How To Become Rich

Tweet

Let me be clear. I am not a millionaire. Let me just also state, for the record, that if I WAS a millionaire, I would not tell you that. Because, whether or not I have acquired enough wealth to make that claim is irrelevant. As many of you who know me here are well aware, I am always trying to help people understand concepts of money. How to earn as much as you can in whatever your primary source of income happens to be, how to stretch each dollar you earn so you can invest and save the dollars you do not need to spend, how you can create multiple streams of income, and how you can save and invest what you earn from those multiple streams of income to not only preserve the money earned, but earn more money on it. I am a guy who has firmly believed from day one that how much money you earn has very little to do with how much money you will ultimately have. But that does not dispel the reality that obviously if you earn a lot, and know what to do with it, you can potentially have quite a lot more money than someone who has no idea what to do with it. I have also often cited the phrase time is money. And while I have no rights to the phrase, I believe in it being true. Trying to save time and ultimately spending more will be detrimental overall to your ability to accumulate wealth. And as a result you will spend more time working to fill the gap. Many people in my category are referred to as cheap. I have always preferred the word frugal. But there is another word I like to use as well. And that word is calculated. I believe that part of the secret to any wealth I may have been able to achieve is simple calculation. I am constantly shopping for the best price, and I know what the best price is on whatever I buy. Especially the staples. When I buy anything I buy with a credit card that pays me cash back, and instead of spending the cash back I invest it. Shopping for the best price also means I shop at multiple stores, and time my shopping according to what I need so I can space out my trips. I stock up on those best priced items so that I can have enough supply until the next time I shop at whatever store so I am not forced to pay a higher price. I keep an eye on gas prices when I am driving around, and if I find a gas price that is "cheap" compared to others, even if I do not need gas, I will pump the gas to take advantage of the price break. And as for money in general? I am constantly shopping my money around to earn as much ON my money as I possibly can. Money gets moved into higher dividends or higher interest rates constantly so that every dollar is maximized, and so are the earnings from each of those dollars. Profits from anything are almost always reinvested in some way or another. I am not so much interested in the money earned up front as much as I am interested in WHAT the money earned up front will earn me tomorrow, and what I can do with it. Another concept of mine; save the principal, spend the proceeds. I shop thrift stores. I save aluminum cans. I use discounts and coupons wherever they are practical. I take advantage of rebate incentives often such as Menards offers, and still only buy items for the rebates that I would already have bought, AND I only use the rebates for things I buy already as well. On the Mendards things, let me give you a quick example of how much this kind of effort helps the bottom line. They offer an 11% rebate. I already know my prices so I ONLY buy things I would have otherwise bought, and IF I am buying these items they are the best price. I save 11% right off the bat. I use my cash back rewards credit card and receive another 1%. Now, here's something more. The other day I went into Menards and had over $50 in rebate checks to use. I bought $38 worth of items. I received the 11%, used the rebate check and paid nothing out of pocket, and received ANOTHER rebate for 11% of the $38. At some point it is almost like Menards is paying ME to shop there. It is a strange concept for a lot of people, that not saving money means you sacrifice more than if you don't. And it is a concept I have been trying desperately to instill into people's minds for years. Most people think of money in terms of its face value. I say, think of it in terms of its intrinsic value. In other words, what is the money actually worth over time, and on the back end, and based on what the money itself, the principal, can earn. I think when we reach a point where we spend right, invest wisely, and find any way we can to stretch dollars and let our money work for us, we get closer to a place where earned income from W-2 wages becomes less important, and becomse less a part of our total income... And we get to live more. We get to work less. And, as funny as it may sound. WE GET TO SPEND MORE. I will leave you with one final note in this discussion that I think a LOT of peole need to understand and wrap their heads around. And that is, most people who are rich did not just happen to become that way through some stroke of luck. I think when we do not understand this, it does all of us a disservice in even trying to accumulate any sort of wealth. 78% of all of the millionaires in the United States are self-made. That is, they did not inherit their wealth, they EARNED IT. They earned it through having multiple streams of income, being frugal, and investing wisely. On average, most self-made millionaires took 32 years to get to their first million. One other interesting fact? Many of these self-made millionaires did not even own their own businesses. A vast majority of them were simple people who were frugal and saved and invested. If nothing else, it makes it very telling that many of the rich are not lucky. They did not have rich uncles that left them untold amounts of money. They were simply people, just like you and me, working 9 to 5 jobs, and working hard. If THEY achieved wealth over their peers, it was because they were simply calculated in areas where their peers who did not achieve the wealth were not. If you can understand and accept the idea that wealth is not attained, it is earned, it can change a lot about how you think about money, and it can vastly change your financial outcome in the end as well. The more money you have, the more money you make. The more you spend, the more you need to make. Even for those who say, "It's only 10 cents more, what do I care?" What they do not realize is that 10 cents is only the face value. Not the intrinsic value. And saving even 10 cents today might be 20 cents in 8 years, 40 cents in 16 years, and 80 cents in 24 years. 80 cents is not a lot of money. But when you start to add up all of the times, and all of the items you spend the extra 10 cents? It really starts to add up to some real dollars. If you are not willing to worry about the 10 cents, don't bother worrying about the dollars, because you have already lost the game, and you have already lost the opportunity. People who accumulate wealth worry about the value of every penny. Those who never achieve wealth could care less about the penny. How do you become rich? You simply have to be calculated, determined, and have the attitude that those who become rich have, and continue to have even when they BECOME rich. And even when you achieve it, you will probably never lose it because the attitude doesn't change the wealthier you get. You simply get to spend frugally MORE today than you did yesterday.