When the average US salary is just $40,000, how on earth do you get rich? Do you have to be born into a rich family? Do you need to be very lucky? Or does it take a big win on the lottery?
Of course all of these things can help, but they're not at all necessary. Many people get rich because they have something that 92% of people don't have. They have a totally different mindset, and this is known as the millionaire mindset.
You can learn about this extraordinary mindset in THIS POST, and I urge anybody that wants to get rich to adopt this way of thinking immediately.
Without this mindset working in your favour, you probably won't get rich. If you do happen to get lucky, you'll probably end up broke again – just like most lottery winners!
This is all well and good, but the millionaire mindset won't work if you don't have anywhere to start, or a clear goal to focus on. So in this post we'll go through 6 of the very best ways to get rich. I'll also tell you some bad habits that poor people make so you can avoid all of them.
The 5 best ways to get rich
1. BE SMART WITH YOUR MONEY
If you won a million dollars on the lottery on Saturday night, what would you spend the money on? Think about your answers for a few seconds before continuing.
OK, have you got a few answers?
Most people would spend a bit on a nice holiday, go on a cruise, get a new car, and maybe even a sports car for the weekend; they'd buy a house, and maybe even buy their kids a house if they have kids.
So did you say any of these?
It's likely that most people reading this post would blow all of the million dollars, and end up right back where they started – broke, and wondering how it happened!
You see, it's important to get rich, so that you can do nice things, and so that you can enjoy your life, but staying rich is just as important.
A smart answer to the above question would have been to invest the money into a place where it will grow. A place where it would generate an income that you could live well from indefinitely.
This is one reason the rich keep getting richer, because they see the value in money, and they know how to spend and invest it so that it continues to grow.
So be very smart with your money, and use the following ways to help you start saving more. The money you save will be used as the foundation for tip number 3.
- Don't spend money on anything that's likely to depreciate rapidly. New cars are a good example of this, as they loose around 25% of their value as soon as you drive them away from the dealership. And they will keep loosing around 25% each year thereafter.
- Cut out the things you don't really need. Take a look at your monthly bills and cancel any subscriptions that you don't need, like sky TV for example.
- Be sensible in the supermarket. Look for the cheaper food brands, very often it's the exact same thing as the expensive brand, just in different packaging.
- Cut out expensive habits. Habits like social drinking, smoking, and buying fast food will all add up to a ridiculous amount of money each week.
- Stop wasting energy. Maybe you leave the TV or computer monitor on, and your phone chargers plugged in? Or do you leave lights on when you're not in the room? These things are all considered energy vampires, and by simply turning things off you'll save big on your energy bill.
- Stop eating out. On average, a meal at a restaurant will cost you 325% more than the exact same meal prepared at home from.
- Drop the gym membership. Gyms have their perks, but lets be honest, they really aren't necessary unless you want to be the next Mr or Mrs Olympia. You can get a fantastic workout by using body weight exercises at home, and get your cardio in by hiking.
2. USE YOUR TIME WISELY
Time is one of the most important things you can use on your quest to becoming rich. Without time to invest in yourself, your chances of getting rich are minimal, so start considering how you will make the most of the time you have.
Identify how you're wasting time
There are many ways that you could be wasting the valuable time that you really need to get rich. Here's the three main culprits:
I used to love watching films, but now I can't sit through the first five minutes of a film or TV show without realizing how much precious time I'm wasting.
TV is a big part of most peoples lives; just looking at the Netflix trend analysis will prove this. But unfortunately, anybody that wants to get rich will need to cut TV out of their lives, or keep the time you spend watching it to a bare minimum.
Social media is an addiction for many people, and studies show that on average, people spend 2 hours and 22 minutes per day on social networking and messaging platforms.
That's the average, so many people are wasting even more time than this watching pointless junk, reading memes, and scrolling their news feed.
It's easy to quit social media. Either deactivate your account and never look back, or break the addiction by filling your time with important activities, like building wealth.
We found out in my working from home post, that the average American wastes a whole 9 days by commuting each year. This average is even higher in London, with people wasting nearly 27 days per year travelling to and from work.
I know that commuting is unavoidable for most people, but instead of wasting this time simply listening to the radio in your car, make use of it. Get yourself some audio courses, or audio books that will teach you valuable skills that you can use to accumulate wealth.
People waste time in many different ways, so you'll need to identify where you're personally wasting time that could be better spent getting rich.
3. INVEST YOUR MONEY
Earlier we discovered that many rich people invest their money to let it grow. Investing in a stocks and shares is the number 1 way that most rich people generate passive income, and it's still one of the best ways to get rich.
It's super easy to get started with investing, and you can use the money that you are now saving from the tips I suggested in step number one to get started.
1. Choose a broker
The first thing you'll need to get if you want to start investing, is a good investment broker. Investment brokers are an important part of investing, and you’ll need one to make your trades within the stock market.
Brokers make it possible for you to purchase stocks, bonds and other securities from the exchanges, and they will conduct investment transactions on your behalf.
Brokers will charge small fees to cover the work they're doing for you, but the fees will be minimal if you choose a good broker.
2. Open an account
Most brokers require an initial investment of $500 - $1000 to open an account, and you can invest into various funds and bonds.
3. Choose where to invest your money
All good brokerage platforms will give you a bunch of investment options to choose from. Some will pay you more interest than others, and some will carry more risk.
I recommend choosing an index fund like the S&P 500 to start with. This option will give you a great mix of stocks in companies like Apple, Microsoft, Johnson & Johnson, and Facebook, so it's about as safe as an investment in the stock market can be.
You'll be given lots of tools, including graphs and past performance charts to help you decide which option to choose.
4. Keep your money invested for at least 5 years
You'll need to invest long term rather than for just a few months. This way you'll have time to ride out any dips in share prices to make the most of your investment.
