Summary: True wealth comes from a feeling of abundance, gratitude and contentment. So how do we become truly wealthy inside and out? In this article, learn tips for how to do just that along with real life examples of individuals who have achieved true wealth.
As we approach the new year, one of the biggest questions people are asking is how can I become wealthy in 2020?
Truth be told, there is no simple answer to this question. Creating lasting wealth involves smart investing as well as having the right mindset and creating the right internal environment for success.
In reality, becoming truly wealthy isn’t just about financial independence. Achieving wealth has less to do with a dollar amount and everything to do with our mindset. Sound crazy? There are plenty of millionaires with an endless supply of money that are unhappy and never experience true wealth. On the flip side, there are also people who are not financially independent at all, but still maintain a high level of happiness.
How To Become Wealthy on the Outside: 10 Tips
As mentioned above, there are people with a lot of money who aren’t happy, and there are also people without any money who are happy. Which path is better? Neither, because no one in either group is truly wealthy. Why? Because real wealth is about balance. To find that balance we need to become wealthy on the outside, which is what we’re going to discuss in this section. (It’s also important to become wealthy on the inside, which we’ll discuss in the next section).
Before we launch into our tips for creating external wealth, it’s important to note that creating this type of wealth doesn’t mean you have to become a millionaire. It’s more about creating the right physical environment for success, and becoming comfortable enough to not have to worry so much about making ends meet.
You can think about it in the context of Maslow’s Hierarchy of Needs. Until we’ve satisfied our basic psychological needs (air, water, food, shelter, sleep, clothing, and reproduction) and safety needs (personal security, employment, resources, health, and property), we won’t have as much bandwidth to focus on developing and maintaining healthy relationships, improving our self esteem, and becoming the best possible versions of ourselves. This doesn’t mean it can’t be done, but it’s much more difficult if we spend our days stressed out about money or worried that we’re not living our ideal lives.
If you’re ready to make a change, here are 10 tips for how to become wealthy on the outside.
Tip #1: Change the Way You Think About Money
I think it goes without saying that people either love wealth or hate it. Of course there are always exceptions, but a big reason why most people never build wealth is because they don’t understand how money works.
When you go to work every morning, you are essentially selling your labor. Just like you work and earn money, your assets can too. Understanding the idea that capital can also earn income can open your eyes to a powerful financial tool.
Think of every dollar you save as a soldier in your own financial army. Your mission is to make your “soldiers” work hard and down the road, start making their own money. You will achieve true wealth when you don’t have to sell your labor anymore, and instead live off of the labor of your assets. Investing in cash flowing assets is a great way to put your money to work.
Tip #2: Create and Stick to a Budget
Today’s the day where you not only create a detailed budget, but actually stick to it. If you want to become financially wealthy, it’s crucial to live below your means and stick to your budget long-term. Jot down your projected income along with your current expenses. Once you see how much money is coming in and how much is going out, you’ll start seeing where you’re spending (or wasting) a good chunk of your cash.
Sometimes all it takes to cut out unnecessary expenses and start saving or investing the money is to see exactly where your money is going. Create your initial budget and continue refining as you go.
Make sticking to a budget easier by automating your finances. Setting up automatic payments and distributions minimizes the urge to break your budget. Taking away the option to spend money outside your budget will keep you on track and progressing toward your dreams of true wealth.
Consider the following income break down:
- 50%-60% Fixed Costs: This includes expenses like utilities, internet, rent and debt.
- 10% Investments: This includes your retirement accounts like a Roth IRA and 401k plan.
- 5%-10% Savings: Your savings is money for vacations, weddings, down payments and unexpected costs.
- 20%-35% Guilt-Free Spending: This is your fun money.
Tip #3: Make a Long-Term Plan
Creating a budget is your plan of action. Sticking to your budget is a key part of your long-term plan. No matter your age, you should be investing in some sort of retirement plan. The earlier you start contributing the better, thanks to the magic of compound interest. However, it’s never too late to start saving for retirement. There are “catch-up” contributions available to those over a certain age.
Additionally, take advantage of employer matching programs for your 401(k), otherwise you’ll be missing out on free money. If that option is not available, look into opening a Roth IRA.
Tip #4: Work in a Career You Love
Working in a career that you love, are passionate about, are making a difference and are fulfilled is considered having “professional wealth.” Most of us have worked at a job we absolutely despised. Some of us have been working at the same job for so long that it seems impossible to make a career change to something we’re actually interested in. Not to mention the financial uncertainty that comes with changing careers.
