From the early days of evolution of human life, it has been a perennial question, “how to become rich?”. The answer to this question is purely technical for a person who is greedy and never satisfied with what he has been blessed with. For him, it is more about techniques and tips to become rich. They are the people who want to become rich overnight. However, for the person who wants to grow rich in a more ore organic and ethical way, ‘becoming rich’ involves a change of mindset, routine, attitude, a way of life and learning a new skill-set that is relevant, much in demand or has a lot of potentials.
Here we are not looking at examples of people who came across a break-through product or services; or a genius who wrote bestsellers or made movies and became cult figures overnight. We are talking about ordinary people who BECOME RICH by ‘growing’ rich. Had it not been the case, then the easiest way to become rich is to be born in a rich family, right? This article is about way anyone can adapt to become rich or richer than he is. Let us start.
#1. First Learn To Change Your Mind-Set And Attitude:
This is the first step and most fundamental. A pessimistic, loser attitude will not take you anywhere. If you yourself are not convinced of your strength and ideas, then you can’t convince others who matter. If you think you are poor and miserable, then you will present a sad, hopeless picture which no one wants to become a part of. Remember, getting rich is not a solo activity like finding a lost treasure or striking gold. You need to make a team or convince people to buy your ideas. This ability will come when you yourself ooze with confidence and optimism; when you are able to rub it on others. A beggar can never think like an industrialist or a millionaire businessman. It is the mindset and attitude you gave to starting working upon. Building wealth is a matter of working consistently with discipline and managing well whatever money you have. Of course, you need to be a bit lucky too.
An easy way to change your mindset and attitude about money or getting rich; is to be in the company of financially responsible people. Companionships, friendships, and associations matter a lot in changing people’s thinking. The learning rubs off without making any conscious effort. That is why the bad company is so effective in spoiling people. Hanging out with people who have achieved financial success will enable you to learn a lot from them besides building a network of influential people who can you in your own personal ventures. Do not waste your time with people who are careless with their spending or are irresponsible and whimsical, impulsive spenders. Having a mentor, who can either be a friend or relative; can be a great help to you in your journey of becoming rich.
#2. Cut Down On Your Spending
Savings is a big way to make you feel secure. Anyone can save money, even if the income is very small. Learn to cut out your expenses. Avoid any expenditure that is not vital. Learn the virtues of frugal living from one of the world’s richest man, Warren Buffet. Despite being the owner of Berkshire Hathway which is a billion dollar Investment Company, the owner still drives his own old car, lives in the same old house and has no servants or personal staff. No fleet of big cars, no uniformed chauffeurs, parties or penthouse living style! Unless you have your nest egg, you cannot feel secure and financially comfortable. The insecurity and feeling of being poor will affect your thinking to an extent that it will come in the way of all your future dreams and endeavors. This may be the hardest step for you as it goes against your personal philosophy of enjoying the riches and luxury. On the other hand, it may be easiest, if you are serious about becoming rich.
Remember the 50-30-20 rule, which means you should only 50% or half your income on the necessities like food, rent, transportation, electricity etc. without which you can’t live. The remaining 30%, you might consider spending on other things like clothes, entertainment etc. The last 20% must necessarily be saved. In fact, many suggest that even before you start paying for the necessary monthly expenses like rent etc you must deposit the 20% saving amount in your monthly saving account first. Building wealth starts with disciplining your spending habits so that you are always operating from a positive financial stance. Do not rake up debts to finance your present requirements.
#3. Eliminate Or Bring Down Your Debts
The debt will prevent you from attempting new ventures. Moreover, debts always carry a high rate of interest. Imagine if you do not have the debt, you would have been earning the same amount extra every month which you pay out to others. In a way, this could have been your income which you could have saved for some good investments or starting a new venture that would have brought you more money.
Pay your high-interest debts first, like credit card dues. The more such debt you repay back, your earnings from the savings will be that much more. Moreover, the difference in the higher rate of interest, which you were paying every month to your credit card or creditors, is saved. Consider this saving as your income and invest it separately. You will soon realize how beneficial it is to bring down your debts, especially high-interest debts.
#4. Build A Small Egg Nest From Your Savings
Having a kitty of savings gives you confidence. Moreover, it is there to take care of you during your time of crisis. If you have sufficient funds in savings, you can think of venturing for some small business or investment that gives you steady returns. A saving kitty of your six months’ salary is absolutely essential and can be considered as a minimum requirement.
