How to Become Rich

People don’t become wealthy by accident, here’s
how they do it

As a financial adviser, I have occasionally found myself feeling envious of certain clients. Not because of their wealth — but because they were disciplined and determined enough to do all the
right things that enabled them to accumulate their wealth and, in many cases, retire early. Despite my
expertise, I, like a lot of people, sometimes struggle not to do the wrong things that make being rich, let alone retiring at all, a pipe dream. Financially responsible and successful people don’t build their wealth by accident — or overnight. Becoming rich takes serious willpower and long-term vision. You have to be able to keep your eye on the prize of financial freedom, be willing to sacrifice your present wants for the sake of your future and develop good habits to win. Here are 10 habits you can start putting into practice now.

1) Start early

As the old saying goes: The early bird catches the worm…or, in this case, gets to retire in style. The
sooner you put your money to work, the more time it has to grow. Earning a paycheck, whether you
are self-employed or work for a company, means the opportunity to contribute to an IRA, which you
should seize ASAP. If you’re fortunate enough to get a job with a company that offers a matching contribution to their retirement plan, you need to make it a priority to enroll in the plan as soon as
you are eligible. It can be the difference between retiring early and never retiring.
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Think about this: If you invested $10,000 and left it to grow for 40 years, assuming an average return per year of 8%, you would end up with over $ 217,000. But if you waited 10 years and invested $ 20,000 — twice as much — you would only end up with just over $200,000. Whatever your situation might be, saving and investing money today is better than waiting until tomorrow. Start now.

2) Automate

You can be your own worst enemy when it comes to financial success. It’s all too easy to procrastinate and neglect what needs to be done and, meanwhile, give in to temptation and spend
more than you should. It’s the perfect recipe for not becoming rich. The best way to protect yourself from yourself is to automate your savings. That means setting up recurring transfers on a regular basis from your checking account to your savings and investment accounts (or setting up auto deduction from your paycheck to your employer-sponsored retirement plan). This way, you force yourself to avoid bad money habits and save what you would likely otherwise spend. If you haven’t already, set aside 15 minutes on your calendar now to do it. Not later, now. Your rich future self will thank you.

3) Maximize contributions

When it comes to retirement account contributions, you’ve probably been told to start small and then try to increase the amount by at least 1% every year until you max out. If you’ve been
procrastinating, then yes, even a small starting contribution is better than none. The problem is
that small efforts can lead to small results. If you want to be rich, you have to save like you mean it. And that means contributing the max amount
allowed from the get-go (and at least as much as
your employer will match in your 401(k) plan).
This is especially true if you are starting to save
later in life and need to play catch up. You might
worry that maxing out your contributions will
squeeze your cash flow too tightly, but it is easier
to get in the habit of spending less if you don’t
have that extra to money to spend in the first
place. It’s much harder to increasingly scale back
your budget year after year to accommodate for
increasing contributions.

4) Never carry credit card balances

Revolving, high-interest debt is one of the biggest threats to your financial freedom. It can seriously drag you down, costing you thousands in unnecessary fees and interest charges — and prevent you from saving more. If you ever want to be rich, you have to ditch the bad habit of carrying credit card balances, along with the minimum payment mentality. Instead, you need to learn how to use credit wisely, rather than as a crutch, and commit to paying off your balances in full each month. Smart credit card holders know and practice the tricks to maximize rewards, points, discounts and monthly cash flow without getting in over their head. Of course, living within your means is key to your success.

5) Live like you’re poor

Have you ever met someone who is unassuming
and modest and then were surprised to later learn
that they are actually rolling in dough? I had an
older client who was stuck in 1983: he wore ugly
brown suits and running shoes, drove a beat-up
baby blue Volvo station wagon and lived in the
same modest house he bought 40 years ago.
Turns out, this man was an uber-successful
entrepreneur and multimillionaire — and even richer because of his humble habits.
Millionaires are all around us, and many of them
are probably not who you would think. This is
because they smartly live below their means and
save their money rather than showcase it. Of
course, it’s easy to live below your means when
you have millions, but even if you have far less,
getting into the habit of spending minimally now
will help you have a lot more later. The trick is
adopting a “less is more” mentality and sticking
with it, even when your income and net worth
increase in the future.

