how to become a wealthy

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how to become a wealthy

Learn How to Become Rich Truths That Can Help Set You on the Path to Financial Freedom

Table of Contents

  • Change the Way You Think of Money
  • The Power of Small Amounts
  • Buying Your Freedom
  • Building Wealth Takes Time
  • Consider Becoming an Owner
  • Study Success Stories
  • More Money Isn’t the Answer
  • Avoid Your Parents’ Bad Decisions
  • Pay Off Debt, Save and Invest
How to manage your money illustration

Building wealth can be one of the most exciting and rewarding undertakings in a person’s life. Aside from providing a more comfortable day-to-day experience, substantial net worth can reduce stress and anxiety by freeing you from worry about putting food on the table or being able to pay your bills.1

For some, that alone is enough motivation to start the financial journey. For others, it’s more like a game, and their passion for wealth building begins with their first dividend check from a stock they own, interest deposit from a bond they acquired, or rent check from a tenant living in their property.

While there are countless articles dedicated to individual techniques and strategies for building wealth and becoming rich, the advice here focuses more broadly on the philosophy behind how to become wealthy. Considering these points can help you better understand the nature of the challenge you face, as you set to the task of accumulating surplus capital.

Change the Way You Think About Money
One reason that many people never accumulate a substantial nest egg is that they don’t understand money or how it works. This is, in part, one of the reasons that the children and grandchildren of the wealthy have a so-called “glass floor” beneath them. Just by way of which family they’re born into, they receive knowledge and networks that allow them to make better long-term decisions—often without fully realizing how they’re benefiting.

No matter the household you grew up in, the key is to push to move past selling your labor (work) to making your money work for you. Each dollar you save is like an employee. The goal is to make your “employees” work hard, and, eventually, they will start making their own money. When you have become truly successful, you no longer have to sell your labor, and you can live off of the labor of your assets.

Make it a goal to create or acquire cash-generating assets that will produce more and more funds every day—which you can then redeploy into other investments.

Understand the Power of Small Amounts
One of the mistakes most people make when trying to figure out how to get wealthy is that they think they have to start with an army of funds. They suffer from the “not enough” mentality: “I don’t have enough money to invest.” They believe if they aren’t making $1,000 or $5,000 investments at a time, they will never become rich. However, armies are built one soldier at a time—so too for your financial arsenal.

You don’t necessarily need to become frugal, but small funds can eventually become millions of dollars, as long as you see the potential and start saving.2

With Each Dollar You Save, You Are Buying Yourself Freedom
Money can work for you, and the more of it you employ, the faster and larger it can grow. Along with more money comes more freedom—the freedom to stay home with your kids, to retire and travel around the world, to quit your job. If you have any source of income, you can start building wealth today. It may only be $5 or $10 at a time, but each of those investments is a stone in the foundation of your financial freedom. Once financially independent, you’re no longer tied to a job or employer; you’re free to do what you want because you’re creating your own income.

Building Wealth Takes Time
Some people are reluctant to make a wealth-building plan because they don’t want to wait 10 years to be rich. They would rather enjoy their money now. The folly with this type of thinking is that most of us are going to be alive in 10 years. The question is whether or not you will be better off 10 years from now than you are today. Where you are right now is the sum total of the decisions you have made in the past. Why not apply that mindset to decisions you can take now to yourself up for success in the future? Your life reflects how you spend your time and money.

Consider Becoming an Owner
One of the big intellectual and emotional hangups people seem to have when they aren’t exposed to wealth is making the connection between productive assets and their everyday life. An investor understands, on a visceral level, that if they own shares of a company such as liquor and beer manufacturer Diageo, and someone around them takes a sip of Johnnie Walker or Guinness, a portion of the money they paid for the drink will make its way back to them in the form of a dividend. With just a single share in Disney, an investor can watch guests stream into Disneyland, knowing that they enjoy their share of any profits generated from the theme park.

One of the strategies of the wealthy is to use their income to acquire productive assets their friends, family members, colleagues, and fellow citizens partake in. They make money (albeit, indirectly) every time you take a bite out of a Reese’s Peanut Butter Cup, drink a Coca-Cola, or order a Big Mac. If you’ve ever taken out a student loan or borrowed money to buy a house from a bank like Wells Fargo, you’ve sent Wells Fargo investors real cash.

