Being rich in the United States is easier than many people think; but it requires discipline and constant effort to achieve your goal.
What do you think of as a rich person? At first glance, we think of someone who has a high income, even in the six-figure range per year. However, something you should understand from the beginning is that wealth is not generated by your high earning capacity, but by the good management of your resources, even if they are limited. Simply put, you can be rich with a 9-to-5 job.
The key to financial success in becoming wealthy is to live below your earning capacity. Saving and, especially, knowing how to invest is the goal to make your net worth grow over time. And saving and investing doesn’t matter if you have a full-time job, regardless of how much your earnings are.
The road to wealth begins with a budget. If you haven’t done so, making a month-to-month budget will help you save money where you thought you didn’t have any. Today, there are many digital tools that help you keep track of your expenses. If that does not suit you, it is valid to do it on paper and pen, the important thing is the constancy and discipline to carry it out.
When you are a master of your personal finances and you are not living paycheck to paycheck with what you earn at your job, it is time to take the second step: increase your income. A side or gig job will help you reach your goals more easily. Technology has also made its breakthrough in bringing you closer to job opportunities you didn’t have before, including working remotely.
Although human nature leads us to spend more the more you earn, you should strive to keep your budget and lifestyle as it is. The primary goal of generating more income should be to grow your wealth wisely, such as through investments, and not to increase your unnecessary items to make you feel like you are living in a status you are not.
And the worst thing you can do is go into debt. If you increase your income, it’s tempting to increase your credit card level. But if you don’t have full control of your finances, you will fall into the terrible spiral of spending more than you earn, and going into debt, which could break any possibility of generating wealth.
When you have full control of your money and you save part of your paycheck every month (experts suggest between 10% and 20% of your monthly income), it is time to find a way to make it grow without having to work. The means can be investing.
Although many believe that investing is like playing the lottery, they are mistaken: one is a strategy to grow your money; the other, a game of chance. In fact, the trick to investing lies in timing, rather than in your income. For example, if you invest $10 a day ($3,650 a year) in an investment that has an annualized return of 7%:
- In 10 years, you will have $53,960, and you will have invested only $36,500.
- In 20 years, you will have $160,107 dollars, and you will have invested only $73,000 dollars.
- In 30 years, you will have $368,916 dollars, and you will only have invested $109,500 dollars.
It should be noted that investments are a risk that is mitigated over time: the longer you hold an investment, the less risk you acquire and the greater the opportunity for growth. In fact, while volatility can give you a bad year, as 2022 was for the stock market, the historical average for, say, the S&P 500, is 13%, so achieving a 7% rate of return is very possible. It’s all in the magic of compound interest. Imagine what you can achieve if you invest more than $10 a day.
As you will realize, it is possible for you to become a rich person with your regular job.