How to Become Rich the Right Way

Grow Your Dough

A few months ago (on April 1st to be exact) I wrote a tongue in cheek post about how to get rich quickly and not very surprisingly it has been a hit with search traffic. It seems as if many people out there are looking for how to become rich and are ending up at Frugal Rules. I know, it’s not really that surprising as who out there would not like to wake up one day to find out that not only had they won the Powerball, but that it was also raining bags of twenties from the heavens? While I am not surprised one bit that there are many out there seeking how to become rich, it really does show me that many need a paradigm shift – meaning that it takes actual work (generally speaking) to build wealth and that the pursuit of becoming rich is fruitless unless you have the right motivation. If you read the aforementioned post, then you’ll remember how over the top my argument was as to how you can become rich quick. My thoughts today are intended to present the complete opposite of what I wrote then; they are a loose framework for those seeking to not only become rich, but more importantly, build wealth.

Live on Less Than You Make

Our society preaches a gospel of consumerism. Take it from someone who works in the advertising field, it is everywhere and companies play on that aspect in every way they can. This same gospel preaches that unless you give into this consumerism and buy the latest and greatest ‘whatever’ whenever it comes out, you truly will not be happy. The question I’m concerned about is, how can you not only become rich, but build wealth if you give into this mindset of “needing” to spend aimlessly? I am not saying that you need to live off rice and beans while avoiding all consumer goods, but the other extreme will generally get you nowhere in terms of building wealth. There is obviously a balance to have between the two, but ultimately I view it as seeking to be frugal and avoiding debt – all the while keeping your long term goal before you. You will not become rich solely off of embracing frugality, but it can be the beginning of a path to building wealth that will last a lifetime.

Your Mindset is Key

I’ve touched on this briefly, but the pursuit of becoming rich is not one that is aided by chasing down ‘get rich quick’ schemes. We’ve all seen the ads on late night TV proclaiming that you can become richer than a Lannister by flipping real estate or taking some “special” class. The secret those telemarketers don’t want you to know is that their secret to becoming rich is by making money off of you! That is why your mindset is so vital. Just as I have said before in regards to retirement planning, building wealth is a marathon and not a sprint and should be viewed as such, otherwise you’ll be disappointed in the long run.

Becoming Rich Requires Diversity

Many of us have our own hobby horse when it comes to building wealth, whether it be investing in stocks or investing in real estate. There is nothing wrong with either, as long as you do it wisely, and keep a long term view of your investments. While I love investing in the stock market through one of our online brokerage accounts, there has always been part of me that would enjoy investing in real estate as well. I know that it is possible to become rich through solely investing in the stock market or in real estate, but just think about how much more risk you can weather by investing in both. You can also achieve greater diversification, which will ultimately help your desire to build wealth as well as having more sustainability.

You Become Rich Through Hard Work

While my list is not exhaustive, it is intended to communicate one theme – that the desire to become rich is not one that is necessarily easy to achieve. Ultimately, the pursuit to build wealth takes time, effort and commitment. I apologize (well not really) if I burst your bubble of becoming rich quick, but if that is your mindset then a change in thinking is needed. We live in a society that thinks you can get something for nothing. What I learned early in life though, was that there really is no such thing as a free lunch. If you desire to become rich, and have not been born into wealth, then that desire will only be achieved through hard work and a commitment to the future. I know that is counter to what we hear preached to us every day, however, hard work will always take you farther down the path to building wealth than get rich quick schemes ever will.

 

What tips do you have for someone who has a desire to become rich and build wealth? What’s one area you’d like to invest in, but have not done so yet?

 

Photo courtesy of: 401(k)2013

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About the author:

I'm the founder of Frugal Rules, a Dad, husband and veteran of the financial services industry. I'm passionate about helping people learn from my mistakes so that they can enjoy the freedom that comes from living frugally. You can connect via Twitter / Facebook.