If you don’t know where to start with investing, make it a financial priority to acquire ownership of productive assets early in life. Make a conscious, informed decision about how to put every dollar to work, and the miracle of compounding interest will do the heavy lifting.

Study Success and Those Who Have Achieved It
In societies such as the United States—where for centuries, fewer and fewer millionaires and billionaires are first-generation or self-made—building wealth is often the by-product of behavioral patterns that are conducive to building wealth. Replicate the behavior and net worth tends to accumulate.

Look for financial lessons not only in real-life examples, but in literature, film, TV, and other stories. These financial parables will help you understand the sometimes-complicated nature of investing for long-term gains.

You’ll find that by investing in yourself first, the money will begin to flow into your life. Success and wealth beget success and wealth. You have to purchase your way into that cycle, and you do so by building your financial army one soldier at a time and putting each dollar to work for you.

Realize That More Money Isn’t the Answer
More money is not going to solve all your problems. Money is a magnifying glass; it will accelerate and bring to light your true spending habits. If you are not capable of properly budgeting a $25,000 salary, bumping your pay up to six figures won’t solve the problem. You may be surprised to learn that nearly 1 out of 5 people earning $100,000 a year live from paycheck to paycheck, and they don’t understand why it is happening.3 The problem isn’t the size of their checks, it is the spending habits they have built up over the years.

Unless Your Parents Were Wealthy, Don’t Do What They Did
If your parents were self-made millionaires, obviously your best bet is to duplicate their financial habits. Otherwise, begin building spending and saving patterns that will support the life you hope to live.

Pay Off Debt, Save and Invest
To achieve financial freedom and success, which your family may or may not have had, you have to do two things. First, make a firm commitment to pay off any debt you have.4 Identify which debts should be paid off before you invest and tackle those debts first. Second, make saving and investing the highest financial priority in your life (one technique is to pay yourself first).

Properly invested in interest-bearing savings accounts and stocks, these funds can generate passive income, which is a key component of how to get rich.

With passive income, you can create cash flow without even having to get out of bed in the morning. Learn about the different types of passive income so you can start to build your net worth beyond what’s possible with a 40-hour workweek.

The Bottom Line: Don’t Worry
The miracle of life is that it doesn’t matter so much where you are, it matters where you are going. Once you have chosen to take control back of your life by building up your net worth, don’t give a second thought to the “what ifs.” Every moment that goes by, you are growing closer and closer to your ultimate goal—control and freedom.

Every dollar that passes through your hands is a seed planted for your financial future. The day will come when you make your last payment on your car, your house, or whatever else it is you owe. Until then, enjoy the process.

how to become rich from poor background

How to Go from Poor to Rich in a Year

How to go from poor to rich in a year; is it possible? In this post, I will share the 7 steps I have used to develop the mindset for financial success.

Wondering how you can accumulate wealth and become rich? Well, you aren’t alone. Many of us dream about becoming the next Bill Gates or Elon Musk; however, accomplishing that level of success is not easy. But it’s not impossible either.

In reality anyone can become rich. Although getting there takes a combination of courage, knowledge, effort, skillful decision making, and a little bit of perseverance.

There’s no one surefire way to make you wealthy overnight, but there are some proven ways that can help you build wealth in the long-term.

How to go from Poor to Rich in a Year (Pinterest Image). Smiling woman holding an iPad.
In my post how to become wealthy in 5 years, I explain why you should focus on becoming wealthy instead of rich.

In this post, I’ll be sharing with you the right steps to set yourself on a path that leads to financial freedom and sustainable wealth.

Let’s get started. Here’s how to go from poor to rich in a year:

  1. Commit to Becoming Rich
    I hate to break it to you, but the desire to become rich without committing to it is certainly not going to work. You need to stop treating getting rich as a hobby and be prepared to make hard decisions.

Once you start following this path, you have to fully devote to your plan and believe that you can do it; because it’s possible and you deserve success.

There’s no room for giving up or failure. You should be ready to give whatever it takes for as long as it takes to achieve wealth.

  1. Financial Education
    Man reading a financial education magazine. The page has a picture of Richard Branson (right side) and the title “The entrepreneurs guide to success & business growth”
    Investing in your financial education is a fundamental step towards building wealth. You don’t need to go to college or spend a fortune to learn about money.

There’s no standard program to teach you about personal finance, but there a few great ways to go about it.

