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Want to learn ways to become rich and wealthy? Not sure how to do it? You’ve come to the right place!
There are many ways to become rich and wealthy. The formula for becoming wealthy is actually quite simple:
Earn Significant Income > Save a Significant Portion of your Income > Invest Your Savings > Wait & Behold the Power of Compound Interest > Rinse & Repeat
Follow these steps and you’re practically guaranteed to become rich and wealthy. Sounds simple right?!?
Now actually doing these is where it gets more difficult. To start, it can be difficult to earn significant income. And even if you are fortunate to have a big paycheck you’ll probably experience lifestyle creep and not save very much. And even if you’re a good earner and saver, you may not have the confidence, discipline, or patience to invest your money. The road to becoming rich and wealthy is full of challenges! Note that we are usually the words “rich” and “wealthy” almost interchangeably in this article. But in reality there is a difference. You can read about rich vs wealthy here for those interested (hint: we would take “wealthy” any day of the week!). That’s why learning ways to become rich is important.
At WealthFam we’ve studied tons of people and businesses that have generated significant wealth. If you are curious to understand how to become rich it makes a lot of sense to study those people that have already done it. While each person has a different story, many common themes start to emerge when you study the wealthy. Without further ado here is what we’ve learned are proven ways to become rich.
7 Proven Ways To Become Wealthy:
#1: Own a business.
Think about the richest people in the world. I’m talking about people like Jeff Bezos, Steve Jobs, or Bill Gates. While most of us will never achieve this level of wealth or business success there is something to be learned from the path they traveled. What do these uber wealthy people all have in common? Most all of them have risked their own money to build something. They didn’t just sit in a cube collecting a fixed paycheck. They have equity (aka ownership) in something. The lesson is this: if you want to become rich you must build something that you have equity in. You probably won’t become rich working for someone else’s bottom line.
A common refrain you’ll hear is that “but I have no money to start a business”. Is this true? Yes and no. My view is this is a just a convenient excuse. Many businesses require little more than sweat equity (i.e. your time) to get off the ground. For example, top bloggers can make over a million dollars per year. The cost to start a blog is under $100. When I started my Amazon business I did it with under $5k. It grew to a million dollar business. The morale of the story is you can start a significant business without having a huge sum of money.
#2: Become a subject-matter expert and charge for this expertise.
If you can figure out how to become exceptional at something others find valuable it is a near certainty that dollars will follow. For instance, imagine a person who has learned everything there is to learn about Facebook marketing. They read all the forums, listened to all the podcasts, taken on a client for free and demonstrated a strong ROI, etc. Do you think businesses would open the purse strings to pay you for this expertise? Yes, yes they would!!! If you become the top 1% in your field people will be willing to open their wallets and pay you for your skills and ability. Keep in mind you need to get good at something the marketplace actually values. If you become world class at something the market doesn’t value don’t expect the money to follow. Sharpen your skills and follow the money and the market!
#3: Save and invest 70%+ of your income into stocks and bonds.
There is a path to becoming rich which doesn’t involve owning equity in a business. Instead it requires being very disciplined and frugal with your money. If you are able to save and invest 70% of your income you will most certainly become rich. It will take time but even at relatively modest income levels this magnitude of saving and investing will allow you to benefit from compound interest (aka the 8th wonder of the world).
Truth be told I prefer people to focus more heavily on creating income versus finding ways to save. Why? There is unlimited potential for income generation while there is only so low you can cut expenses. Further you have to be strongly convicted in your decision and be okay to be different from 99% of your peers. Are you okay driving an old car (or no car at all), living in a neighborhood and property far below what you can afford, shopping at Goodwill, rarely eating out, etc. In our consumerist society and the era of social media it is very difficult to stand firm and not succumb to upgrading your lifestyle when you have the available funds.
Lastly, as your income rises you need to be really careful about lifestyle creep. Ever heard of a pro athlete or musician who somehow becomes broke? Most often it’s the result of lifestyle creep. The big paydays go into second homes, luxury cars, fancy vacations, expensive clothes and jewelry, etc. All that money is gone and poured into things that depreciate.
If you are one of the rare individuals that possesses discipline and patience you can apply it to your finances and in time you will most certainly become rich.
#4: Invest in real estate.
Real estate investment is a tried and true way to get rich. There are many ways to go about it: flips, buy and hold multi-families, renting on AirBNB, and lots more. BiggerPockets is an incredible resource for people interested in becoming rich via real estate. Two recent podcast episodes I enjoyed: From $900 to $4.5m Net Worth and 10 Deals on a $20K Waitress Salary With Ashley Hamilton. These will get you inspired and teach you a lot as well. Real estate allows people to use “leverage” to increase their riches. For example, for $10,000 you could control a $100,000 property. You tenants pay the mortgage and then some. You save another $10,000 and buy another $100,000 property.
#5: Get a degree in a field with high paying jobs (e.g. engineering, computer science).
This path doesn’t require an equity stake and will take some time but it is another great way to get rich assuming you are able to save at a high level and continue to progress in your career. Some of the top paying majors for 2019 are: engineering, accounting, finance, and actuarial mathematics. We would caution any students to choose a major simply because it’s graduates earn a high income. But at the same time you should definitely consider the marketplace and incomes for your major when selecting one. In a perfect world you can find a subject/field that interests you and pays well.
One awesome option for people interested in coding is the Lambda School. It’s an online school where you’ll learn to code in as fast as nine months. You pay nothing in tuition until you land that high paying job.
#6: Join a startup and ensure you get equity.
One way to have equity in a business is to build something yourself. Another way is to join a startup and get equity in the business. The best way to get in with founders is to network with them. A great way to network is to look at sites like MeetUp.com. Another good option is to check out the co-working options in your city and attend mixers. Many colleges and universities have entrepreneurship clubs that you can connect with as well. And there are websites such as https://angel.co/jobs that post startup jobs. Again, owning a business or a portion of the business is an incredibly powerful way to create wealth which is why we encourage you to check out the local startup scene.
#7: Marry Someone Rich.
We can’t say we recommend this approach. In fact, we’d strongly advise against it! You know what they say, when you marry rich you earn every cent.
So there you have it, seven ways to become rich. Earn, save, and invest. If you can do those three things consistently you’ll one day wake up a rich man or women. Have other great ways to get rich? Let us know in the comments below!