My daughter recently asked how someone gets rich. Before I share my answer, it’s important to distinguish rich from wealthy (and upper middle class).
Rich is having a high income, typically north of $300,000 a year in America, regardless of debt. Wealthy is possessing a large amount of money, property, assets, savings, and/or investments relative to debt (aka “high net worth”).
For reference, the lower economic class makes less than $50,000 a year; middle class between $50-150k, and upper middle class between $150-300k. Super rich (just 1% of Americans) make half a million a year or more.
Depending on how fast you spend money, it’s possible to be “rich but broke.” It’s also possible to become wealthy over time without ever being technically rich in any given year. And depending on your lifestyle, where you live, and your family status, it’s possible to live rich and/or approach wealth without hitting those exact numbers.
That said, there are five proven ways to make a lot of money. They are as follows:
- Believe. Don’t roll your eyes. If you believe in scarcity and think money is hard to come by, it most likely will be. Conversely, if you’re an abundant thinker and believe money comes easy, you will probably encounter more of it. On a related note, you must believe you are worth good money and that you’re capable of attracting it no matter your age, race, gender, expertise, or background. So believe. That is the first step towards making lots of money.
- Read, think, listen, and learn. The richest people are usually (but not always) some of the smartest people in the room. And the smartest people in the room almost always read, think, listen, and learn a lot better than the majority. In fact, the former love the daily process of reading, thinking, listening, and learning. They constantly seek it out, even when interacting with janitors, Uber drives, and service workers (i.e. no one is beneath anyone and everyone has something to teach). To accomplish this, however, you must forgo the 20 hours a week (a part-time job’s worth!) that the average American spends watching TV. Instead, you should be reading, thinking, listening to others, and gaining wisdom every day. Except on vacation (and depending on your ambition, maybe even nights and weekends). Because resting your mind can usually lead to better results elsewhere.
- Work hard (but smart). Don’t procrastinate. Turn in a full day. Create more than you consume. Don’t succumb to distractions. Delete the things in life that do (such as social media, phone alerts, needy apps, etc). Focus on your hardest tasks first thing in the morning. Stay in the fight until 80% (or better 100%) of your tasks are completed. Rig your environment for success. Set tight deadlines for yourself. That’s what hard workers do. But they also work smart. They know what they don’t know and humble themselves when asking other experts, their “customers,” and even direct competitors for advice (often for free even).
- Eliminate mistakes. Accuracy gets paid a whole lot more than sloppiness. That’s a fact. So the fewer mistakes you make, the more money you will earn. To compound this effect, however, you’ll need to work fast. The key is working the fastest you can (done is better than perfect) with the fewest mistakes. That’s the sweet spot.
- Inspire others. Fact: givers make a lot more money on average than takers. That’s because givers attract others. And the more people you attract, welcome, and hopefully inspire in your life, the more referrals, good will, trust, recommendations, and money you’ll earn. So be genuine, generous, and kind in all of your relationships, especially with service workers and your support network at home who will never give you money but will buoy you up and cheer you on more than any other relationships. To make a lot of money, you certainly don’t have to be liked by everyone. But you will need to stand out. And you can’t do that if you follow the crowd, aren’t true to yourself, and fail to take an unending interest in others.
- BONUS: Be selfish with your health, sleep, fitness, diet, and personal relationships! You won’t last long if your mental and physical health keep you out of the game. So take care of yourself.
If you do all of the above, it would take an act of God to not get rich within five years. When you do come into money, I would encourage you to spend it wisely (and even indulge in a few things you love) while building real wealth. You can do that by spending less than you earn (something many rich people struggle with), saving 15% or more of your paycheck, avoiding debt by paying cash (even for things like used cars and modest homes), investing in things you understand, and avoiding extravagant purchases that so many insecure people succumb to (sex, drugs, shiny cars, luxury brands, mansions, and any other expensive but always temporary ego boosts). I’d also encourage you to donate at least 10% of your income to charity, which teaches you selflessness, greater good, and forces you to be a giver (which in turn helps you attract more money and positive relationships in your life).
Remember: 80% of millionaires live next door, drive old cars, only buy the premium brands that bring them the most joy and use, and never flaunt their wealth, because they’re too busy growing it instead of wasting it. Good luck!