How to become rich

How to become rich in the UK

It’s simple math. Becoming financially rich is having much more money than you need.

Almost anyone with a steady income can become rich if they save and start to invest a percentage of their money over many years. The more you save and invest, the richer you will become.

Step 1: Plan

Set goals

Do you want to know how to become rich by 30? Or how to become rich in 10 years? Or how to become a millionaire? It’s all possible.

But what is the goal of becoming rich? Is it to afford a one-time purchase like a car or a house, or sending a child to private school? That’s a different goal than retiring early and travelling the world in luxury.

Whatever your get-rich-goal, write it down. Then work backwards to see how much money you will need and how much time you have to get there. Set short term and longer term goals that will set you on the right path.

Be realistic

You can become rich from nothing, but becoming a rich overnight is unlikely, as is acquiring £100,000 in a week. So set realistic expectations for yourself, but don’t be afraid to set a challenge.

Becoming rich is not necessarily easy, but if you only set big goals for yourself you are more likely to put your energy into reaching them. Choose a goal that motivates you, but not so lofty that it overwhelms or discourages you. If you need help, talk to a certified financial planner for professional guidance.

Step 2: Make money

Save up

If you want to become rich fast, spend less, save more and invest the difference.

If you’re starting from a place of financial constraint, you’ll want to start saving your money right and paying down debt. You’ll need that savings for investments. And if you’re starting from a place of financial comfort, you can still benefit from having more to invest.

As a rule of thumb, try saving at least 10% of what you earn. The more you save, the better. To reduce temptation to spend your savings, it helps to automate transfers directly from your account into your savings and investments.

If you don’t know where your money is going, use Money Dashboard to track your income and expenses and see where you can cut back, sell something, or downsize. Create a budget and monitor your cash flow with an eagle eye.

Make extra cash

There’s always money to be made. So aim to earn more money than you need and invest the difference.

To get started, take stock of what you can rent, such as a room in your home or an extra parking space in your driveway. Sell items you don’t use or need.

Find part-time jobs for a nice boost to your account. Look into delivery services (Amazon, Uber Eats, Deliveroo), teach part time if you can, maybe drive an Uber in your spare time. Seasonal side-hustles like Christmas markets can also boost your savings.

If you have a creative hobby, see if you can sell work or drum up commissions at markets or on Etsy.

Get a great job

No matter what job or line of work you’re in, you can become rich. Of course, it helps to be in a high-paying field and on a growing career path. As income rises, so should your savings and investments.

Depending on where you are in your career, it might not be too late to shift into a STEM job (Science, Technology, Engineering, and Math). Demand for STEM workers is rising, as are the incomes that come with them.

Otherwise, look for career building within your existing line of work. Large companies tend to offer most room for advancement. Seek advice and training that will set you up for a promotion or new opportunity with better pay.

3: Build your wealth

Educate yourself

Now that you’ve earned and saved money, it’s time to put that money into investments that will multiply your earnings and create new income streams.

There are many ways to invest, but whatever you choose, they will be better planned with research and education. Without the discipline to learn, your plan to become rich will falter. So stay motivated and read up on investing strategies and techniques. There are many books, magazine and websites that can teach you. Or listen to podcasts and attend events. Some helpful ‘How to become rich’ books can be found here. Again, you can work with a certified financial adviser for guidance. This guide from Citizen Advice is a good place to start.

And research ways to reduce your investing fees and taxes so you can hold on to as much money as possible.

Invest the money

There’s no shortage of investment opportunities. Diversifying is wise, but always choose approaches that best suit your goals, risk profile, understanding and income.

Some popular investments linked with strong returns are:

* Real estate. Getting on the property ladder is a common way to invest money and become rich. Depending on the size and location, there’s often property in a price range available to someone with modest savings. Property may rise in value over years, and the investments can be flipped, rented, or developed.

* Invest in a business. Start your own business or buy into one. But choose wisely – preferably the business offers products and services which are in a growing market.

* Stocks, ETFs and mutual funds. You can invest in the stock market yourself or have an adviser do it for you. Always consider the brokerage fees and the cost of the investment platforms and funds. They varied and will impact your returns. When possible, make use of these tax efficient savings and investments accounts like Individual Savings Accounts (ISAs).

* Leveraged trading. This is a trade method that maximises both the potential gains and potential losses of an investment by, essentially, multiplying the investment. It is a high risk, high reward method. You need to take the time to educate yourselves before making leveraged trades. You are at risk of losing much more money than you invested in the first place. Start small!

Step 4: Don’t get discouraged.

Patience is a key ingredient. Start investing as soon as possible and don’t get distracted or discouraged by the bumps in the road ahead. Stay motivated to reach your goal. If you need to revisit your plans (step 1), do so.

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All content is for informational purposes only and is the opinion of the author. Nothing on this website should be interpreted as "advice". Money Dashboard Ltd make no representations as to the accuracy, completeness, suitability or validity of any information on this site and will not be liable for any errors or omissions or any damages arising from its display or use.

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