How to become Rich: Started Work

If this is the first article that you're reading in the How to become Rich series then I encourage you to go back and read The Basics first.

Starting Work: The Situation

So after University/ Education comes the world of work. For many, this is the start of the rest of their lives. Personally, I do no intend to work for the rest of my adult life . My ideal goal is to be retired in my 50s. However, I am well aware that to achieve this goal I am going to have to work hard today!

For many, starting work usually means the first step on a career path. However, I would also point out that many of my peers, myself included, have not begun the working world in their dream job. This may be because times are hard and we cannot afford to be fussy about our jobs at this stage in our lives. Alternatively, your dream job may require you to have skills and experience in areas that are less enjoyable, as in my case.

Bank Accounts

Quite simply you need a current account (ideally without annual charges). You should have all your income from your job paid into that account and set up all direct debits out of that account. This current account is your main account from where most of your transactions take place.

Attach a cashback/rewards credit card to this account, set up a direct debit to pay off the bill in full each month and aim to spend on your credit card rather than on your debit card. Don't go over your credit limit! Make a note of every transaction that you make in the card and update a spreadsheet every week with your current credit card spending and compare this your bank account balance. Don't spend more than you have! If you do then you're either ignorant or stupid. Of course we all make mistakes, but we also learn from mistakes made by others so we don;t have to. I repeat, do not spend more than you have, otherwise you will accrue "bad" debt and you can write off any hopes of becoming a multimillionaire.

Set up your standing order to save 10% of your after tax income. To calculate this you multiply 0.1 by your net income (you can ask your HR what this monthly amount is). You should call up your bank (or you can do this online or in branch), ask them to transfer the savings monthly on the day after your income is paid into your account. 

As long as you keep a watchful eye on your spending in comparison to your disposable income (after tax and savings) you should find that your spending adjusts accordingly. 

If you've managed to save 10% over a few months then why not try to increase the percentage to 15%? Alternatively you could increase the percentage every time you get a pay increase. This way you will notice the percentage increase in savings less.


Sign up and invest in your Company pension scheme as soon as you can. The money comes out of your paycheck before it even hits your bank account. As such you won't even notice that you won't have it, and will be simultaneously looking after your future.

You must invest in a pension before doing anything else as there are unmissable tax benefits as well as the possibility that the Company you work for may match your contribution. All this is free money that you could be missing out on.

As I have advocated before, split your savings, 50% in a mix of cash and bonds and the other 50% in investments. The reason for this is to build up a pool of emergency cash as insurance to something bad happening, such as losing your job. Build up 6 months worth of earnings in a cash pile and put the rest of your "cash and bonds" 50% portion of your savings in bonds.

However, you don't just want cash earning little in the way of interest. Instead, you want your money to work for you I.e you want your money to produce money! As such you need to invest in a mixture of bonds and shares. For those that are clueless in the methods of choosing companies to invest in I suggest an index tracker such as FTSE All-Share tracker to give you broad, diversified coverage of the stockmarket. The reason why I recommend investing in stocks and bonds is because they tend not to correlate with each other. As one goes down the other tends to go up.

...And don't forget to utilize your ISAs!!!

Job - "The 9 to 5ers"

Having a job and being an employee is not the way to become rich. Don't get me wrong, it helps you along the way, but to become rich you need to be an investor and a businessman. Of course there are those in jobs such as investment banking who will disprove my earlier statement. However, the above is true for most people.

We've already covered investing in the "savings" section. Many will complain that they don't have time to start creating a business. I would argue that in the age of the Internet there is no excuse for not creating a business in the evenings and at weekends. We are the "9 till 5" generation ( of course we work longer hours than that - it's just an expression!) and as such we come home from our day jobs and work on our business and moneymaking ideas. I currently this we sit as well as work on developing a business idea. You can and should do the same. You're not going to become a multimillionaire by being an employee and putting money in someone else's pockets! 


Okay, so the chances are that you don't live with your parents rent free, don't have rich generous parents, have not recently won the lottery and have not just inherited a lot of money. As such you probably cannot afford to buy a property, nor even put a deposit down on one. So it is to the rental market that many first time buyers should look.

When hunting for a rental property, many guess what amount of rent they can afford to pay, have a look at a few they like, and pick one based on its location and aesthetics.

This is not the best way to determine what property you should live in. The chances are that rent will be your biggest outgoings for the first few years and as such you want to ensure that you try and minimise the rent that you pay as much as possible. The strategy is therefore to estimate how much you think you will need to pay for everything else including bills and entertainment and then, working backwards you can figure out what level of rent you can afford to pay monthly. Only then should you go out and look for a property, based on the monthly rent you can afford.

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Joe said...

Great article! A good guide for those starting out on their personal finance journey! Any advice for choosing a new UK current account?

Mr. Moneybanks said...

Hi Joe,
Ideally I'd just say any that does not charge you. I do not believe whether you get 0.1% versus 0.2% will make the big difference to your finances.
Good luck