What People Do to Get Rich
The word "rich" is a relative term. To some, it can mean just having enough to eat, but to others it can mean possessing millions of dollars.
How the average person gains wealth is often a matter of how much he is willing to risk and/or sacrifice to do so.
Everybody thinks that improving their financial status is hard to do, but it isn't once you learn how to get your hands on money and then figure out how to make itwork for you.
The nine methods people use to do gain wealth are to
- take risks,
- save and invest,
- reduce taxes,
- eliminate debt,
- understand needs and wants and
- develop a special talent or skill.
Those who do best in life combine several of these methods rather than just depending on one of them.
Unfortunately, we live in a society that encourages instant gratification. Thus properly using the money we take in can be difficult.
For some, it is impossible.
The way most people earn is through working, but how much they take in depends largely on the marketability of their skills.
This is why training and education are so important.
The formula is quite simple. The more you know the more you are likely to be able to find a job that pays well and a company that wants to employ you.
If you can't find one that pays well and you want to get a head in life, you may either have to
- improve your value as a worker or
- work on several jobs at the same time.
Both are time consuming, but the first is a better choice because it is a permanent solution to your problem.
This is because once you have improved your value you will never have to work a second job again and will also open up more opportunities for yourself.
Some people don't have to earn money because they inherit it.
This sounds ideal, but the danger is that if they don't learn how to manage their wealth, they can lose it.
For this reason they need to make sure that they, or someone they employ, knows how to manage their wealth for them.
Some of the wealthiest and most famous people in the world have lost everything specifically because they did not understand the simple fact that you cannot wantonly spend and still expect to keep what you have.
One of the easiest ways to improve your finances is to marry somebody who already is wealthy.
Many people marry for money, and some even end up having great lives as a result.
Others find that while they have a better quality of life in terms of riches, their daily lives aren't as good as they thought they might be.
Much depends on one's value system, but those who are smart, attractive and alluring have been known to live very well without having to do much other than find a mate who thinks marrying them will make him or her happy.
Take Financial Risks
Another way people gain wealth is to take financial risks.
They do this by either
- trusting the knowledge of others or
- making risky investments.
However, these are not the best ways to grow wealth because risk is a double-edged sword. If it does not work out, people can lose just as much as they might gain.
Even when things do work out, they have to find ways to hang onto their newfound wealth, which is not always easy to do because risk takers rarely stop with one success.
One of the best books I've ever read about growing wealth is called "Rich Dad, Poor Dad". It was written by a man who learned early in life that rich people have different mind sets than poor ones. He took this philosophy and used it to build a massive fortune for himself.
The book is a great read, and is full of good information that can help people see how they can use the money they have to gain wealth fairly easily. It's a definite "must read".
Unfortunately, we live in a world where people tend to want instant gratification. This is a problem for people who want to get ahead in life because they have to decide whether it is more important to
- have what they want now and continually spend to get it or
- sacrifice the present so that they will have both money and gratification at some future date.
Those who continually spend never achieve wealth, but those who live within their means can use extra dollars to build nest eggs for themselves that can grow into real wealth over time.
Doing this requires a great deal of sacrifice, but it also allows people to have their money start working for them so that they eventually have two or more sources of income instead of just one.
Saving as little as a dollar a day adds up to $365 dollars a year, $3650 over ten years and $7300 over twenty. When this money starts earning, the interest compounds and these figures rise significantly.
This is how wealth building begins.
Learn How to Make Your Money Work For You
Save and Invest
Saving and investing those extra dollars takes time and a willingness to allow money to grow through a process called compounding, but doing this is the only way people can become wealthy.
The longer you avoid the temptation of spending the money, the more it earns for you and the more secure your life becomes.
Compounding is the basic vehicle by which money grows when you either save or invest it. Here’s a simple example that shows how it works:
- Let’s say you put $10 per month into a savings account that is earning 5% annually.
- At the end of the first year, you have saved $120 dollars, and your money has earned $6 in interest. You now have $126.
- If you use the same strategy the second year, you’ll have $258.30 because you have doubled your investment and added the interest on it for the two years.
- If you continue doing this for ten years, you’ll have saved $1585, $385 dollars of which will be from interest.
The chart shows you the details, but the point is that for only saving $10 per month over ten years, you can earn $385!
This is money that was earned via your investment, not your sweat.
Clearly, the more you invest, the more you will earn, and the higher the interest rate you are able to negotiate the more money you will make.
This, of course, is a simplified chart due to the fact that you will have to pay taxes on the money you earn by investing it in this way.
Taxes can take away some of your financial gains, but the good news is that if you don’t want to pay taxes, there are investment vehicles you can use that will allow you to defer or even avoid paying them completely.
By using them, you allow your money to grow tax free for many years.
For example, you can place money into a Certificate Deposit that you will be able to borrow against if an emergency arises, but will grow tax free until you cash it in.
The trick is to learn enough to grow wealth while at the same time protecting your principle.
It’s always best to make sure you get the return of your money instead of just trying to get a return on your money.
Always Make Getting the Return of Your Original Investment Your First Priority.
Borrowing money is a trap that can plague you for life and may even ruin you.
When you start borrowing it means you are living beyond your means.
The more you borrow, the deeper is the financial hole you dig for yourself due to the fact that the interest you pay on your loans will be so high.
- if you have debt you need to eliminate it.
- If you don't have debt, you need to avoid creating any.
Understand Needs and Wants
Everybody knows that you have to spend money in order to be able to live. However, the methods you use for doing so can have a major impact on how well you will be able to increase your wealth.
If you learn the difference between wants and needs, it’s easy to determine the best uses for your money.
- Needs are things you must have in order to survive.
- Wants are things you would like to have but are not requirements for survival.
It takes relatively little money to take care of your basic needs, so you should focus on them if you want to get ahead in life.
By sacrificing the present in order to have a better future, you can grow your finances to a point where you will eventually be able to fulfill your wants, but it takes self discipline and time to get to that point.
Using a “stupid phone” today translates into being able to own any type of smart phone you want to have in the future!
Develop a Special Talent or Skill
Some people are fortunate enough to be able to develop a special talent or skill that they may have been born with or that they have worked hard to improve.
You see them all the time because they are the entertainers, popular sports stars and high end business people.
Although the average person never sees it, most of these people sacrifice a great deal to get to the point where they achieve great wealth because competition is fierce.
Furthermore, earning is only one part of the equation because they also need to know how to manage their money.
The rewards of people who achieve on this level are great, but the problems can be brutal.
Often they overcome the wealthy and negatively impact their lives. Thus, although they may be rich, they may lead sad, lonely lives.
Focus on the Bottom Line
There isn’t a person in this world who wouldn’t want to have a beautiful home, a nice car and enough money to be able to take great vacations, but those things cost money.
- If you borrow to get them, you'll never own them.
- If you invest and save as you go along, you can buy all of them for cash one day.
It takes time to build wealth. If you try to take shortcuts, you’ll never have it.
This means you’ll also never have the security and peace of mind that go along with it.
Learning what you need to know about money and then acting on the insights you gain from doing so is the only way to find peace and security in this hard life we live.
It’s never too late to start learning how to grow your wealth.
Do you see the wisdom of saving and investing?
© 2016 Dreamworker