The formula for getting rich is easy but following it is extremely hard. Successful people do not just know how to get rich but have the guts to follow the formula no matter how hard it gets.
Many people only want to know how to get rich quick and fast. This is the wrong approach. Wealth creation requires patience and perseverance.
Becoming rich is an art but also a science. If you follow the rules of wealth creation, you will certainly make become rich.
There is no magic in how to become rich. You have to follow the process.
If you want to get rich quick, you can only steal, win the lottery, or inherit wealth. However, how many people are lucky enough to inherit millions or win a lottery? Very few. How many people are wicked enough to steal? Many but 99% of them fear the consequences.
We have also seen people win lotteries or inherit millions and waste it all. After several years, they are as broke as they were before they got lucky.
Therefore, to create sustainable wealth needs one to follow the due process. Easy come easy go.
What to expect
If you are asking yourself, the following questions, rest easy because this article will answer them all:
- How can I get rich?
- How can I become rich with no money?
- How can I get rich from nothing?
- How can I get rich at a young age?
However, this article will not answer the following:
- How to get rich fast
- How to get rich with no effort
If you want to get rich by following well-set principles of financial success, continue reading.
How to get rich
Getting rich is easy. You just have to follow these three steps and repeat them over time:
- Make money and more money.
- Spend wisely and save money.
- Invest what you save wisely.
- Repeat the process
It is that easy.
1. Make money
You have to keep making money. After making money, figure out a way of making even more money. Do not be content with what you are making now.
There are 3 classifications of income:
- Earned income. This is the income you work for.
- Portfolio income. This is the income you take time to manage. However, you do not have to work for it. Growth is not dependent on how hard you work.
- Passive income. This is the income that comes to you without working for it. This is the realm of the super-rich.
Learn more about the three classifications of income.
How to get rich is dependent on the classification of income you choose to have. People who depend on earned income struggle financially. Those that depend on passive income find life easy and enjoyable.
There are 7 types of income everyone should have:
- Rental income
- Capital gains
- Interest income
You can learn more about them in the 7 types of income everyone should have.
Make sure you earn as much as possible.
2. Save money
After making money, spend wisely and save the rest. These savings become your investment capital.
Saving for saving sake is not prudent financially. This is what retirement schemes do. You need to invest whatever you save to multiply it.
After saving money, put it in a money-making deal to multiply it.
At this point, you ought to be very careful because you can lose your hard-earned money in minutes. Getting investment intelligence is critical to your investment mission.
How to get rich simplified
In a nutshell, the secret is: make money, protect it, and then multiply it.
Every dollar that comes into your pocket should never leave. If it leaves, let it bring in more dollars. Avoid consuming your hard-earned cash because you will lose it.
When you get money, first invest it and consume the profits. If you consume before investing, you lose it.
As I always say, wealth is transferred during trade. Are you buying or selling? If you are buying without selling, you are in big trouble.
Many people sell their time (Work for a paycheck) to buy products (Consume). This is how they remain poor. To get financial success, you have to buy time (Hire people) and sell products (Produce and trade). Not the other way round.
Is getting rich this easy?
Getting rich is that easy. However, only a few people can follow those simple steps. This is because following them needs commitment, sacrifice, and knowledge.
In the remaining bit of this article, we will spend time looking at how to get rich by following these simple steps.
The nitty-gritty of how to get rich
Let us now see how to create wealth in details. Which principles, rules, and tactics will you follow to become rich? That is what we will look at.
1. Set goals
Creating wealth starts with setting goals and big goals for that matter. Goals are the fuel for all form of discipline.
Your goals should be SMART (Specific, Measurable, Attainable, Realistic, and Time-bound). Make sure your goals are big enough to challenge you.
Divide those goals into small milestones. After setting goals, develop an action plan. This is a guide of the strategies and tactics that you need to follow to reach your financial goals.
2. Start early
Compound interest works financial wonders. When you start early, your money will work hard over time to create more money for you.
If you start following the rules of success in your 20s or even before that, you are guaranteed to get rich. Even if it takes you 15 years to get financial freedom, you will be free at 35. This is still good.
The secret to getting rich is starting today. Start where you are. Do not wait for the wind to be right. Just start with what you have.
3. Produce something
As I said, wealth is transferred during trade. Those who produce become richer while those who consume become poorer.
In as much as we cannot run away from consumption, we can produce more than we consume.
I have over ten published books. These books will continue bringing income all my life. My generations will continue making money from them even after I am dead.
What have you produced? If you have nothing, you might never get rich.
4. Give value
Producing something is easy but producing something that adds value to people’s lives is not easy.
If you need value to come to you, you need to give value to others first. Find a way of helping people solve their problems. They will reward you by bringing money to your bank account.
As you produce, put value first. It is not about producing many things but producing a few things that add value to others. In this age, quality is better than quantity.
Differentiate what you produce from every other product in the market. This is how you can be able to charge a premium and make more profit.
5. Be market-oriented
We are living in an age where the customer is king. The power has shifted to the consumer thanks to intense competition.
You do not create something and then stimulate demand (Production orientation), you observe the demand and produce something to satisfy it (Market orientation).
Customers want what they want. You cannot force them to love what they do not. Therefore, to make sales, you have to be market-oriented at all times.
6. Become a salesperson
After producing, you have to sell to make money. You can produce a product and make nothing from it. In this case, you need to become a salesperson.
The sales function scares many people. This is because it takes GUTS and courage to handle the rejection that comes with it.
However, success in life is tied to sales. You have to do it.
No one becomes financially free just by producing. Everyone becomes wealthy by making sales.
