Stop Wasting Time and Start Getting Rich
By Samantha Chang
If getting rich were as simple as reading a how-to article, we would all be billionaires. But the fact is, there are only a few guaranteed paths to wealth: You can win the lottery, inherit money, marry into it or become a superstar athlete or entertainer.
Unfortunately, many of these options aren’t available to us, either by choice or circumstance. For instance, most of us aren’t in line to inherit millions or become the next Tiger Woods. But there are several things we can each do to set ourselves on the path to riches. These steps—while hardly sexy—can deliver solid results over the long term.
Set a budget
It doesn’t matter how much money you have because if you don’t budget properly, you can quickly find yourself in the poorhouse. Think of all those lottery winners you’ve read about who won millions, only to find themselves broke within five years. Ditto with high-profile entertainers, who earn unimaginable sums of money but fritter it all away in record time. Do you remember ’80s superstar MC Hammer? He reportedly made $40 million in a single year at the height of his success, but wound up filing for bankruptcy shortly afterward. Same with Grammy-winning songstress Toni Braxton and a slew of other famous people. So the moral is, anyone can become poor by failing to save and spending more than they earn.
Save your money
A critical step to getting rich is to pay yourself first. If possible, automatically have a portion of your paycheck go into a savings account. Try to store away at least 10% of your income every year. While this doesn’t seem like much, over 10, 20 or 30 years, your savings can really grow, especially with interest.
One thing that may surprise you is that the wealthy spend a lot of time thinking up ways to minimize, defer or avoid taxes since the more money you make, the more taxes you pay. But tax-reduction strategies are something everyone should consider.
Invest in employer-sponsored retirement plans
You’ve probably heard people say that not investing in a company-sponsored retirement program is like throwing money out the window. Well, they’re right. Anytime someone matches your contribution, you’re earning extra money. So if you are able to, maximize your 401(k) contributions since that’ll increase your employer donations. In addition, doing this also reduces your taxable income and allows your money to grow tax-deferred.
Make smart investment decisions
If you know what you’re doing, investing in stocks, bonds or other financial vehicles are a good way to build or increase wealth. Unfortunately, since most of us aren’t investment bankers (and even they don’t bat 1,000), many of us don’t know enough to invest in individual securities ourselves. But if investing is something you’d really like to do, you might want to consult a financial advisor or planner. Many can offer a free consultation and may be able to point you in the right direction.
Supplement your income
Another way to riches is obviously to make more money. There are several ways to do this: You can consider launching a home-based business, which’ll enable you to take advantage of tax breaks you’re not entitled to as an employee, or you can try freelancing on the side if this is an option in your field. An extra $500 a month, for example, could make a huge difference in your overall income if you invest it wisely.
Consider investing in real estate
Real estate has given birth to many millionaires. If you can swing it, you should try to own your own home instead of renting, since you can get use out of your property now by living in it and then sell it at a profit down the line.
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