Having said that, one of the most important decisions you can make on your path to becoming wealthy is to work in a career that you love. It can not only bring more happiness and contentment to your life, but your attitude will likely reflect in your work–because you actually care and take pride in what you’re doing. Life is too short to spend a huge part of your time doing something you don’t enjoy.
Tip #5: Surround Yourself with People You Love & Love You
Surrounding yourself with people you love and people who love you is considered social or relational wealth. Put your time and energy toward meaningful relationships that support you and build you up. Surround yourself with money-minded friends that share similar goals, aspirations and mindset. Doing so will keep you motivated and help propel you toward becoming wealthy inside and out.
Tip #6: Live in a Place You Love
Living in a place that you love and surrounded by the things you want and need is considered environmental wealth. Did you know that your personal environment has a huge impact on your overall well being? Your home and work environment can influence your mood, your behavior and motivation. It facilitates or discourages your interactions with others and can either create or reduce stress.
A number of studies have shown that a healthy environment, like plants in your office or a picture of a happy memory hanging on your wall, can do more than just boost your mood. A pleasing environment is proven to affect your immune system and overall physical health.
Even making small adjustments to your home and work environments to make them more appealing and positive can improve your quality of life exponentially.
Tip #7: Find Good Mentors
A few months back, we published an article about tips for finding the right mentor. A mentor should be an experienced and trusted advisor. Whether that’s in your field of work or in your personal life, a great mentor has the ability, time and desire to help you reach your potential.
The majority of individuals who have successfully achieved true wealth did so with the help and guidance of great mentors. Take advantage of your resources and do everything you can to learn from the wisdom and experience of those around you.
Tip #8: Choose the Right Investments & Diversify
The very best thing you can do to become wealthy inside and out is to invest in yourself. You are your own best resource. Before you decide where to invest, take a hard look at your own skills, talents and interests, and think about the best ways to maximize your potential.
You may choose to spend time or money advancing your education and refining your skills. Investing in yourself includes putting yourself out there, connecting with others and looking for opportunities that will help you build true wealth.
Next, you’ll want to make sure to meet with a financial advisor to help guide your investing decisions and portfolio allocation. A balanced investment portfolio, tailored to you, will minimize risk and maximize growth.
Consider the following long-term investment options:
- Retirement Accounts – 401(k) and/or Roth IRA
- Low-Cost, Diversified Index Funds
- Real Estate
Tip #9: Create Multiple Streams of Income
Use the skills you have to start a side-hustle to earn extra income. Use the talents and skills that you have to start an online business. One great thing about money is that there’s no limit to how much you can earn and save. There are always ways to create multiple streams of income, you just have to be on the lookout for an opportunity to capitalize on your skills.
Tip #10: Maintain Your Standard of Living
Having the money and resources to keep up with your standard of living without having to work is considered financial wealth. The pinnacle of financial wealth is peace of mind–meaning you live to work, not work to live.
Knowing what it takes to maintain your standard of living is different for everyone. A good rule of thumb is to keep your living expenses low, regardless of how much money is coming in. Just because you get a raise every year, doesn’t mean you should be spending more. Rather, you should work to maintain the same standard of living, while investing the extra money.
Top 5 Wealth Building Investment Ideas
Looking for the best investments for building wealth? Check out these five ideas…
Idea #1: Invest 15% of Your Income in Retirement Accounts
The first 15% of your income should go directly into your retirement accounts. These accounts are an absolute necessity if you want to become wealthy. Because retirement accounts are long-term investments, their earning power comes from the magic of compound interest. The money in your retirement accounts will continue to compound or grow over time. Ideally, making it possible to retire wealthy.
Idea #2: Build a Diversified Portfolio
Most of us have heard the phrase, “Don’t put all your eggs in one basket.” The same principle holds true with investing. Where investors lose the most is when they put all of their money into one type of investment or one business venture. Don’t put yourself at risk for a catastrophic loss. Try setting up multiple streams of income, come up with a few backup plans and continue looking for opportunities to invest elsewhere.
Idea #3: Try Real Estate
Real estate has been the vehicle to become wealthy for many investors. While it doesn’t happen overnight, it is possible to increase your net worth in a shorter time frame. Consider buying a rental property in a growing market or buying into a portion of a bigger, multi-family real estate project. This is a great way to generate monthly cash flow to reinvest.
Idea #4: Venture into Entrepreneurship
20 percent of small businesses fail in the first year, and about 50 percent fail within five years. While those statistics may not be very appealing, venturing into entrepreneurship and starting your own business is one of the best ways to become wealthy.
Would you rather be working for people or have people working for you? If any part of you would prefer having people work for you, entrepreneurship may be just the ticket to achieving wealth.
