How To Become Wealthy

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Becoming wealthy is simple, but there's a catch...

Those who have built wealth follow a simple principle: keep your money and make it work for you. Instead of spending money on goods and services which do not increase your wealth, invest the money in ways which will earn you more money.

Examples of using money to earn you more money would be:

  • Loaning the money (via savings accounts, money markets, bond funds, etc.), which earns you money through interest,
  • Buying ownership of companies (via stock shares, ownership of a small local business, etc.), which earns you money through company earnings and the growth of company value,
  • Using the money to improve your skills and knowledge (via job training, education, certifications, etc.), which earns you money by increasing your earning power (as long as the extra earning power exceeds the amount spent).

Using money to buy things which do not return, on average, what you paid for them plus extra decreases your wealth. Examples of this would be spending more than you need to on food, clothes, transportation, shelter, etc. Examples would be:

  • Buying a new car
  • Eating out, or spending too much on groceries
  • Buying nice new clothes
  • Living in a large home

Wealth moves from the pockets of the unwealthy into the pockets of the wealthy based on this choice of money usage. Wealthy people use their money in ways that make them more money, and unwealthy people do not.

The path to wealth is simple: Spend significantly less than 100% of your income in ways that do not increase your wealth, and use the remaining money in ways that do increase your wealth. The popular term for this is "live within your means". By spending less than what you make, you have money left over to invest and earn you more money.

Though the path to wealth is simple, it is followed by few. The reason is that there is a missing ingredient to the above formula. It is an important obstacle that must be surmounted before you can proceed on the above path to wealth: desire.

You must let go of your desire for a higher standard of living. Specifically, you must:

  • Learn to be content with a standard of living lower than what your income affords
  • Learn to accept the fact that your friends, neighbors, and coworkers can have nice cars, eat out, travel on vacations, and buy nice things for their kids, but that you cannot
  • Become accustomed to living your life and spending your time in ways that cost much less money then the people around you do

This may seem like bitter pill to swallow, yet it is the necessary ingredient to building wealth. Once mastered, the above method of making your money work for you will come easily, and your wealth will grow.


The preceding article is not financial advice, and should not be interpreted as financial advice. The author of this article is not qualified to give financial advice. Always consult a qualified financial advisor before making any financial decisions.



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