How to become rich…and wealthy? Ahhh, such a loaded question.
Being rich is mostly associated with a high income. Rich people earn money easily, but they spend it easier. Their look rich lifestyles have been linked to Keeping Up With the Joneses and buying the latest gadgets, cars, and clothes that hit the market. Unfortunately, this is also linked to excessive debt. You remember Mike Tyson and MC Hammer, don’t you?
Being wealthy, on the other hand, is more focused on net worth and not having to worry about money. Wealthy people don’t have to work to maintain their lifestyle. They’ve reached financial freedom to live life as they please. Many people with wealth are also rich. Although they still budget, they can buy the extra little things and don’t necessarily live in extreme frugality.
Whether you want to be rich or wealthy or rich and wealthy is semantics. It doesn’t really matter. What matters is setting financial goals that you want to achieve and working towards them every day. Keep reading to learn a little more about 15 insights to increase your income, become rich, and build wealth.
What does it mean to be rich?
Getting rich is all about making or having “a lot” of money. Unfortunately, economists haven’t quantified “a lot” just yet. It’s kinda a mix of opinion and personal preference. How much money do you think someone has to make before you say “they’re rich?” Is it $100K a year, $250K, maybe $500K? Each one of us is going to say something different.
What does it mean to be wealthy?
Getting wealthy is all about having enough money to do as you please. It’s more focused on net worth than income. Someone can be wealthy with $500K in the bank and early retirement forecasted for a low cost of living area. Someone else might need $1 million to consider themselves wealthy. It really does vary depending on the person and the area. It’s financial independence and all its glory.
How to become rich
The act of “becoming” is a process to undergo a change or development. To “become” is to be done with that process. So, when someone is looking to become rich, they’re really looking to have finished the process of becoming rich. And that process can be quick or lengthy depending on the person and their situation.
There are three main ways to become rich: 1) inherit a lot of money, 2) make a lot of money, or 3) win it. For those who aren’t living off wealthy parents and those who don’t play the lottery, you’re probably looking at making money.
I recommend increasing your income by increasing the number of streams that bring in money. Take a look at this list of the 8 main streams of income:
- Earned Income (often referred to as wages)
- Dividend Income
- Interest Income
- Royalty/Licensing Income
- Rental Income
- Capital Gains Income
- Profit Income (also referred to as business income)
- Retirement Income (pensions, 401ks, annuities, social security payments)
Realistically, what are some of the ways to get rich that you could try? I got a few listed below to get you started.
1. Find a high-paying job (Earned Income)
If you just want to be rich, you could do it the old fashioned way and earn a lot of money with a high-paying job. Doctors, dentists, lawyers, engineers, athletes, and many more professionals are making multi-six-figure salaries with full time work. Yes, many of these jobs require a college education but there are some six-figure jobs like real estate, electrician, sales consultants, air traffic controllers, and more that don’t.
2. Flip Real Estate (Profit Income)
When we’re thinking about ways to simply make a lot of money…real estate is one of them. Buying and flipping houses, duplexes, or apartment buildings can churn a lot of money. Of course it’s a full time gig, it’s risky, and it’s a little expensive. But when done properly you can easily make 12% return on investment according to Home Light. You can make a lot of money flipping houses but it’s hard work and you should consult a professional before going down this path.
3. Start a side hustle (Earned, Passive, Or Royalty Income)
Starting a side hustle that you’re passionate about is one of the easiest ways to build passive income. You could try proofreading, freelance writing, blogging, virtual assistant, coaching, graphic design, course development, podcasts, being an influencer, dropshipping, youtube creator, and many more ideas. How can you help someone else? What do you have to make the world a better place? Take that passion and turn it into money. You can always make more money.
4. Be an entrepreneur (Profit Income)
Become an entrepreneur and start your own small business…one of the best, but most risky ways to become rich and wealthy. Many small businesses fail, but you’ll never know if you don’t try.
With entrepreneurship there’s no limit on your earning potential and profitability. Plus, you’re also more likely to gain experience, connections, freedom, and life satisfaction. When combined with good financial habits, becoming an entrepreneur and building a business that you love, just might lead to the land of richness.
5. Write a book (Royalty Income)
Authors don’t tend to make a lot of money, especially in the beginning. But if you keep going, you’re more likely to find a nice stream of income. Writing a book could introduce you to other opportunities like consulting and guest speaking. You may also be called upon to be an ambassador for products related to your book or asked to create a movie based on your book. You’ll never know if you don’t try. What’s your story? What could you teach someone? Or maybe what can you say that’s entertaining?
6. Be A Freelance Writer (Earned Income)
Sure many writers have found themselves starving and living paycheck to paycheck. But in today’s fast paced world the demand for a good freelance writer is high. Journalists are writing short, whitty pieces for a variety of media outlets and demanding their salaries. Freelance writers have the ability to write for multiple media sites at their own pace and pay. Because media outlets are looking for large volumes of articles to send into the virtual world, there’s no shortage of jobs for freelance writers.
7. Become an influencer (Earned Income)
Influencers are able to use their platforms to promote products to their audience. Some get paid to advertise for brands in their social media posts and others get paid through affiliate marketing emails. Becoming an influencer may take time but if it’s a niche that matches your passions, you can’t lose. Just be consistent, create content with added value, and be true to your personal motto.
8. Take up acting
It’s no secret that famous actors can make millions for one movie. So, sure being an actor can make you rich. But you could also do well as a stunt double or on broadway. You have lots of options. Sometimes it’s not even about how much money you make. It’s more about how much you can keep. And there’s something to be said for happiness.
