The bottom line

Getting rich is not reserved for a select few out there. It’s available to anyone who has the gumption to give it a go. Future you only has one ace in the bag, and it’s the decisions you make today. 

Instead of waiting for the proverbial ship to come in or banking your rich life on imaginary winnings, you can make small but indelible changes to your finances that will shift your financial future. You deserve financial freedom. 

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9. Take Calculated Risks

There is no money made without a risk taken. Whether it’s starting a business or investing in stocks, every avenue to making money requires some risk. Even selling your old furniture requires you taking the risk that the buyer will show up and will pay you. It is a comparatively small risk when compared to deciding whether to spend millions of dollars on a new product line, but it is still a risk.

In order to make money, you have to take a chance that a venture or idea you have will pan out. Therefore, it is important to think deeply and evaluate multiple possible outcomes before you decide that an investment is worth it. Taking risks without thinking about them beforehand is an incredibly quick way to lose money. To earn, you should take risks, but they should be calculated.

3. Create multiple streams of incomes

A 2019 U.S. Census Bureau study found that only 8.8% of women and 8.0% of men have two or more jobs.

Corley found that 65% of wealthy people had at least three different streams of income set up prior to making their first $1 million.

“Poor people have one income stream,” he wrote. “Their eggs are all in one basket.”

So, if you lose your job, you run into a medical emergency or you fall behind paying bills, you’re single source of income probably isn’t going to be enough to bail you out.

6. Be Grateful

Becoming rich does not only require external factors to fall into place — many personality factors have to align for you to succeed at whatever venture you’ve started. Staying humble and grateful for the progress you’ve made at every step of the way is essential.

People do not want to give their money to someone who does not appear to appreciate it, or gets too carried away with any moderate amount of success. Keeping your life in perspective and having a considerate, thankful, and humble attitude is the way to go.

2. Avoid any kind of debt

Take everything you’ve been told about saving and apply absolutely the opposite to debt. Don’t buy anything you can’t afford. It’s a simple rule that will also help you avoid whims.

“You want a smartphone, but you don’t have the money to buy it? Then don’t buy it,” explained Müller.

A lot of debt occurs when people become addicted to the fleeting pleasure that you get from making a purchase.

 “Leave a note in your wallet that says — do I really need that? With time, you’ll start asking yourself that question, and then you won’t need the note anymore,” Müller said.

How can I be a millionaire in 5 years?

To become a millionaire in five years, you’ll need to do a few key things:

  1. Pay off all high interest debt
  2. Limit your spending
  3. Start investing as much as you can immediately and consistently
  4. Boost your earnings, including by developing multiple streams of income
  5. Create short term financial milestones alongside your longer term one
  6. Monitor your finances and adjust as needed

If you’re starting from zero, it’s not going to be easy but it’s definitely doable.

For instance, if you invest all your money in broad market index funds that track the S&P 500 (which is actually how I invest my money, as it’s low-cost, reliable and easy to simply set and forget), the average annual return is 8%.

Not sure how to start investing? The Simple Path to Wealth is the book I recommend to everyone for this. It literally shows you everything you need to do to build your net worth from zero to seven-figures. In fact, it’s the exact strategy I follow for investing my own money.

To become wealthy in five years by becoming a millionaire through investing in this way, you’d have to invest $157,830.05 per year – yes, don’t forget the five cents!

Clearly, that won’t be possible for everyone. And there’s no reason why you can’t take a few extra years to do the same.

(If you want to see how much your investments will be worth in future, this simple, free compound interest calculator does the job.)

But people have done it – like this person, for example, who followed the exact steps outlined above to reach that point.

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Realize That More Money Isnt the Answer

More money is not going to solve all your problems. Money is a magnifying glass; it will accelerate and bring to light your true spending habits. If you are not capable of properly budgeting a $25,000 salary, bumping your pay up to six figures won't solve the problem. You may be surprised to learn that nearly 1 out of 5 people earning $100,000 a year live from paycheck to paycheck, and they don't understand why it is happening. The problem isn't the size of their checks, it is the spending habits they have built up over the years.

4. Actively contact creditors

Müller advised being proactive and contacting your creditors before they contact you.

“This will set you apart from most debtors,” explains Müller.

If you can’t pay, it’s better to communicate this openly rather than waiting for them to call you to ask for explanations for non-payments. 