Having some substantial savings can tide you over some bad times, like a sickness. Not only the medical services are horribly expensive, but absence from work or business takes its toll. The income gets affected. Many are forced to take high-interest rate personal loans, which again makes a big dent in their monthly income due to the heavy interest installments. You can avoid these emergency loans trap, by having a good amount in your savings to take care of these rainy days.
#5. Never withdraw from your PF Account or Pension Funds
If you are an employee then you will be having a PF Account. Every month 12% of your basic salary is deducted and put in your PF account. The employer contributes a matching amount. This amount gets an interest of more than 8% per annum. Over the years this amount gets the benefit of compound interest and balloons into a huge amount. This is your retirement corpus which ensures that you retire somewhat richer.
It is similar to the 401k plan in the US, where the employer matches the amount; for every dollar that you contribute, your company too contributes the same amount. This is a big amount constituting about one-fifth of your monthly salary. On top, you get the benefit of compound interest on your accumulated funds.
#6. Never Give-in to Speculative Investments
Avoid playing stock markets or day-trading, if it is not your chief occupation. People who spend their whole life in stock markets often end up losing everything. If you can then invest in a few solid companies that give good dividends or the value of their stocks rises up every year. Never play the stock markets as gambling.
Same goes for Multi-Level Marketing companies. They simply waste your time and if at all you stand to gain anything, it is miniscule compared to the efforts and money you spend. Stay away from those companies that are nothing but Ponzi schemes or Pyramid schemes.
It is the same for certain dubious investment companies or companies that tempt you with extravagant earnings through agriculture or livestock rearing. Better to stay away from these scams. Even if others show you how they have profited from these schemes, do not give in. It is better to rein your greed than to repent later in grief.
The only exceptions can be, to buy a diversified portfolio of stocks, bonds and other assets that will grow in future. These should be high security and minimum or very low risk. Mutual Funds and Index Funds are safer avenues for making such investments. These long-term investments have stable growth over the years and have given adequate returns.
#7. Set Annual Targets For Next Five Years And Make Plan At The Beginning Of Every Financial Year
Learn from the corporate best companies, how they state their Vision and mission statements. Set a financial goal on what you wish to achieve in the next five years. Have a vision for a longer period of time, say, by your retirement. At the beginning of each year, set a big but achievable target for the year. Make quarterly plans to achieve the yearly goal.
At the end of every quarter, review your performance and modify your strategy, if necessary. Review the achievements at the end of the year against the annual plan you had made earlier. If you do these with absolute dedication and stringent self-discipline; there is no reason why you cannot achieve your set goals.
#8. Make judicious job changes and earn those salary raises
If you are a working person, then never under-estimate the power of making pragmatic job choices and job changes. Often salaried working people are averse to taking risks in looking for new job and getting them. Remember, the more you keep stagnating at your present job which has limited avenues for growth, promotions and pays increments; you are losing your chances of growing rich. Truly professional people are not very emotional about their companies. Just as companies are seldom emotional about keeping their people during a recession or when business is low. So be realistic and seek out those jobs that are paying well. You can even negotiate a salary raise in your present company if your performance has been rated good.
Your work and your time are precious. Do not settle for less. You will never get it back. So start looking for other avenues that pay you better. Just imagine, if you invest that extra money that you get; in a good investment plan, it will multiply manifold by the time you retire. It is one of the easiest and surest ways to become a millionaire.
Depending on an estimated salary raise per month of just $500, it comes to $6,000 in a year. If this monthly amount is invested in a safe SIP of investment, it will yield more than a million dollar by the time you retire. This is a very conservative estimate, and it will actually yield much more. This is without doing anything else, other than working at your job.
#9. Make investments in Real Estate
Investment in real estate seldom goes bad. They appreciate a lot in just a few years. If the location is prime and the market is good with a booming economy, then you can make a killing. Whether it is land, building or any good property; you are sure to gain a good amount within just a few months. Hold on to it, and then you stand to gain a good deal.