66 comments on “How to Become Rich the Right Way

  1. I like your tip about diversifying your investments. I think it’s important to be exposed to different markets such as real estate, the stock market, commodities, etc. It’s also important that you keep growing your income-producing assets so that you can keep building your wealth year-over-year.
    DC @ Young Adult Money recently posted..The Spender and The SaverMy Profile

  2. That’s the thing about the get-rich-quick infomercials. If they’ve found a way to make boatloads of money, why are they selling the information to everyone? Wouldn’t you focus on doing that thing that makes you boatloads of money instead of working trying to get people to buy your information? Plus, the less people know your secret, the easier it is for you to cash in since you don’t have to worry about competition.
    Jon @ MoneySmartGuides recently posted..Buy and Hold: The Path to WealthMy Profile

    • I could not agree more Holly. It, so often, does come down to that mindset. You have to gear yourself up for the long haul, otherwise it becomes that much more difficult.

  3. I agree with all of your points, and can only add this: you are the product of the thoughts and people with whom you surround yourself. If you constantly spend time in the mall, you’ll spend money. If you hang out with wealthy, frugal people, you’ll probably develop frugal, wealth building habits.
    AverageJoe recently posted..Is It Time To Fire Your Advisor?My Profile

    • I could not agree more Joe. Sadly, there is not many people becoming rich or building wealth if they’re always at the mall. Shocker, I know! ;)

  4. Wait, you can’t teach me how to get rich quick? What a sham! Haha, of course I think this is spot on. Even when you think of the Mark Zuckerbergs of the world who “all of a sudden” have billions of dollars, there was a TON of work that got them to that point of almost instantaneous wealth. And the people who do actually become rich without effort almost always lose it just as quickly.

    I think another important point to add here is the need to define what “rich” means for yourself. No tactic will help you get rich if you don’t even know what rich is.
    Matt Becker recently posted..How to Beat 80% of Investors With 1% of the EffortMy Profile

    • Lol, sorry to bust your bubble Matt! ;)

      Great point on determining what it means to you. What it means for you may not be the same thing for me and thus make it less likely I’ll reach it.

  5. LOL, we had rice and beans for dinner last night. :-). Love Joe’s thoughts here too. We have absolutely changed our mentality, and a big part of that was because we moved from a “spending” suburb to a town full of super frugal wealthy people who don’t give a rip what anyone thinks about their Walmart clothes or lack of “stuff”. It is awesome – such freedom!
    Laurie @thefrugalfarmer recently posted..Recipe of the Week: Napolean BarsMy Profile

  6. Great points John! We all need to hear this but this is a message that is extremely lost on today’s youth. All they see in the media are “have-it-now” options and stories of young people creating an app and becoming a millionaire by 25. Sure this can happen but it’s not the norm. The long-term, hard work approach is a much more viable option.
    Brian @ Luke1428 recently posted..Investing Made Easy (Part IV) – How to Pick a Good Mutual FundMy Profile

    • Thanks Brian! I agree that it is lost on today’s youth, but I have also seen it be rife in the older generations. Unfortunately no generation is innocent of this mentality.

  7. You mean that first post wasn’t realistic? Now I need to change my whole strategy.

    Diversity is a big one in my opinion and I’m really wanting to purchase some rental properties. Of course I’ll be taking it pretty slow but with the right properties they can be a big boon for passive cash flow. In regards to mindset, I think that is the biggest factor in building wealth. Your savings rate is going to be the determining factor on your wealth creation, much more than the actual investments or returns, especially during the first 10 years or so. It definitely is a marathon not a sprint and you won’t stick with it if you don’t have the right mindset. Although I will say I’m trying to sprint to the finish. Just not through the get rich quick type plans.
    JC @ Passive-Income-Pursuit recently posted..Net Worth Update – June 2013My Profile

    • Ha ha – sorry to ruin it for you JC. ;)

      I cold not agree more on your thoughts. Mindset is huge, which is why so few ever reach what they want and instead wonder what they’re doing wrong.

    • I know, sorry to break it to you Keren. ;) Time and effort are huge. Put it with the right mindset and you’ve conquered a big part of the battle.

    • That’s a great point Alexa. Becoming rich is somewhat of a nebulous ideal. I think concrete goals are key, otherwise how will you measure success?

  8. Solid lessons here, thanks. Based on the lines at the lottery counter, that seems to be many people’s idea for the best way to get rich! I think a key is avoiding debt, except for a mortgage. And that mortgage payment should be for as little house as will work for the buyer, not the most house one can afford (according to the lender or realtor–two people who benefit the more you borrow!)
    Kurt @ Money Counselor recently posted..Pulse TV ReviewMy Profile

    • I agree Kurt, so many think it’s easy when it really is not.

