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Ask any group of high school students what they want to be when they grow up and you’ll get at least one class clown who’ll say “rich”.
All joking aside, who wouldn’t want to have the money game mastered, to be debt free, to not have to worry about bills and to sleep like a baby every night knowing that your finances are all squared away?
But ask that same kid how to get rich, and you’ll get a befuddled look like they just sort of assumed by speaking the words out loud the universe would grant their wish.
Well, I hate to break it to you, but this ain’t Aladdin. You don’t get 3 wishes and the genie in that bottle has left the building and isn’t coming back.
But that doesn’t mean you can’t get rich.
You can. Slowly and methodically.
These 11 money tips will show you how to get rich and make a permanent mark not only on your finances, but on your future.
1. Spend less than you make
This is probably simplest tip for how to get rich, but also the most critical. It’s also the most often repeated. And there’s a reason for that.
It’s super important.
It’s just basic math. If you spend more than you make, we have a word for it that starts with D…dumb, ahem, I mean debt. Dumb and debt and well we’re at it, destructive.
Don’t mortgage your future for some empty spending thrill-ride that leaves you lighter in the wallet and short on future dreams.
2. Set up a budget
Rich people have a plan for how they’re going to spend their money. Each dollar has a job and they put those dollars to work for them.
In fact, according to Thomas Stanley’s landmark book The Millionaire Next Door, having a budget is a hallmark feature of the rich. And it’s never been easier to build a budget with literally thousands of spreadsheets, apps and tracking tools like EveryDollar (my personal fave, and free!), YNAB and Mint.
If you want to grow your wealth, you need to have a plan for how to get rich and use every dollar to bring you closer to your goal.
3. Track your spending
Building a budget is good.
But a budget is just a plan, and a plan without action is just a dream. And dreams die a thousand deaths every day.
In order to make your plan for how to get rich a reality, you need to have a way to measure your progress. In fact, legendary CEO Peter Drucker once famously remarked that “what gets measured, gets managed”.
To measure your progress, be sure to track your spending. One of the best features of the budgeting apps mentioned above is the ability to do just this. It’s critical for making your plan a reality.
4. Avoid debt like the plague
Debt is an anchor when it comes to the question of how to get rich.
You need to avoid it at all costs.
And even though it can be really tempting to use your credit cards or line of credit to finance your dreams, it’s like chasing the wind. Not only will you wake up with a spending hangover wondering where your hard earned money went, you’ll get to pay for your stupidity for years to come.
Depending on your level of self-control, get into the habit of only buying things you have the money for. If you need to use cash to curb your impulse purchases, do it.
The relatively small inconvenience will pay dividends far into the future.
5. Pay Yourself First
You can’t get far into a conversation about how to get rich, without talking about the need to invest money.
Investing works best when you actually have money (PRO TIP: It doesn’t work well if you don’t have money. I don’t recommend borrowing to invest!).
To maximize the amount you can stash away, don’t save from the leftovers. Save from the main course.
Be sure to withdraw your savings as soon as your paycheck hits your bank account. Not only will you not miss the money and avoid the pain of feeling like you’re losing dollars, but your future rich self will thank you.
6. Set specific money goals
Anyone who’s figured out how to get rich doesn’t just float through life without any specific financial goals. Unfortunately though, that describes most people and their money.
Author Michael Hyatt describes this as simply “drift” in his book Living Forward. You wake up one morning and wonder how the heck you ended where you are in life.
That’s why you need to set very specific goals.
In order to be most effective, set short-term goals for 1 month and 6 months, and longer-term goals anywhere between 1 year and 20 years. Having these goals will help you keep your eyes on the prize when it’s tough sledding.
(PRO TIP: Tell someone what your goals are. Having someone hold you accountable will improve the odds of you reaching them!)
7. Set BIG financial goals
According to T. Harv Eker’s Secrets of the Millionaire Mind, people who know how to get rich set BIG goals.
Poor people? Well, they set goals that are “attainable”.
Screw attainable goals.
Set ENORMOUS goals.
Set goals that scare you.
If you’ve got six figures of debt, make it a goal to bang it out.
If you want to quit your job to work from home, go for it!