Idea #5: Work Hard Now
Even if you’re working at a boring job, doing your work well and going above and beyond almost always pays off. Your work ethic and drive will speak for itself. Imagine that you are the CEO of the company you work for. Would it change your approach and attitude toward your daily duties? Whatever job you do, give it everything you’ve got. People will notice and opportunities will start coming your way.
How To Become Wealthy on the Inside: 10 Tips
As we’ve discussed, there’s more to being happy than how much money is your wallet or the type of car you drive. True wealth can be created from the inside. And once you create this internal feeling of wealth it’s much easier to achieve wealth externally.
Again, it’s all about balance. Working hard to get your external wealth on track may add some zero’s to your bank account, but without the other half of the equation, internal wealth, you’ll never achieve true wealth.
Here are 10 tips for how to become wealthy on the inside:
Tip #1: Make Time for Family
The purpose of life is not to spend it locked to our desks at work. No amount of money in the world will give you the memories, love and fulfillment that spending time with your family and friends will give you. Afterall, what is the driving factor behind working hard to become wealthy if not to enjoy life with the people you love most? Keep your priorities in order and always remember why you get up every morning and go to work.
Tip #2: Give Back
Giving back to your community and adding value to other people’s lives is considered charitable wealth. When we look outside of our own wants and needs and instead look for ways to help others and give back, we are building internal wealth. Donating your time and/or money is both selfless and selfish (the good kind of selfish). Not only are you adding to someone else’s life, giving back is also an opportunity to feel gratitude for what you have rather than what you don’t. It’s a win-win situation.
Tip #3: Develop a Mindfulness Practice
Mindfulness is a type of meditation where you focus on being intensely aware of what you’re sensing and feeling in the moment, without interpretation or judgment. Developing a mindfulness practice may include breathing exercises, guided imagery, or music to relax the body and mind and help lower stress.
Start a daily mindfulness practice and as part of your goal for becoming wealthy on the inside.
Tip #4: Focus on Gratitude
There is no amount of money in the world that can make you feel wealthy. There will always be one “thing” that you don’t have but wish you did. Gratitude is the key to becoming truly wealthy. Without gratitude, the focus is only on the things you don’t have–the never-ending want for more. On the other hand, when we choose to focus on being grateful for what we do have, our perspective on life in general shifts in a positive direction.
Tip #5: Discover Your Purpose
Knowing your true meaning and purpose in life is considered spiritual wealth. Discovering your why and living according to your life’s purpose can help make difficult decisions easier and light the path on your journey to internal wealth.
Tip #6: Achieve Physical Wellness
Being healthy and having the wellness for optimal energy to perform any tasks at your maximum peak is considered physical wealth. Taking care of your physical wellness is equally as important as your mental, emotional and financial health. In fact, maintaining a healthy lifestyle has proven to help with depression, elevate your mood, improve your sleep, lower stress and declutter the mind.
Tip #7: Develop Resiliency
Having the resiliency to overcome and remove any negative emotions and looking for the best in every situation is considered emotional wealth. Did you know that Michael Jordan was cut from his high school basketball team? Did you know that following a near-fatal car accident, Walt Disney created Mickey Mouse in a dilapidated garage?
My point is, many of the most successful and wealthy people on the planet learned how to develop resilience in the face of rejection, hardship and failure.
Tip #8: Work Toward Mental Wealth
Knowledge, expertise, abilities, skills, and experience to accomplish your goals is considered mental wealth. You should be your biggest fan, supporter, protector and advocate. Your mental wealth depends on the confidence you have in your own skills, abilities and expertise.
Tip #9: Create Time to Experience the Things You Want
Time to experience what you want and accomplish your goals is considered time wealth. Going back to your why, working hard to earn a living while also creating time to do and experience the things you want can help you become time wealthy.
Tip #10: Balance Your Life
Look back at all the tips for how to become wealthy inside and out. Notice that there isn’t one tip that is more important than the next. Rather, these tips can collectively help you become wealthy in all aspects of life, not just financially. Commit to establishing balance in your life.
10 Wealthy People Who Started Out with Nothing & How They Created Wealth for Themselves
Did you know that new research has shown that almost 68% of millionaires are first-generation rich? Next we will share 10 rags-to-riches stories and how these people created wealth for themselves.
1-Roman Abramovich, Russian Business Tycoon & Chelsea Football Club Owner
Net worth: $8.2 billion
Born into poverty and orphaned at age two, Abramovich was raised by his uncle and other family members. He started a small business producing plastic toys, while studying at the Moscow Auto Transport Institute. Eventually, his small company helped him enter the oil industry and make a name for himself. Abramovich, the sole leader of the Sibneft company, finalized a merger making it the fourth largest oil company in the world. The company was then sold in 2005 for $13 billion.
