Some of the richest people in the world didn’t have to try their hand at getting rich — it was simply handed to them. Whether it was a rich family, a lucky investment opportunity, famous parents, or building a company that would eventually disrupt an entire industry — most people will never be that lucky when it comes to accruing wealth.
Even Jeff Bezos, the famous creator and CEO of Amazon, received a loan ($250,000) from his parents when he first started his company back in 1995. Sure, that investment has grown significantly, but for normal families, loans of that size are reserved for houses — not random investments into your children’s hopes and dreams. For the rest of the world, getting rich requires a lot of hard work, and you can’t count on luck or a family fortune to help you get there.
Although many people will work hard for years in order to grow their wealth, very few will ever break through to the next income level. Additionally, many people will throw away hundreds — if not thousands — of dollars doing their best to beat the odds in order to win a fortune. Getting rich is seen as an ultimate life goal or a dream come true, but how likely is it that you’ll someday achieve that goal?
Let’s look at the different methods for getting rich quick — both the good and the bad — and what options work best for people that have luck stacked against them.
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Get Rich Quick Schemes That Won’t Work For You
Unfortunately, there are only a few ways to actually accrue wealth, but in our world there are plenty of people and organizations that are eager to scam you out of your money by promising you a fortune.
This includes schemes like Multi-Level Marketing (MLM) “businesses” that promise thousands of dollars in income with a rather suspicious looking plan. They expect you to purchase your own supply of goods, sell that supply, and recruit other people to join the business, but the only way you can earn money is based on a percentage of the sales that your recruits make. MLMs are unfortunately common across the United States, and are almost identical in setup to illegal “pyramid schemes.” They rely entirely on your ability to recruit more people to the business, and the only person that actually “gets rich quick” is the person who started the scam business in the first place.
But this isn’t the only common scam you may come across on your journey to find riches.
Winning the Lottery
As tempting as the latest powerball jackpot may be — most recently sitting at $858 million — there is still a greater chance that you will be struck by lightning, attacked by a shark, or struck by a train, than win the lottery. You may even have greater luck finding an authentic pearl in an oyster. The odds of winning the lottery are about 1 in 292,201,338 according to 2016 estimates, and the more you buy, the bigger that jackpot becomes, and the more people are willing to play in order to try to win it.
Although the lottery is tempting, it is never something you should count on, and it is never something you should “invest” in. Your investments are better saved for retirement accounts and saving accounts — anything that actually accrues interest, and doesn’t just drain you of all your spare cash.
Plus, taxes on your winnings are about 40% of the overall total, and the “cash now” option is only about 60-70% of your earnings. So you’re really not getting much out of the whole transaction, and it’s certainly not worth the wasted time, money, and energy.
Although the internet provides almost everyone with a chance for “15 seconds of fame,” the actual likelihood of you becoming famous (and wealthy because of it) is very small. Your chances of becoming a famous movie star are about 1 in 1,505,000, while your chances for becoming a famous Olympic skier are about 1 in 662,000. As for a Youtube star, your chances are about 1 in 505,347.
Plus, almost every pathway to fame is paved with a lot of hard work, and not a lot of recognition. Even famous movie stars have to start somewhere, and it can take them years — and a lot of failures and barista jobs — before they’re ever noticed. The same goes for famous athletes: they didn’t just pick up a ball and suddenly become a star player. They all worked hard, spent hours a day in gyms practicing, and possibly even broke a few bones in the process.
Now this isn’t to say your childhood dream of going on to the Olympics or becoming an actress are worthless — if you’re passionate about pursuing a craft or perfecting a sport, then more power to you. However, if you think you can get rich fast by stumbling into sudden fame? Don’t count on it.
Another dream scenario is the one where you wake up one day and get a letter in the mail saying you’re the last sole surviving relative of Mr. Moneybags, and he’s left his entire inheritance and estate to you. As nice as that may sound, the likelihood of that happening is extremely small — especially if you weren’t born into money in the first place.
