress of daily life get in the way of your goals. Maintain focus and take calculated steps towards your goals and, always stay on track.
Get smart with money
This means, avoid being “penny wise and pound foolish.” This usually happens when you drive to multiple stores to save a few cents on a particular product. However, you have already spent a substantial amount of your time and a good number of pounds on fuel.
Just making little savings in the process of spending more doesn’t serve the purpose. You may always put extra things into your basket while shopping. This can be small amounts, but the small ones add up to be bigger.
Invest and diversify your portfolio
To get rich, you need to invest wisely and, you should never put all your money eggs in one basket. Divide your money amongst different investment options and enable your portfolio with multiple sources of growth. This practice is very important to keep the momentum going in case one of the investment tools falls.
Make sure your portfolio has a good balance of stocks, bonds, ETFs, real estate and others.
Ok, being rich means accumulating an enormous amount of money over the years that defines your net worth. That is one perspective. However, rich also can mean being financially comfortable with enough income for recurring expenses. Moreover, it’s a situation where you no longer have to worry about where your money is coming from and, where it’s going.
In the end, it’s your own definition and, the action plan you are going to take that defines your level of richness. And remember, financial awareness is the greatest asset you can have if you are serious about getting rich.