How to get rich

The road to riches

A brief breakdown of the essentials to becoming a multi-millionaire. The only question is: Do you have the mental strength to stick with the plan.

The get rich plan

There are several parts to my 'Get Rich Plan' and they all work in conjunction with each other. There will be upcoming posts on each part. They are:

1. Frugality - this does not mean living off beans on toast for the next 30 years and then living off "turtle-duck soup served with a golden spoon" for the rest of my life. Everything in moderation, including moderation! There's nothing wrong with enjoying yourself from time to time but keep a record of everything you're spending. Open a 'note' on your phone and every time you spend write it down under a self-made category that you will understand. For example, money spent on eating food or drink out, I categorise as 'restaurant'. Make sure you update an excel spreadsheet every so often with your monthly income and outgoings. Furthermore frugality requires seeking the best deals on comparison websites for all kinds of goods and services, considering second hand and even changing things like your bank (regularly) to get the best current accounts.
2. Budgeting - See post on budgeting
3. Saving - The amount you are willing to save must appear on your budget. I would recommend a savings rate of 20% of your net income. This is a realistic goal for most people. Some of my favourite bloggers, such as Invest It Wisely (http://www.investitwisely.com/) encourage as much as 50% saving. This is much more adventurous, and definitely something to work towards.
4. Debt - Some debt is good and some is bad. credit card debt that is paid each month is good debt as it builds your credit score. Use it.
5. Housing - This is a complicated topic. It is a personal choice but I would advocate long-term renting over buying. I will explain this in an upcoming post.
6. Investing - Savings must be invested in businesses, property, shares i.e. income-producing vehicles that generate capital. Potentially also acceptable would be an index tracker for the more conservative investor.
7. Tax - tax efficiency is key. You want to be able to retain as much money as possible. This involves using ISAs etc.
8. Job - you don't need to be an investment banker, however a well paying job will definitely help. If you are not one of these people it isn't the end of the world. You will need to work harder to produce other investment vehicles.
9. Time and Patience - this is key. Getting rich does not happen over night. Ignore the get rich quick schemes.
10. Self-belief - If you want it badly enough, your efforts will be efficiently directed to your goals and you WILL achieve!

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