How do people get rich? This is something that I’ve been researching ever since I was a freshman in college. I’ve always been interested in learning from others on how do people get rich.
I was reading Free Money Finance the other day and was enamored with one of the interesting articles that discussed the most important factors making people wealthy. FMF presented results from a book that showed how a group of individuals made money in life and eventually became what is considered, “wealthy.”
How do people get rich? We all talk about how we want to make lots of money in the future but do we really know how to get there? Why not follow what others did? The findings come directly from individuals that got wealthy in life and took some time to reflect on their success.
Of course you don’t have to listen to a 20-something behind a computer screen but I hope you take the results of real life millionaires seriously.
The top 2 reasons the people felt they got rich/wealthy in life:
Wait a minute. So you actually have to save money to accumulate wealth? This shows that getting rich is not a slow process. It is a process that involves spending less than you earn for as long as you live. Are you willing to ditch the credit card and spend less than you earn? If so then slowly but surely you will begin to accumulate money in your bank account. As time goes on, and with compound interest on your side, your small weekly savings will end up a nice large sum. You could argue that this is boring and slow but I would rather know that I’m on the right track as opposed to gambling with my hard earned savings.
This doesn’t include chasing momentum or constantly seeking the next hot stock. It involves investing your money into investment vehicles that you understand and trust. It doesn’t matter if you invest in stocks, mutual bonds, bonds, CDs, or a online savings account, as long as compound interest is on your side (and the market doesn’t completely crash) your savings will grow.
Before you can begin investing, make sure you have found a debt elimination plan to get rid of all of your debt.
At the bottom of this list of factors influencing how everyone got wealthy, guess what was there? The two least common methods of getting rich over time:
I wrote about this in my post on how to get rich quick. If you plan on taking it easy until you inherit money you will be in for a surprise. After all of the time has gone by and once you figure out what you were left behind with, you will still have to pay all of the relevant taxes. Once that is all complete you will realize you are far from rich. If you do plan on inheriting some decent money don’t let it be your saving grace. The money will help you with your savings goals but it will usually not provide you with financial independence.
Starting a successful business
Okay I’m surprised about this one. I know that many small business and new business ventures fail but I still thought starting a successful business was a more critical factor influencing the accumulation of wealth.
I’m guessing the keyword here is “successful.” We can all start a business and make some money from it but we will experience varying levels of prosperity. This probably also includes individuals that have lost money as the result of a new business venture. With that being said, I still strongly believe that college student should consider starting a side business.
Other factors on getting wealthy that made the list (top to bottom): a high paying job, an advanced degree, buying a first home, and getting married.
What is your take on these various wealth accumulation strategies? Are you working on any of them? Would you like to improve on any areas? Please do share with us!