There are no guarantees when you invest in the stock market, and your money can go up as well as down in value. But when investing into a good index fund you're unlikely to loose out in the long term.
Take a look at the performance of the s&p 500 UCITS ETF from Vanguard in the graph below. A single $10,000 investment has grown by over $5500 in just 5 years!
5. Drip feed your investment
When you have money invested, it's important to keep adding to your account. Try to add as much as possible, and remember – the more you invest, the more your investment will grow.
The earlier you start investing the better. Starting early means that you won't have to put as much money away each month to hit your goal of getting rich.
If you start at age 23 for example, you will only have to save about $14 a day to become a millionaire by the time you are age 67. That’s assuming that you receive a six percent average annual investment return.
4. START A BUSINESS
At the beginning of this post I mentioned that the average wage is $40,000. This should give you enough money to start investing, and to eventually get rich, presuming you have time on your side.
But what happens in the meantime? If you're only in your twenties you could be waiting over 40 years to collect your million dollars! And what if you aren't earning enough to start investing?
This is why it's important to start making more money now, and starting your own business is the best way to do so.
You can start an online business, and THIS POST will give you some great tips and ideas. Even small online businesses can bring in thousands of dollars per month, so whatever your idea, it's important to get to work right away.
If you would like to keep your regular job, creating a profitable side hustle that generates passive income will be your best option. Check out my guide to earning passive income HERE.
If you would like a more hands on business, you can literally try anything that takes your fancy. This could be anything from hairdressing to offering yourself up as a home tutor. Whatever your idea, it's important to take action and start as soon as possible.
To give you some motivation, I started my first business back in 2007, and was able to make over $88,000 per year just by working for four hours per day in my garden shed, and this was just a simple idea that anybody can dream up.
Remember that a good profitable business can also be sold. This could be multiples of the turnover, so a healthy business making just $50,000 per year could easily fetch 6 figures. This is how many very wealthy people were able to do it, and so can you.
5. Get a higher paying job
This probably isn't one of the best ways to get rich, but while you're building your business or side hustle, there's nothing stopping you from earning more from your current day job.
You can start by negotiating your salary with your employer. If you are providing value to the company then there is no reason this shouldn't work. If a pay rise is rejected, then you may want to look for a higher paying job.
Many people settle for a lot less than they're worth. If you're skilled, then a regular job certainly can make you rich, but you'll want to look for jobs that offer a 6 figure salary if this is going to be your only money source.
6. Develop property
I mentioned how you should avoid anything that will depreciate in value, but you should strive to buy anything that will gain value. Property is a fine example of something that will appreciate in value, and if you have a home you can start immediately.
Most homes can be improved upon or added to, to increase the value. In THIS POST I explain how I was able to make over $200,000 by renovating my fathers house. I then used the profit I made to buy a second house that is now rented to provide a source of passive income.
Don't worry if you don't currently own a home, you can still start property developing, or making money from property, and I also tell you how in the linked post above.
Things to avoid if you want to get rich
These are some of the mistakes that poor people make on the regular. These mistakes not only keep you poor, but they remove any chance of you ever getting rich!
Stop believing in luck
Poor people put a lot of faith in luck, even though most of them believe they aren't lucky enough to get rich, or have nice things. How many times have you said, or heard anybody say things like –
"Maybe one day I'll come into some money."
"One day I'll win the lottery."
Of course these are things that could happen, but they're highly unlikely.
Poor people throw so much money at lottery tickets and scratch cards thinking they'll get lucky. But when you tell them to use the money to invest in the stock market they'll tell you it's too risky, or that they can't afford it.
This is a crazy way of behaving, and it will only keep you poor! So stop believing in luck, and know that things only happen if you make them happen!
Stop borrowing money
Borrowing can work if it's done correctly, but the things you buy with the borrowed money need to be appreciate in value more than the interest on the loan.
So by all means borrow money for a house that will be worth more in a few years, but don't borrow money for things like cars, vacations, and general consumption.
Debt is a huge problem, and the average person has around $38,000 in personal debt. This excludes home mortgages, so people are borrowing money for completely the wrong reasons.
If you have any debt, then concentrate on clearing it with the help of the saving tips that I gave you earlier.
Stop trying to impress people
Whether you buy flash cars to impress your friends, or wear the latest fashion and accessories to make yourself look rich, you are only making yourself poorer. So stop now!
Stop going on expensive vacations
Vacations can suck your bank dry! Or maybe the bank is already dry, so why not use the credit card? No don't do that!! You really need to avoid the vacations until you are truly rich.
Poor people are spendaholics! As soon as the pay check goes into their bank, they'll be straight out to the shops, or on the net spending it all on their favourite clothing website. If the money is there, it has to be spent.
I've already told you how important it is to save our money, so just let me reiterate: Save and invest at least 10% of your income or you will be broke forever!
Drop the expensive hobby
Expensive hobbies will eat up everything you have. When you're passionate about something it's really hard not to spend money on it. Trust me, I've been there, and this is the one thing in this post that I had problems with when I started building wealth.
Do what I did, and drop the hobby completely until you are sure you can afford it.
By this I mean wait until you have more passive income coming in than all of your expenses combined. And be sure that you can still put away at least $5000 per year into your investment account.
Start getting rich today!
You now know the best ways to get rich, and more importantly – how to stay rich! Start putting everything I just told you into action right now, and know that you can get rich, but it will take time, effort, and a lot of work.
You've probably said, or heard somebody say "Good things don't happen to people like us." This is another common poor mans quote, and this way of thinking will keep you poor forever.
If you believe the opposite, good things will start happening to you. So stop doubting yourself, and start believing in yourself, You can do this!
Enjoy getting rich.