He explained that if you disclose your financial situation honestly, the other party will usually make you a counteroffer, such as extending the payment period or waiving your interest.

This advice is even more important if the debt you owe is to someone you know. 

“If you owe someone something, that will have negative effects in your life. Money isn’t just a medium of exchange; it’s an energy that flows.”

Consider Becoming an Owner

One of the big intellectual and emotional hangups people seem to have when they aren't exposed to wealth is making the connection between productive assets and their everyday life. An investor understands, on a visceral level, that if they own shares of a company such as liquor and beer manufacturer Diageo, and someone around them takes a sip of Johnnie Walker or Guinness, a portion of the money they paid for the drink will make its way back to them in the form of a dividend. With just a single share in Disney, an investor can watch guests stream into Disneyland, knowing that they enjoy their share of any profits generated from the theme park.

One of the strategies of the wealthy is to use their income to acquire productive assets their friends, family members, colleagues, and fellow citizens partake in. They make money (albeit, indirectly) every time you take a bite out of a Reese's Peanut Butter Cup, drink a Coca-Cola, or order a Big Mac. If you've ever taken out a student loan or borrowed money to buy a house from a bank like Wells Fargo, you've sent Wells Fargo investors real cash. 

If you don't know where to start with investing, make it a financial priority to acquire ownership of productive assets early in life. Make a conscious, informed decision about how to put every dollar to work, and the miracle of compounding interest will do the heavy lifting. 

6. Boost your current income

You can boost your current income to help in your new financial journey of getting rich. One way to do this is by asking for a raise at your current job. Be sure you have been performing well and have worked for the company for a while if you go this route. If you are a good employee, they may be willing to increase your income to keep you from looking for another job.

If you have been with your current employer for a significant time period and perform your job well, and they refuse to give you the pay increase you desire, it may be time to seek out other opportunities. Spruce up your resume and seek out an opportunity that will give you the pay bump you need in order to start getting rich.

You may also consider furthering your education in order to get a higher-paying career. Rather than going into deep debt with student loans for college, you can consider a high-paying trade career instead. Examples of trade careers are:

  • Carpenter
  • HVAC Technician
  • Electrician
  • Plumber
  • Hairdresser
  • Dental Assistant
  • Photographer

These are just a few examples of great career options with good pay. Trade Career Programs typically take less time to complete and cost less than college tuition.

3. Invest as Much as Possible in a Diversified Portfolio

While there are limits to how much you can put into a 401(k) or IRA, those limits are high enough that many people are not able to reach them. And if you do, you can always invest more in a taxable brokerage account. Thus, if you want to become rich, you should invest as much as you can — there is no upper limit to that amount.

There are many different investment strategies, but most experts recommend putting most of your money in the stock market. Some recommend a smaller portion of real estate or even speculative investments. Burrow recommends a portfolio of 65% stocks, 25% real estate, 10% speculative asset of choice.

You will want to invest that money in a tax-advantaged account such as a 401(k) or IRA first. That will help you minimize your tax bill and thus increase your returns over time. If you manage to max out all tax-advantaged accounts, you can move to a brokerage account.

More Advice: 8 Insider Tips to Get Rich in Real Estate

5. Avoid toxic relationships

Psychology plays a huge role in wealth accumulation. It may sound corny, but a Can-Do attitude is a must. It’s hard to maintain one if you associate with Can’t-Do people. Corley found that only 4% of low-income people associate with “success-minded” people.

“You are only going to succeed in life if you surround yourself with the right type of people,” he wrote. “That is to say, people who are encouraging, positive, curious, and helpful.”

How much money do I need to never work again?

The amount of money you need to never work again can be determined by calculating your annual spending and multiplying it by 25. For example, if you spend $40,000 per year, you’ll need $1,000,000 in order to retire and never have to work again.

This is based on what’s called the “four percent rule”. The rule is based on a study that found that if you withdraw 4% of your retirement savings every year, they won’t run out – on the understanding that your investments will continue to grow at the same time.

There are some caveats to this. For example, in years where there are economic downturns, meaning your investments may actually drop in value, you’ll be expected to also withdraw less than the previous years. 

However, according to the study, as long as this withdrawal rate stays at 4% of your total savings during your retirement, you shouldn’t ever have to work again.

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