When I first started learning about personal finance, it was because I wanted to pay off my debt and eventually have more money. I never thought for once that I could become rich. I thought that millionaires were just privileged people who made a boatload of money like CEOs, successful lawyers, and celebrities. No matter your status you can do things that will make you wealthy.
Certainly, everyday blue collar people like myself could never reach such a level of wealth. Then I started reading books like The Millionaire Next Door and realized that most wealthy people are self-made meaning they didn’t inherit their wealth.
I also realized that the people who I thought were rich really weren’t. The truth is, if you want to become wealthy, you have to change your thinking and your habits. Check out these key 5 things that will make you wealthy (guaranteed) and you might be surprised.
1. Start Using a Budget
Of course, the good old ‘b’ word. Most people don’t feel like budgeting is that exciting, and that’s because it isn’t. A budget is just a spending plan for your money. You take your income and decide what you’ll spend during the money using your budget.
You can also dedicate categories to saving money so you can be prepared for lump sum or unexpected expenses as they arise. I like budgeting because it allows me to tell my money where to go and not the other way around.
If you just spend whatever you have and don’t track expenses or budget, managing money can be more stressful and it will take longer to meet goals. Some people assume things about their financial situation and that’s what throws them off track.
Thinking ‘I spend $350 on groceries each month’ when you really spend $550 is not realistic and can be debunked with a proper budget. You may think you don’t have enough to save but if you organize your expenses and map everything out with a budget, you’ll likely find leaks and places where you could save a little money.
2. Get Out of Debt
Once you have a realistic budget in place, you can use it as a tool to help you pay off debt. Debt is a financial burden that no one wants to carry. It changes our entire economy down and can hold you back from living the life you want to live.
I see people waiting to get married, millennials holding off homeownership, adults living at home with parents longer and others not even getting a chance to go to the doctor all because of debt.
Debt will invade and take over your life if you let it, so it’s best to create a plan of attack to get it paid off ASAP. When you look at truly wealthy people, they don’t have debt. You can’t really carry a ton of debt if you want to be wealthy because your net worth is assets – debt/liabilities.
Paying off debt frees up so much money in your budget so you can focus on saving, building wealth, and spending on your values. To pay off debt, you need to start budgeting for extra payments. You may also need to focus on earning more, spending less, and making some sacrifices in order to pay everything off.
3. Live on Less Than What You Make
Wealthy people always live on less than what they make – even before they became wealthy. This almost ensures that you’ll have enough to save, pay off debt, and live comfortably.
When I graduated from college, I decided to keep living like a college student so I could live below my means. I landed an entry-level job making more money, but it still wasn’t a ton.
As my income grew, I continued to live below my means. We buy gently used furniture and clothes and save money and we also eat most of our meals at home. I always look for deals when we travel or go on family outings.
When we bought a house last year, we bought a smaller house for less than what the bank said we could afford. This meant we wouldn’t have a huge mortgage payment to worry about each month.
Living below your means should be a priority no matter what your income looks like. As you get raises and make more money, keep living frugally and invest the extra money to build wealth.
4. Save Money
Wealthy people don’t just spend up all their money – or else, they wouldn’t really be wealthy. They actually save and the steps mentioned above make it possible to save. I mentioned earlier how some of the people who I thought were wealthy actually weren’t.
I used to think being a lawyer was the ultimate job to help you get rich. That was until I met and read about lawyers who were making six figures but working 7 days a week, financing cars, and paying a hefty mortgage on a huge house. This wasn’t wealth, this was debt and living a lavish lifestyle.
The same goes for celebrities. I’m always shocked when I find out that people like Johnny Depp or Kanye West are having money problems.
Don’t they make a boatload of money? Can’t they buy whatever they want? What are they doing with their money?
The truth is, making a lot of money doesn’t guarantee you’ll be wealthy. You have to manage it properly, eliminate debt, and save aggressively.
Start by saving what you can at first, then increase as time goes on. Once you pay off debt, you’ll free up a lot more money to save and invest. Combine that with living below your means and anyone can become wealthy really.
5. Be Generous
This one is my favorite. Being wealthy is not all about your net worth, it’s also about the lifestyle you lead and how you look out for others. Sometimes I visit certain websites for organizations and see they have a donation page.
I often think about how nice it would be to just donate a sum of money on a random Tuesday to an organization or project I care about. The other day my mom and I were shopping at a friend’s new store and she offered to let us grab whatever we wanted and do an IOU (pay it back later).
What I spent wasn’t much so I just went ahead and paid but my mom did an IOU. Right then, I thought about how nice it would have been if I could have paid for my mom’s total.
I also think about how much it would impact someone in my community who’s in need if I just randomly blessed them with a financial gift.
This is why I am working to pay off my debt, save money and build wealth. Giving to others is awesome and moves you mentally from a state of scarcity to a place of abundance. There’s nothing like it and more people should seek to become wealthy so they can experience this type of generosity.
If reading this has got you all jazzed up about becoming wealthy, start making some changes now. Create your budget (even if it’s super basic in the beginning) and tweak things.Giving to others is awesome and moves you mentally from a state of scarcity to a place of abundance. Click To Tweet
Develop a plan to pay off your debt faster and start living on less than you make to help accelerate the process. If you find it difficult to do this, you can always focus on earning more money so you can live comfortably but still get ahead financially.
Prioritize saving money and be generous regardless of what your situation is like. Tithe and give back when you can and also donate your time talents when you are unable to give financially. This will still move you closer to a state of abundance so you can truly enjoy and appreciate living a wealthy life.