7. Have multiple streams of income (MSIs)
This is the best advice on how to get rich. You need to have multiple streams of income to make it big. It is said that the average millionaire has up to 7 income sources.
Many sources of income will shield you from going broke when one source is not performing well. Sometimes, there are systemic challenges that affect specific industries.
Diversification is a good way to ensure safety even as you work on making, protecting, and multiplying money.
8. Go passive
Even as you develop MSIs, you have to focus on one or two things to become really successful. Therefore, you need many sources of income to be passive.
This means that you do not have to work on them to get money. They should bring money without your input.
These can be investments that need no daily effort. They can also be businesses that are managed by other people on your behalf.
Going passive allows you to focus on one thing. All your effort should be concentrated on that one business.
9. Get financial intelligence
Financial intelligence means having financial knowledge. You can have knowledge in many other areas and still remain poor if you do not have financial knowledge.
You do not need to be an expert in all, you just need to have the basics.
10. Live below your means
This is about avoiding the rat race. Always keep your expenditure low. Spend less than you earn and save the rest for investment purposes.
You need a budget and personal financial policies to get rich. Decide to spend only a certain percentage of your income.
There is the 50:30:20 rule. It says that you need to spend 50% of your income on needs, 30% on wants, and 20% on investment. This is for beginners. You can invest more if you want to get rich quick.
11. Be disciplined
Living below your means takes discipline. After all, everybody out there, including the government, wants you to spend.
With all the juicy advertisement messages, it is easy to be carried into buying everything.
Greed will destroy your financial life. This is why you need to discipline yourself and tame your spending.
12. Dominate the market
This is how to get rich; become better than your competitors. Find a way of becoming the best in your industry.
Jeff Bezos is the richest man in the world because he has dominated the eCommerce space. Bill Gates created a company that dominated the computer market. Warren Buffet is the greatest investor.
This is the secret. Do not just produce; find a way of outdoing your competitors. You only do that by having a clear competitive strategy.
13. Use other people’s money (OPM)
You cannot become rich without OPM. The fastest-growing businesses get outside investment. This investment accelerates growth. This can be in form of debt or equity investment.
The greatest investors use other people’s money to create their wealth. This calls for proper debt management.
14. Use other people’s time (OPT)
As we said, selling time only makes people poor. Buying time, on the other hand, helps people accomplish more in a day.
Do not hesitate to hire people to work for you. However, make sure the financial value they bring is more than the amount you pay them. As they say, a good employee should be free.
15. Do not lose money
Never lose money. Therefore, you have to be very careful when handling your money. Avoid losing money through consumption or during investment.
Observe the following rules:
- Avoid paying more than a commodity is worth.
- Avoid fraudulent deals.
- Invest only in what you understand.
- Never sell an asset at a throwaway price for temporary gains.
- Do not major on assets that depreciate easily.
- The interest on debt should be less than the ROI of your investment.
- Only lend what you are ready to lose.
- Do not buy what you do not need.
If you can protect every cent, and then multiply it, you will surely become financially free. This is how to get rich.
16. Increase Return on Investment (ROI)
ROI is calculated by dividing the returns (Profits) over the capital invested. The higher the ROI, the better.
To increase ROI, you have to either:
- Increase the returns (Find a way of making more profit)
- Decrease the capital invested (Look for cheaper ways of reducing the cost of a project)
A good investor will always come up with ways of handling the two. If the investment is zero, the ROI is infinite.
One way of increasing your returns is by innovating. This involves doing things differently. The purpose here is to differentiate your offering.
With differentiation, you can charge more for your commodity and increase returns. Higher returns mean higher ROI.
18. Take risks
Higher risk means higher rewards. How to get rich has to have an aspect of risk. You get the profits by bearing the risk.
Therefore, do not be afraid of taking risks. However, take on calculated risks. Do not just throw your money at every opportunity.
To reduce risk, you have to learn. A calculated risk is also called an educated risk.
By learning, you can reduce risk significantly. You can also eliminate it altogether.
20. Follow your purpose
Everyone was created to accomplish something on earth. When you understand what you were created to accomplish and then work on it diligently, you cannot be poor.
Purpose is always accompanied by passion. Your passion motivates you to become better every day. It acts as fuel as you work on your dreams.
21. Get known
There are people in life who can change your life within the blink of an eye. Their endorsement can turn your business around. Their small gift can change your financial position for good.
Here, I am talking about your networks. It is not about the people you know but the people who know you. Make an effort of getting known by quality people.
22. Kill what is killing you
Some self-destructive habits kill your financial life. You have to kill them before they kill you. This is self-defense.
Some of these habits include:
- Pleasing people.
- Smoking and excessive alcoholism.
- Pride, arrogance, and excessive ego.
- Emotional weakness.
- Hate and bitterness.
- Not minding your own business.
- Pornography, adultery, and masturbation.
- Low self-esteem.
- Making excuses and blaming others.
- Too much partying, TV, and social media.
If you do not kill these habits, they will kill your financial life. Your financial success is strongly tied to your character.
23. Never give up
Last but not least, you cannot give up if you want to create wealth. The journey to wealth creation is not easy. Therefore, you have to resolve to hold on no matter what happens.
Remember, no one is celebrated for starting. You are only rewarded for what you finish. This is how to get rich. If you quit, all the effort is lost.
Final thoughts on how to get rich
I have nothing else to add. This article has extensively covered how to get rich. It is now your responsibility to implement the lessons herein to become rich.
Remember, getting rich gives you more options and make your life more comfortable. No one can be truly happy when struggling financially.
Make a move today. Change your life for good. All the best.