I’d recommend you take the time to read personal finance books & resources. Here are a few recommendations:

5 Minute Millionaire Mentor
The Total Money Makeover by Dave Ramsey
I Will Teach You To Be Rich
These are handy books to kick start your learning journey. There are also great online courses and podcasts to listen to and improve your financial literacy in regard to basic topics like budgeting, debt, saving, and investing.

Don’t just follow one resource or finance expert. The best way to learn is to take in enough information so that you can form your own opinion.

The author of the book Rich Dad, Poor Dad — Robert Kiyosaki, says there are 3 sides to a coin; not the 2 sides as many people know (the edge of the coin represents the third side).

Instead of simply sticking to advice from one teacher or expert, a smart person will stand on the edge of the coin to see what the other side has to offer.

  1. Cut back unnecessary expenses and live frugally

Adopting a more frugal life is something I recommend. Frugality means being economical with your money and avoiding lavish or unnecessary spending.

Start by accounting for every dollar you spend each day simply by setting a budget. It helps if you stay within your spending limits. Being disciplined can prevent you from making impulse purchases when you go out shopping.

If you are having trouble tracking your daily expenditure, take advantage of expense tracker apps. Another practical option is to use Excel spreadsheets.

The video below is full of great tips to help you start living frugally.

At the end of the day, you can review your spending and see what doesn’t make sense. Here are a few more tips to reduce your expenses:

Cut back on lifestyle expenses

Let’s assume you’re the type of person who enjoys going out for food and drinks most days of the week.

It’s a good idea to start cooking more at your home. This change can help you to avoid the high prices of eating out at restaurants.

By eating more at home, you can help to cut your monthly expenses by an average of $200. That’s a saving of $2,400 in a year!

Suggested Read: How to drastically cut household expenses

Lower your energy bills

There are several ways to save on your utility bills. For example, you can install a smart meter, energy-efficient bulbs, and insulating your home if you haven’t done it already.

A smart home meter can help you make better energy choices and control your bills. It gives you accurate real-time information on your overall energy consumption.

Since the device can be programmed to shut off when not needed, it can prevent your electrical appliances from running and wasting energy.

Insulating your home can prevent the loss of heat through walls, roofs, windows, floors, and doors. With proper insulation, it becomes easier to meet the heating and cooling needs without your system running longer.

Avoid expensive premium brands

As a consumer, you have some lower-cost brands out there offering quality products that can meet and even exceed your expectations. Keep in mind expensive products do not always translate to ultimate superior quality.

Don’t be afraid to try out the slightly cheaper brand and compare your satisfaction. You’re likely to notice no significant difference except in your savings.

Suggested Reads:

How to live super frugally and happy
Grocery shopping on a budget for one person

  1. Clear any debts first
    Debt can get in your way of getting rich, especially if you have different loans with high-interest rates. Debt simply borrows from your future income. And, it may encourage you to keep on spending more than you can afford.

If your debt doesn’t have future value, then that’s considered a bad debt. And the best thing to do is to pay it off.

A good example of bad debt you should clear first is credit card debt. Credit card debt has a stronger risk on your finances because it compounds way faster than your best investments ever could.

In other words, you’re likely to have a debt load that outweighs your earning capacity and ability to pay it off.

Getting out of debt may seem easier said than done if your finances are already stretched.

The good news is that there are practical ways to reduce your expensive debts. First of all, the money you save from becoming more frugal, can be used to pay down your debt.

Secondly, you can always look into debt consolidation or debt refinancing.

With the debt consolidation option, you can turn your expensive student loans, credit card debt, and personal loans into a single manageable debt.

Debt refinancing involves taking out a loan with more favorable terms and conditions to replace your existing expensive debt.

This can save you a significant amount of money on interest rates. You can use your savings to make more than the minimum payment so that you pay down the debt sooner.

Remember, I’m not a financial advisor. I’m just sharing what I would do. When it comes to debt, its always best to seek professional financial advice from an expert.

When you become debt-free, you’ll instantly feel like a weight has been lifted from your shoulders. It’s now time to make some money.

Watch the video below for more tips on how to pay off debt fast.

  1. Treat your money like a rich person
    Mega-successful people have a financial growth mindset. They focus on spending money on profitable opportunities.

Wealthy people are more open to exploring new ideas because they believe there’s always more money to be generated. Also, they are not easily carried away by instant gratification.