2- Mohed Altrad, Entrepreneur of the Year & Montpellier Rugby Club President
Net worth: $1 billion
Raised in a desert-dwelling Syrian tribe, Altrad was raised by his grandmother after his mother died. His grandmother forbid him from attending school in the city that is now the capital of ISIS. Against his grandmother’s wishes, Altrad attended school and later moved to France to attend university, where he spoke no French and lived off of one meal a day. After earning his PhD in computer science, he worked for several leading French companies and then bought a faltering scaffolding company. Altrad turned this company into one of the world’s top manufacturers of scaffolding and cement mixers.
3- Kenny Troutt, Founder of Excel Communications
Net worth: $1.5 billion
Troutt grew up in a middle-class family, with his dad working as a bartender. He went on to sell life insurance to pay for his tuition at Southern Illinois University. In 1988, he founded the phone company Excel Communications, which later went public. In 1998, Troutt merged the company with Teleglobe in a $3.5 billion deal. Now retired, Troutt invests in racehorses.
4- Howard Schultz, Starbucks CEO
Net worth: $2.9 billion
After earning a football scholarship to University of Northern Michigan, Shultz began working at Xerox upon graduating. He then acquired a Starbucks coffee shop, which had only 60 shops open at the time. In 1987, Shultz was named the CEO of Starbucks and built the coffee chain to 16,000+ stores worldwide.
In an interview, Shultz shared, “Growing up, I always felt like I was living on the other side of the tracks. I knew the people on the other side had more resources, more money, happier families. And for some reason, I don’t know why or how, I wanted to climb over that fence and achieve something beyond what people were saying was possible. I may have a suit and tie on now, but I know where I’m from and I know what it’s like.”
5- Ken Langone, Founder of Home Depot and Electronic Data Systems
Net worth: $2.8 billion
Raised by a plumber and cafeteria worker, Langone worked random jobs and his parents mortgaged their home in order to help pay for school at Bucknell University. He then worked with Ross Perot at Electronic Data Systems, taking the company public in 1968 and later selling it to HP. Two years later, Langone and Bernard Marcus started the well-known hardware store, Home Depot.
6- Oprah Winfrey, The First African-American TV Correspondent
Net worth: $3 billion
Born in Mississippi to an extremely poor family, Winfrey went on to earn a scholarship to Tennessee State University. At the age of 19, she became the first African-American television correspondent. Winfrey got a job at an AM talk show in Chicago in 1983, which went on to become The Oprah Winfrey Show.
7- John Paul DeJoria, Founder of John Paul Mitchell Systems and Patron Tequila
Net worth: $2.9 billion
A first-generation American, DeJoria began selling Christmas cards and newspapers before the age of 10 in order to help support his family. Later, he lived in a foster home and joined a gang before deciding to join the military. While living out of his car, DeJoria created John Paul Mitchell Systems after taking out a loan for just $700 and sold shampoo door-to-door. Eventually, he founded Patron Tequila and continues to invest in different industries.
8- Shahid Khan, Owner of Flex-n-Gate, the NFL’s Jacksonville Jaguars, and Premier League soccer club Fulham
Net worth: $4.4 billion
Originally from Pakistan, Kahn came to the U.S. and worked as a dishwasher for $1.20 an hour while attending the University of Illinois. He’s now the owner of one of the biggest private companies in America, Flex-n-Gate. A sports enthusiast, Khan also owns the NFL team Jacksonville Jaguars and Premier League soccer club Fulham.
9- Do Won Chang, Founder of Forever 21
Net worth: $6.5 billion
Korean immigrants, Do Won Chang and wife Jin Sook, moved to the United States in 1981. To make ends meet, Do Won worked three jobs, as a janitor, a gas station attendant and in a coffee shop. Three years later, the couple opened their first clothing store. Their clothing store, Forever 21 can now be found around the globe, with 480 stores and $3 billion in sales per year.
10- Ralph Lauren, Founder of Ralph Lauren and Polo
Net worth: $6.8 billion
Growing up in the Bronx, New York, Lauren dropped out of college and joined the Army. Later, while working at Brooks Brothers, he had the idea of making wider and brighter tie designs for men. In 1967, Lauren sold $500,000 in ties in just one year. The next year he started the clothing brand Polo.
We hope this article helped you understand that becoming wealthy is a two part endeavor. It’s about finding balance between financial and personal wealth. Learning how to become wealthy inside and out is not an easy feat, but it is absolutely possible. Use these tips to get ahead of the game and start living life on your own terms.
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