Unfortunately, economic classes are often generational, meaning they develop over multiple generations and remain static (stay the same) through multiple generations. Poverty, for example, can become a cycle when it has surpassed three generations, and there is no person to potentially pass on intellectual, social, or cultural capital to you.
More than likely, the only inheritance you will get will be from your parents — if they have anything to give after they pass. And if you do happen to have a surprise rich relative, then it certainly will be a surprise if you ever get that money — but the chances are not stacked in your favor. Plus, losing a loved one can be an extremely difficult process. No amount of money will make it worthwhile to lose someone you love.
Ways to Get Rich That Actually Work (But Usually Aren’t Fast)
Unfortunately, there is no real formula for “getting rich quick” that actually works. If there was, then everyone would be doing it. However, there are some tried and true methods on how to grow your wealth and set yourself up for success. The problem is, it takes time. Good things come to those who wait!
One option to becoming successful financially is to become an expert in your field. Your job is certainly important, and in a lot of ways it may help create the foundation on which you can build up your career. But, there are also many other opportunities out there that may require you to leave your job or bulk up your resume. Each opportunity that you capitalize on could have the potential of increasing your standing and increasing your wealth. As you become more of an expert, you can also gain bargaining power over your pay and benefits. If employers want your expertise, they will need to pay you what you’re worth.
However, this isn’t the only secret to success, and in some ways this may not work for everyone. Unless your area of expertise can withstand changing technologies and remain relevant for your entire working life, you may need to try other methods for getting rich or even become an expert in multiple areas. Here are some other steps to help you attain wealth and remain wealthy throughout your lifetime.
Invest Early, Regularly, and Wisely
One of the best things you can do to grow your wealth is to invest your money and allow it to grow through compounding interest over a few decades. The trick is to start investing as soon as possible — whether into a individual retirement account (IRA), a Roth IRA, or a 401k provided by your employer, or through a financial planner that can help you find low-cost, diversified index funds.
When most people think about investing, the stock market and images of men yelling “SELL” or “BUY” often comes to mind. However, this type of investing isn’t the sort where you go out and purchase large stocks in Apple, Tesla, or Netflix. Instead you’re investing a certain portion of your income (normally 2-15%) that will then be transferred into an account that can accrue interest through the gradual growth of the stock market. The more you invest early on, the more your wealth will grow, and the sooner you can retire. The stocks that will be tied to your account will be diverse, low-cost, and will grow in value slowly over time. As your value increases and the interest accrues, your interest will eventually also become a part of the larger pool and will accrue additional interest — which is compounding interest.
Other Forms of Investments
However, besides investing into a retirement account, there are also other types of investments you can make — namely investments into your personal education, skills, and financial literacy. Although college degrees and other postsecondary education classes or certifications can cost a lot of money up front, they are almost always worth the effort.
Having a college degree and credentials can provide you with ample employment opportunities that you might not have without a college background. Plus, with every level of education that you achieve, your salary will most likely also see a significant boost. According to 2017 research from the Bureau of Labor Statistics (BLS), those with only a high school diploma but without a college degree have a weekly earning of about $718 (median range). As for those that have a four-year college degree, they make about $1,189 on average in weekly earnings, and those with an advanced degree (masters or doctorate) have an average of about $1,451 in weekly earnings. With each bump in your education, you can see significant growth in your overall income. Investing in your education is certainly a worthwhile decision.
Of course, not all education has to be from an accredited college or institution. You can also grow your own personal knowledge through a lot of hands-on experience and personal research. You should certainly take the time to educate yourself on personal finances if you want to grow your wealth. Each bit of knowledge can help you better understand your income potential, your accrual of interest in IRAs or similar investments, and will help you understand how you can budget, save, and become a financially successful individual.
Budget and Spend With Discipline
Budgeting is a surefire way to not only track your spending, but track your overall financial growth. Whether you’re using budgeting apps like Mint or Pocketguard or you’re just using pen, paper, and a check ledger — tracking your month-over-month paychecks and purchases can really help you get a better understanding of how you can save money and cut back on spending.