I’d like to make a simple suggestion. Be frugal on purchases that depreciate in value or don’t produce income. Buy assets and avoid or reduce liabilities.

For example, spend frugally on things like cars, home appliances, entertainment items, computers, smartphones, and clothes depreciate quite rapidly.

I’m not going to tell you to avoid these things entirely, but it pays off when you practice conscious spending. The rich wouldn’t stay rich if they always spend mindlessly.

Learn to take full control of your finances. As I mentioned earlier in this post, you need to prepare a budget and pay attention to your spending so you know where your money goes.

Automating your finances can take away the stress of managing your money effectively without leaving anything out. When you receive your paycheck, the money is sent to where it is supposed to.

Your bills will be paid on time and money put away in your savings account without you even lifting a finger. Also, you’ll know if you have some income left over to spend guilt-free.

You can always tweak the automated system to work best for you.

Here a are a few example of how automating your money works:

Contribute 10% of salary to your 401k and Roth IRA plan.
Save 5% of salary for things like wedding, vacation, and down payment on a house
Use 50%-60% of salary to pay regular and miscellaneous bills (rent, utilities, debt, gym, Netflix, etc.)
Spend 20%-35% of salary on what makes you happy guilt-free
Suggest Read: How to start saving money when you have none

  1. Invest your money
    Woman looking at her personal finances on her laptop and phone.
    That’s right, it’s time to invest your money. Investing is a smart way to grow your finances and get rich.

It’s important to remember that investments do involve some kind of risk. Therefore, you have to choose your investments wisely. One bad investment mistake can be very costly.

Below are a few great suggestions you may want to consider.

Invest in stocks, shares and mutual funds

When you invest in stocks, you become a shareholder of a corporation. You’re entitled to be part of the earnings and assets of that corporation. As a shareholder, you can make money through dividend payment or by selling your shares.

Investing in stocks can help you build wealth if you make steady investments over a long period.

The average annual return is estimated to be 7%. This means your initial investment in the stock market will double ten years.

It’s good to keep in mind stocks can go either way. So before buying your first stock and putting it on autopilot, at least make sure you’ve mastered the fundamentals of stock investing.

Stocks carry more risk than mutual funds. With mutual funds, you can diversify your assets.

It can consist of a mix of stocks and bonds or 100% stocks that are not entirely of one corporation.

If the unthinkable happens and stock prices decline significantly, you won’t be hit hard like you would if you only invested in individual stocks.

Invest in real estate

In my humble opinion real estate is one of the safest investments to accumulate wealth.

However, it typically requires high initial capital that you may not be able to raise as for now.

If you already have enough money saved, don’t waste more time. Research the best areas where to put your investment.

Whether you’re buying, developing, or selling real estate properties, the rewards are certainly encouraging.

Invest in businesses

Business is a broad subject. While there are hundreds of business options, it’s advisable to invest money in a business centered on your skills, hobbies, interests, and talents to increase your chances of success.

Put simply, you should focus on a type of business you would love spending time on even when things aren’t as swift as you anticipated.

Suggested Reads:

Investments that will make you money a monthly income
Things to buy that will make you money
21+ Passive Income Ideas

  1. Build multiple streams of income
    Diversifying sources of income should be part of your get-rich plan. You don’t necessarily need to quit your job to start a business. And without further ado, let me show you how to go about it.

Start a blog

It easy to create a blog and you can work from anywhere. Just like most methods, a blog won’t make you rich fast. However, a blog is a great way of creating a new stream of income.

It takes time to reap the benefits, but in my opinion, its worth it!

When starting a blog, I’d recommend venturing into something you’re passionate about. For example, if you love cooking food, you could start a food blog to share different recipes with people.

To earn money from your blog, you’ll need to monetize it. You can do affiliate marketing, email marketing, securing sponsorship, selling eBooks and online courses, etc.

Suggested Reads:

How to become a rich blogger
How to start a new blog
7 ways you can make money blogging on Squarespace
Affiliate marketing

I picked out affiliate marketing because it’s my favorite way to earn extra money online. It’s arguably the easiest and effective option.

Basically, you promote someone else’s products through your blog or website. For example, you could do product reviews for potential customers. If the buyer makes a purchase, you get a commission.

The beauty of affiliate marketing is that most of the programs are free to join. And with so many companies offering different types of products to choose from, it’s easy to find something you’re passionate about.

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