6) Avoid temptation

The temptation to live large and beyond our means is all around us: TV, magazines, friends, family,
colleagues, “the Joneses.” It is nearly impossible to escape the pressure to spend, spend and then
spend some more. The problem is that overspending often leads to debt accumulation, undersaving and long-term financial insecurity. Force yourself to avoid negative financial influences as much as possible. That means going cold turkey: Avoid malls, unsubscribe from all those retail emails and don’t sign up for new ones and say “no” to invitations that you know will cost you. Then, replace these temptations with things that motivate you.

7) Be goal-oriented

Have you hit a snag with your office mentor? 
Young employees sometimes hit snags in their relationships with their office mentors but there are ways to salvage the relationship. Goals inspire us, motivate us and give us purpose. Many of us have common goals, such as paying off debt, buying a house and retiring by a certain age. Maybe you have another goal of starting your own business or buying a second home. Unfortunately, goals are easily overshadowed by the daily stresses of life and all too often forgotten and neglected. When goals are just fleeting thoughts in your mind, they lose their meaning and influence over your behavior. This leads to bad financial habits, and your dream of becoming rich stays just that — a dream. To make it a reality, stay focused on your goals by committing the time to think about them, prioritize them and assign a target saving amount to each of them if possible. Then you should display your goals in places where you can be reminded on a regular basis, which will keep you accountable and help you stay on track.

8) Get educated

Successful investors take the time to study key financial concepts, learn the dos and don’ts and stay abreast of current trends. They take advantage of opportunities to strengthen and expand their understanding and expose themselves to financial information on a daily basis. Take a cue from them and subscribe to The Wall Street Journal NWS, +0.32% , watch CNBC CMCSA, +0.09% , pick up Fortune TIME, -0.10% instead of a gossip magazine and follow financial experts on Twitter TWTR, -1.90% . Become a devoted student of
money, and you can master the science of getting rich. Be careful not to overwhelm yourself, and only follow advice from credible sources, so you don’t fall victim to progress paralysis or unsuitable and potentially dangerous investments.

9) Diversify your portfolio

Successful investors also know not to put all of their money eggs in one basket—or two baskets, for that matter. They spread their wealth across a variety of investments, from stocks, mutual funds, ETFs and bonds, to real estate, collectibles and startups. A diversified portfolio means that you can potentially take advantage of multiple sources of growth and protect yourself from financial ruin if one of your investments bombs.
An easy way to achieve diversification is to invest in an asset-allocation fund, such as a target-date fund or “life strategy” fund that is based on your risk tolerance. And if you don’t have the means to buy property outright, you can explore investing in real estate mutual funds, ETFs or investment trusts (REITs), which can even offer steady income in some cases. Learn more about crowdfunding, which now gives the average investor the ability to support startup companies. Just be careful not to concentrate your money too heavily in any one investment.

10) Spend money to make money
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Warren Buffett

It’s true that there’s a price to pay for wealth, but unless you’re Warren Buffett, it is not gambling — and losing — on stock picking. Impulse, naiveté, and emotions, particularly greed and fear, can seriously hinder your chances of being rich if you let them. The best way to protect yourself and get a step up on your financial goals is to first invest in a team of financial professionals. This means hiring a qualified and experienced financial adviser, accountant and in complex cases, an estate planner. Yes, working with pros will cost you, andyou can still do some DIY investing, but their objectivity, expertise, personalized guidance and ongoing monitoring can be well worth it (and relieve you of the huge burden of figuring it all out on your own). Make sure that you interview several candidates so you can find pros you trust, feel comfortable with and whose approach is a good fit for your situation. And even if you work with an adviser, make sure that you’re still involved and aware of
where your money is going — and why.