Another way for making a very wise investment is to buy a multi-family building. These are generally available at a lower price than the new, swanky ones. All you have to do is invest a bit in renovation, repair or remodeling. Then you can stay in one and rent out the rest. You can match the rent with the mortgage premium of the bank. So what you get is that the investment you made by taking loans from the bank gets paid by the rent you receive. You get to stay in your unit or apartment for which you need not pay any rent. This rent saved, which you must have otherwise paid, becomes your monthly additional income, instead of being a necessary monthly expense. When the loan from the bank is fully paid through the rent collected by you; you have a building that is all yours. You can sell it at a huge profit any time you want.
Yet another way to save through real-estate is to get your home mortgage refinanced. In case you had taken loan during the years when interest rates were high, you can make a deal with another bank or finance company who will take over your loan and offer the same to you at a lower rate of interest. You can also save on additional interest burden by reducing the period or tenure of the loan. This will increase your monthly payout, but you will save a huge amount in terms of interest. So by converting a 20-year-old house loan to 10 or 15 years; you are saving that much more on the extra interest that you may have been required to pay.
#10. Own a Business
This is by far the most powerful way of becoming rich. This is the reason it is being taken up last so that you can focus on it. Starting your own business is the most powerful and potent way of becoming rich. Business is about finding a need that a vast majority of people have and then finding a way to fulfill that need. In business, you either create a product or service for people; or you help the product or services to reach people. For example, you can make an app which is a new product and sell it on the market. You can also do affiliate marketing online. In this case, you are helping product reach people. If you start taking tuition classes, it amounts to taking knowledge services directly to the consumers. If you choose the right business, in which you have an expertise; there is no reason that your business will not be successful. The successful people in business are those who have expertise and passion for their business. The unsuccessful people in business are those who simply try to copy others’ success without having the required skill, passion or caliber to do it. So do not start a business, just because someone else is successful in that business. Start a business because you have the wish to do it and the grit to make it a success.
If you are a salaried person, then remember that having a side business, moonlighting is absolutely essential to becoming rich. Unless you own a business, you cannot become rich. Working will just give you what you deserve and work for. The ‘extra’ needed will only come from a business which gives you much more than the hours you put in it.
Warren Buffet says that the average millionaire has seven sources of income. Having multiple income streams is necessary for a dependable flow of fund. Even if one stream is not doing well the averaging effect more than make up for it.
To start a business; instead of thinking how much money you will make, start with what service or products you can deliver. People will offer money for what they want, not what you want to sell, however good it may be. There is no limit to how much you can earn. If you want to start your own business, then you must keep the following point in mind.
(a) Going for an Online Business to become rich
The Internet has made it easy for many to become rich, by helping business get more customers easily. This is especially true if you start your own online business. You are not bound by the usual set of the customer but can reach millions of people all over the world at the same time.
There are so many avenues to online business, but you have to choose your own niche. Here are a few suggestions:
• You can sell a product or a service like an app, software, images, videos, courses, tutorials etc.
• You can also do affiliate marketing and other online stuff based on products and services online. You can make a referral and advertising income out of these.
• You can have a specialized blog, and make money from online advertisement, Adsense and similar advertising affiliates.
• You can have your own YouTube channel and teach or inform about some important aspects of life. The revenue from some popular channels can be huge.
• You can freelance online for any services and consult. People have handled high-value important assignments through freelancing.
You might need to learn new skills to exploit these online opportunities, but it is worth all the trouble.
(b) Start a brick-and-mortar business
Instead of online business, if you are not comfortable with it; you can also start a real business. You can have a franchise store, as these are easy to set up and do not require much investment or business experience.
You can take up a distribution agency of a big company, and do business-to-business activities.
Some food outlets or small coffee and snack shops can be easily run by anyone who doesn’t have prior business experience. With free wi-fi being offered to customers, these are making good business.
(c) Start a side business
If you have the required skill that many can benefit from then you can start a side business. This is especially useful in case you lack the necessary resources, courage, and experience to start a full-scale full-time business. You can continue your regular job or vocation which gives you the financial stability.
You can start freelancing or take up a part-time assignment to generate a steady source of income on the side, without quitting the job you already have.
It is neither too easy nor impossible to become rich. Anyone who has certain skills and knowledge, and has the passion for excelling in something can work his way towards becoming rich. It requires a lot of dedication and determination, as well as rational and logical thinking to become rich. It also requires being emotionally tough to take hard decisions, as well as avoiding falling into the greed trap. While nothing in this world can guarantee success to any individual, the tips and information given here will propel you on your way to become rich.
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