How to become rich and wealthy
So now we’ve talked about how to become rich but we need to talk about what you’re going to do now that you have that money.
9. Set SMART money goals
When you’re focused and determined to do something, you’re more likely to do it. Take the time to write out some SMART money goals. It’s not enough to say I want to save money. How much money do you want to save and how often? If you’re looking to be rich and wealthy, how do you plan to get there, what’s your goal? Try calculating your monthly expenses or your Financial Independence number.
10. Build passive income (Passive Income)
Millionaires tend to have multiple sources of passive income adding to their bank account 24 hours a day, 7 days a week. They don’t have to physically work for every dime they have. In fact, we’re limited in how much we can physically work anyways. We need other sources of income to be compounding in order to really see our numbers hitting 6, 7 figures. You have tons of options to build passive income. Check out stock dividends, blogging, rental properties, interest, advertising on your blog, licensing your photos, royalties from your intellectual property, and many more.
11. Learn to spot opportunities
Success is generally built on one’s ability to easily spot opportunities. In today’s fast paced environment, being quick and innovative is golden. True opportunity seekers can find a golden goose almost anywhere. They’re quick to spot problems and even quicker to see the silver lining. Of course, it’s a mindset. One of the best ways to become rich and wealthy is to learn to spot opportunities.
You can learn to spot opportunities by reading and learning a lot. Opportunity seeks are able to put situations together and see outcomes before others can. They’re able to think intuitively about what the future could look like. They’re not surprised when the next Amazon or Google appears because they knew it would and they’re ready to be a part of it or better yet design it.
Opportunity seekers build products, companies, and corporations. They don’t wait for something. They go out and look for it. They’re networkers, media watchers, and chance takers. Sure, they can lose big, but they can also win pretty big too.
Opportunity seekers need to be careful with grandiose thinking and need to practice careful planning. They benefit from teams that keep them calm and realistic. They must carefully consider the pros and cons of any business venture before diving in 110%.
12. Minimize Expenses
You need to find a surplus of money. Making more money won’t help, if you’re always spending what you earn. The best answer is to keep your expenses low. Find areas that you can eliminate like unused subscriptions and memberships, wasted electricity, eating out a lot,
Minimizing expenses will maximize the amount of money you have to spend in other areas like investing, a family vacation, or emergencies. Benjamin Franklin once said “Beware of small expenses; a small leak will sink a great ship.” Start telling your money where to go with a budget, instead of wondering where it went at the end of the month.
13. Pay Attention To Your Savings Rate
The average saving rate isn’t necessarily correlated to income. And a pay raise isn’t guaranteed to increase your savings rate. It’s easy to live paycheck to paycheck despite getting a raise when you factor in lifestyle inflation. The average saving rate is around 10%, but why not strive for more.
Your rate of saving is actually more important than your investment return rate. The top 1% of earners save an astonishing 38% on average, while the top 10% save an average of 12%.
14. Invest Early, Invest Often
You can only work so many hours in your lifetime. Maybe 40 hours a week for 75 years max. But your money can work 24/7/365 days a year. It works all the time while you don’t have to. If you want to be rich and be rich quickly, investing in the stock market is one of the quickest ways to do it. Be sure to fund your employer-matched sponsored 401K first and then your Roth IRA.
15. Develop good financial habits
The best way to get ahead is to develop strong financial habits. It’s really not about how much money you make. It’s about how much you keep. Check out these tips to stretch your dollars further:
- Live by your SMART financial goals, but be flexible
- Budget regularly
- Spend less than you make
- Cut out extras that you’re not using like gym memberships, streaming subscriptions, etc.
- Don’t rely on credit card debt
- Have an emergency fund
- Pay yourself first and invest regularly
- Maximize employer matched contributions
- Use cash back and reward programs
- Minimize lifestyle inflation
- Live by the Latte Factor
- Never stop learning
What are the consequences of being rich without wealth?
Well, the biggest problem with being rich and not being wealthy is that you’re really living in a false reality. It may seem like you have a lot of money but you’ll never have enough. Without a solid budget, the more you make, the more you’re likely to spend.
Think about it…you get a raise…what do you want to do? Do you jump to invest or buy a new car? Many people want the new car or clothes that they’ve been putting off for a month or two. For the majority, when they begin making more money, they’re going to spend more. This is called the rat race and it’s hard to get off the hamster wheel once you start. It’s very easy for rich people to end up in a lot of debt because they are constantly needing more money.
Sometimes the rich are forced to work excessive hours for a bonus or to pay off debt. Remember working is nothing more than trading time for dollars. How much is your time worth?
Unfortunately, I don’t have a get rich quick scheme to tell you about. There’s no secret on how to get rich. It’s going to take some degree of time, effort, and focus. No matter how much money you have, if you don’t know what to do with it, you’ll spend it all and end up broke. You can blow through a million dollars pretty quickly just like every other lottery winner who went from nothing to millionaire overnight.
Once you’re rich, you want to stay super rich. Self-made millionaires always start with a sharp mindset. They start investing wisely and saving for retirement early. They work hard and sometimes they don’t. They don’t try to time the market. They reinvest dividends and learn the power of compound-interest.
I’ve talked to you about 10 strategies to build several streams of income that will help you become rich and I’ve talked about ways to keep that money so you never have to worry about money again. It’s up to you what you do with this information. But I hope that you make a sound plan and enjoy the journey to becoming wealthy. Comment below, what are your thoughts about being rich? What are your financial goals to be rich and accumulate wealth?