      So, you’re telling me that my mortgage payment shouldn’t be like 60% of my pay? ;)

    • You’re exactly right Rita. So many want it to happen quickly, which is nearly impossible. Unfortunately for many it takes a lot of hard work – amongst other things.

  9. Your mindset is the most important part I believe. If you think about what it will take for you to feel rich then you will start making your purchasing decisions based off of this. When I make a purchase I am always thinking about wether it fits into my overall plan.
    Sean @ One Smart Dollar recently posted..Motors Most DeservingMy Profile

    • I am the same way Sean. I’ve just trained myself to do that and it really does help with the mindset. Sadly, too many do not think about purchases that way and end up falling behind as a result.

  10. The general idea people have about being “rich” is itself flawed. When you look into the lives of real-life millionaires, they almost always live nothing like the “rich” people we see on television. They control expenses, but spend freely on things they truly value. They work hard and are always looking for ways to expand their income. True wealth is usually built up over a lifetime of good decision-making.
    Justin @ The Family Finances recently posted..5 Things You Should Bring to CollegeMy Profile

    • We want to get into real estate as well at some point. It’s not a viable option for us right now, for numerous reason. That said, it can be a great way to diversify your investing.

    • That is a key part Erin! Many think just being in a few stocks means being diversified – that is missing the point though. Building wealth, generally speaking, requires being invested in numerous types of investments.

  11. I love those get rich infomercials (not!). In our haste to get rich, we sometimes forget that they want to go rich too – and often it’s through us buying their program. :) I believe mindset and knowing what you TRULY want is so important. I see things every day that I want but knowing what I truly want makes it so much easier to walk away without feeling deprived. And we humans are not programmed to take deprivation well.
    Shannon @ The Heavy Purse recently posted..How to Integrate Debt Conversations into Everyday ActivitiesMy Profile

    • Great points Shannon! I agree that your mindset and knowing what you want are so vital. I believe it helps you formulate a plan you can start to work around and with.

  12. You bring up some great points. It’s not easy to get rich, but everyone can do it. It just requires a bit of planning and patience. Unless you inherit the money, it’s really tough to “get rich quick”. My wife and I know that this won’t be happening, so we’ve set up a plan that will help us get rich, but it’ll just take a bit longer. I don’t mind that at all because we’ll have more appreciation for it when we get there.
    Jake @ Common Cents Wealth recently posted..We’re Debt FREE!!My Profile

  13. I wonder how many people who go to your site through a “get rich” search see the words hard work and live below your means and (unfortunately) high tail it out of here. Great points on all of the above, especially about the informercials. If it sounds too good to be true, then it probably is.
    anna recently posted..Wedding Stuff Part 1: Church CeremonyMy Profile

  14. Great post as usual! What kills me even more are people buying the latest and greatest technology and they don’t even know how to use it. I have one aunt and uncle that are the most well off of the family, and are constantly trying to keep up with the Jonses. They got an iPad, kindle, underwater camera, all these fancy things, but they don’t know how to utilize them correctly. What an even bigger waste! What’s the point but to feel better that you own the product?
    E.M. recently posted..The Experience of Being A BridesmaidMy Profile

  15. For me I probably need to work on diversity or multiple streams of income. I started that this year and it’s slowly starting to pay off, but I’d like to learn more about investing too. I want to go into the fetal position currently when it comes to talk of investing. :) Unless you win the lottery or make the next big blockbuster movie, it does require a good mindset, work ethic, living below your means…all those things. Oh and patience!
    Budget and the Beach recently posted..My BudgetMy Profile

    • That’s great Tonya! Starting is half the battle. You’re not alone on the investing front, but finding what helps “you” understand it is very important. :)

    • I agree Mr. CBB – having a solid plan and knowing what “you” want is a vital first step to starting down the path of building wealth.

  16. Your last point is particularly important, it is all about the amount of hard work that you put in.
    I often conteplate going out and starting my own business, as then I would be rewarded for working harder. You often don’t get rewarded for working harder when in a 9 – 5 job.

    Growing rich is a marathon, not a sprint. And nobody ever said a marathon doesn’t take hard work.
    Mr Ikonz recently posted..Saving money buying no-name brands – $209 ThermoblendMy Profile

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