How can you be rich if you are a lazy fool? I only mention this because most of us overestimate ourselves. Psychologists have shown that people are generally not as smart and attractive or as hard-working as they think they are. People mistakenly jump to the conclusion that they must be very smart, attractive, and work hard to become rich. The fact is that even an average person can become rich with a few simple ideas. In the book, the millionaire next door, the authors bust the myth that you have to be super smart to achieve wealth. They even show how many smarter people are more likely to fail. Here are the basics.
save your money
In the book, The richest man in Babylon, there is a central idea. Save your money by putting a minimum of ten percent of your income into savings. It sounds easy, but very few people do it. Most people will say they are broke and can’t save. The funny thing is that everyone earns different amounts of money. The guy who makes 20k a year says he needs to make 40k (and so on). The bottom line is that saving is a choice. He can save if he decides it’s important to do so. Until you make a mental commitment, “ice cream and candy” will always seem more important than saving. Most of us have a spending problem, not an income problem.
do extra work
You can still get rich being a lazy guy, but working hard will help you immensely. Most people only take home half of their salary. Some people creatively find secondary ways to earn income. They could sell something extra or have a second job. The main point is to do something extra so you can save more, not spend more. Many business owners start out this way.
passive income
The money saved generates passive income. For example, if you saved enough to buy a second home, you could rent it out for passive income. Essentially, you could get a rental payment for hundreds of years. Or, you could buy several houses that are mortgaged and in thirty years or so you’ll have a lot of rent.
Your savings could also help you get into a business that runs on its own. You could be a limited partner. You could also invest in stocks or bonds and earn passive income this way.
The bottom line is that you need passive income to build wealth. Due to the powerful compound nature of money, you become very rich if you use money somewhat intelligently. You need capital so learn to save. Many companies only require 20-30 thousand to start. It’s in the realm of possibility for most people if they work hard and save.
take advantage of
Working a regular job is poor leverage. There are only so many hours in a day to work. Does this mean you should quit your job? Not likely. Most rich people were great employees first. They saved while working for someone else. Get yourself in a great race and then save your money. You will notice that most people will spend all of their money. The few who invest wisely will become truly rich. If you think it’s too hard and takes too long, think about your children or the ways society could benefit.
Leverage can come in different ways. Good employees or self-governing businesses are great ways to spend your time. Wise investments are also great leverage.
hand to mouth
Most of us live day to day. We work with our hands to get food for our mouths. We transmit this poverty to our children because we think it is very difficult to do otherwise. What we miss is that simply saving money will eventually get you where you need to be. You’ll be broke no matter what you make, so you might as well be broke with a future.
Future generations
Children should be taught from an early age to respect parents and work hard. Usually in the third or fourth generation, wealth disappears from families. Someone decides that it is too much trouble to work hard and follow the rules. However, some families have remained wealthy for hundreds of years. It’s in how they teach their children responsibility and work ethics. Because you are so blessed, you have a responsibility to improve what you have been given. Americans are pretty poor at this point. You can search for other (eastern) cultures to learn more about this.
final tips
Having read the book, how to be rich by J. Paul Getty (Billionaire) basically emphasizes working as hard as possible, being utterly frugal, and spending money on opportunities that look promising. There are great opportunities, you just have to work hard to find creative solutions. You’ll find that your competitors aren’t working as hard on solutions. Most large companies have policies to take thinking out of the hands of employees. This is how companies protect themselves from making big mistakes. However, they are missing out on many good opportunities. As a normal person, you have a huge advantage in your ability to think, move quickly, and take calculated risks. Thank God for opportunities and you will begin to see more of them.