When you’re scraping by on pennies, it can be difficult to create a personal budget and stick to it, but benefits far outweigh any reasons you may have for avoiding a budget, so it’s best to start as soon as possible. Plus, once you can pinpoint your fixed expenses (mortgage, rent, utilities, and subscription services) you can make spending adjustments in your plan to either save more or contribute more to your IRA. If you find you’re spending a lot on eating out or entertainment, you can cut back to become a more frugal spender.
Spending Like a Rich Person
Another useful tip is to automate your fixed expenses if you know many of them will be the same amount throughout the year. Instead of risking the chance of forgetting a payment on your credit card or mortgage, you can ensure that every month a certain amount of money will come out of your bank account. This will make it easier to plan out your spending month-over-month, as you’ll know exactly how much is leaving for bills or savings, and how much is available for you to spend on going out, shopping, or other fun activities.
However, if you really want to spend like the rich, you’ll have to get frugal with your money. Surprisingly, although many rich people don’t have to stress about money at all, quite a few are actually frugal spenders. They are able to adjust their spending along with their income, and although they may be making more money, that doesn’t mean they need to be spending more. If anything, they can turn over more of their money into investments and savings — again, utilizing the benefits of compounding interest to accrue more wealth.
If you find you’re struggling with bad financial habits — such as gambling, shopping, or racking up credit card bills — try your hand at building a personal budget, and see if you can visualize where all your money is going and how you can curb your impulses. The more you cut back on your spending, the more money you can save for your future. Additionally, budgets are always flexible, so if you need to make adjustments due to a changing lifestyle, you can very easily make it work.
Generate New Sources of Income
Everyone has the potential to tap into some form of additional income. It could be that you have a hobby you enjoy doing on weekends — anything from making art to refurbishing old furniture. You could also have unused but valuable items around your house that you can sell online to make some extra cash. You could also be in the process of starting your own business — which is always a sure-fire way to help you accrue wealth (as long as you do it wisely, with a solid business plan in place).
Sometimes these extra forms of income can be described as “side-hustles,” but the basic idea is that you have an additional way of earning money outside of your day-job by turning your passion into your own small business. Plus, with the help of technology, almost anyone can start their own business, track their finances, and manage their inventory or services. The trick is to find what it is that you can do that people are willing to pay for, and how to tap into that market. Eventually, you can decide if you want to keep this small business as a side-hustle, or if you should drop everything and invest all your time into your business venture.
The Most Successful Businesses
However, it’s important to note that many small businesses are doomed to fail in their first five years. This isn’t to say that you shouldn’t try your best, but if you want your business to succeed, the best thing you can do is create a disruptive business model. Disruptive businesses often tend to be the most successful startups — examples include AirBNB, Tesla, and Uber or Lyft — as they create a new standard for the entire industry, and their CEOs often become fast millionaires.
If you think you have a million-dollar idea that no one has tried before, then it could be that your idea is the secret behind your wealth and potential. Once you can fund it, build it, grow it, and invest in your idea, you’ll be able to enjoy years of comfortable living.
Get Rich and Stay Rich
Unfortunately, wealth can be tricky to obtain. It requires time and dedication, and many of those that are the wealthiest in the world were simply born into it. Some of the more common “get rich quick” schemes are almost impossible to achieve, and many a famous person or lottery winner has squandered the very riches they tried so hard to earn. Instead of hoping for a windfall, focus on these tried and true ways that do work: investing, budgeting and saving, and getting multiple sources of income.
If you do decide to start a disruptive business (or just a small business), keep in mind that it will take time, and it may require a lot of sacrifices. But if you’re eager to become your own boss and earn your money by working for yourself, then the sacrifices may be well worth it.
Otherwise, investing early and often, coupled with budgeting and saving is going to be your best bet when it comes to becoming wealthy. If you can work to curb any unnecessary spending, and find ways to compound your interest, then you may see yourself living out a comfortable retirement sometime down the road. However, you will also want to make sure you stay wealthy by continuing to practice good financial habits. Stay on your budget, control your spending, and keep investing with a solid strategy (and a bit of discipline) in mind.
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