Ready to make your dream of becoming rich a reality? Use the following six steps to catapult your wealth to levels you’d never thought possible:
1. Contribute the Maximum to an Employer-Matched Retirement Plan
According to the Society for Human Resource Management, the most common 401(k) match plan is currently $1 per $1 on the first six percent. If you’re not contributing the maximum amount to your company’s employer-match retirement plan, you’re essentially throwing away free money. For example, employees earning $50,000 per year with an employer-matched 401(k) up to 6 percent can earn an extra $3,000 annually simply by opting to invest the same in their own retirement. Take advantage of this incredible opportunity to earn extra money for your golden years.
2. Surround Yourself with Successful People
Take a minute to think about your social circle. Would you describe your friends as motivated and successful, or just plain lazy? It’s only natural to emulate the behaviors of those in your friends group, so the company you keep can either boost you up or drag you down. When you surround yourself with successful people, you feel inspired to reach your full potential. Not only that — successful people stick together and support one another, so when your network is filled with wealthy and driven contacts, it’s easy to connect with people who can help you succeed.
3. Pay off Your Credit Card Balance in Full Each Month
Using a credit card to pay for purchases is safe, convenient and might even help you to earn rewards points that allow you to save money. However, it’s important to never spend more money than you have in the bank, as you’ll pay a hefty price to live above your means.
The national average credit card APR is approximately 15 percent. If you charge $5,000 to a credit card with a 15 percent APR and pay the minimum payment of approximately $115 per month toward the balance, it will take you 64 months to pay off — ultimately costing you $2,258.89 in interest. Therefore, if you don’t have the money in your bank account to make a purchase, resist the temptation to charge it.
4. Invest More Than You Spend
As your income rises, it can be tempting to take on an increasingly lavish lifestyle. It’s important to resist the temptation to live large and instead put the money back into your investments. For example, while still in high school, Warren Buffett and a friend purchased a pinball machine to put in a barbershop. They reinvested the money they earned into buying more machines to put in other shops. When they sold their business, Buffet invested the proceeds by purchasing stock options and starting another small business. Today, he has amassed an estimated fortune of $62 billion.
5. Don’t Be Afraid of Hard Work
If you want to get rich, you’re going to have to work for it. Everyone would be rich if doing so was easy, so you have to be willing to earn your money the old-fashioned way ─ by putting in long hours at the office. A study conducted by Daniel Kahneman, a Nobel Prize-winning psychologist, revealed that people who earn less than $20,000 per year spend more than one-third of their time engaging in passive leisure activities, while those earning more than $100,000 annually spend less than one-fifth of their time in this manner. Relaxation is great and necessary, but too much of it will significantly decrease your earning power.
6. Generate Multiple Forms of Income:
Rich people are always looking ahead to the next revenue-generating endeavor to ensure they don’t miss out on a great opportunity to cash in. Employment can often be unstable, so rich people diversify their sources of income. In addition to wages earned from their primary jobs, they also earn money from investments and passive income — real estate ventures, business enterprises and other profit-generating endeavors. Not only does this help them amass their wealth much more quickly, it also provides a sense of financial security if one form of income dries up.
Getting rich is anything but easy. Amassing a personal fortune takes a great deal of hard work, savvy thinking and dedication. If you have a strong commitment to growing your bank account exponentially, you can do anything you put your mind to. Use the steps above to create a plan to start your journey down the road to prosperity.