One goal I set was getting my blog to 25,000 pageviews so I could join MediaVine and improve my blog revenue. It still makes me terrified just seeing it on the page.
But I’m committed.
I want the bar set high. I want the goal out of reach. Because if I can reach it already, it means I don’t have to stretch or leap to get there.
8. Build an emergency fund
One of your savings goals NEEDS to be setting up an emergency fund.
It’s not a matter of if it’ll rain. It will.
It’s just a matter of when and how hard.
To be prepared, you need to have a big umbrella.
Well, most financial experts recommend 3-6 months worth of expenses. Depending on your particular situation and your level of job security and health, you may need more or less.
At the bare minimum, you need to maintain at least $1000 to cover those unexpected expenses that can send you spiraling into debt.
9. Set big SAVINGS goals
The old mantra of saving 15% is under assault as being too low for Millennials and Gen X’ers. But with costs of living rising and wages not keeping pace, it can be hard to reach for the massive savings rates often trumpeted by the media.
Don’t get discouraged.
Yes, you should minimize your lifestyle to try to save as much as possible. But let’s be realistic. Most people aren’t going to give up vacations or lattes for the next 30 years.
Set goals that work for you, both in the short and long term.
When setting your goals, be sure that you actually run the numbers to see where you’ll be down the road. Use conservative rates of return to determine how much you should be saving.
You can always ramp up savings or dial it down as you get closer to your targeted retirement date (check out these awesome financial calculators).
10. Invest your money when you’re young
Young is a relative term, but without question, people who know how to get rich know that the best time to invest is…now.
Market’s up? Invest now.
Market’s down? Invest now.
The sooner you start to invest, the sooner you can harness the most powerful force in the universe according to Albert Einstein – compound interest.
With your money invested over a longer time span, the total dollars you’ll need to invest will be significantly lower than if you had waited even 5 years.
11. Avoid high fee investments at all costs
To learn how to get rich, you have to understand that past investment performance is NO predictor of future performance.
In light of that, don’t get hoodwinked by mutual fund salespeople trying to tell you that they can beat the market and have done so consistently in the past.
The best predictor of future results?
You can’t control regular market fluctuations, international incidents which cause market bumps or dips, housing crashes, or immoral traders trying to make a quick buck by screwing people over.
What you can control though, is how much you’ll pay for your investments.
And not paying attention to fees can cost you hundreds of thousands of dollars over the long term.
12. Automate your money
Whether it’s bill payments, savings goals, or investing, making your withdrawals automated will do WONDERS to make you rich.
Instead of being faced with the choice to save or not each month, you only have to make the decision one time.
Automation will take care of the rest.
This greatly reduces the chance you’ll make a stupid decision down the line, like impulse buying something instead of saving or paying down your debt. And, as an added bonus, it’ll make your life MUCH simpler.
People who know how to get rich understand that automation is your friend.
Get to know each other.
13. Make your mark with a side hustle
Those who’ve learned how to get rich know that a side hustle can be an important part of the equation.
Starting to bring in extra money side hustling will put all of your financial goals on steroids.
There’s never been a better time to start a side business to add to your income. From proofreading and affiliate marketing, to tutoring and driving for Uber, you can hustle from the comfort of your home or get out and do it.
Either way, the potential for earning extra income is there for anyone willing to put in the time and hard work!
How to Get Rich – Bringing It All Together
Now that you know HOW to get rich, it’s time to set these 13 money tips in motion.
If you do, it will radically alter your life.
Notice I said your life and not JUST your money.
Not only will you whip your finances into shape, but your confidence to face the future will skyrocket, your self-worth will explode, and your level of resilience will go through the roof. It’ll impact your marriage, your parenting, and your work.
In short, it’ll be completely life altering.
And it WILL make you rich.
Not overnight, or in a week, or a year. But over time. Little by little.
The way true and lasting how to get rich stories are built.
What tips would you add to the list for how to get rich? Add to the conversation in the comments below or on Twitter @method_money or my Facebook page Method To Your Money. You can also find me on Pinterest. Want more great ideas for mastering your money? Sign up to receive my weekly emails detailing how to keep more of your hard earned cash!