Disclaimer: The advice in this article is general only. I am not accredited to give financial advice. before making any financial decision you should seek the advice of a professional.
What does it mean to be Rich? When are you rich? This isn’t going to be an article where I define being rich as having health, good relationships and giving to others. I mean those things are important but that’s not what this article is about.
When I say rich I mean all the expensive finer things in life. The cars, houses, clothes, travelling first class, watches, private jets and yachts.
When I say rich I mean all the things that are financially out of reach for the average person.
There is a difference between wealthy and rich. Wealthy means you are managing your money well, you are in little to no debt, you are able to save some money and enjoy things in life, you may be an average salaried worker but you can still be wealthy. Wealthy is financial independence, working because you want to not because you have to. Wealthy is control over your finances. Even if you never become rich, I encourage you to be wealthy.
What do I define as being rich? Well think about it, being rich means you can afford the things that the average person cannot. The average person is usually a salaried worker. Most people are these worker bees, they may earn a minimum of around 40k a year or in the higher end of the range they may be earning 100k or 150+k a year. If the average person makes an income in that range, that means the average person can afford a lifestyle within that range.
In order to be “rich”, I believe you must be earning at least 200k a year as a single, but this is the minimum, ideally you would be earning a lot more.
On 200k a year for example, you will probably be taxed on about half and clearing 100k a year. In 10 years you have made 1 million. With 1 million in 10 years you have something to play with, you could have a fully paid of house at 500k and have 500k to spend on some of the finer things. In another 10 years you will have another million. But do you see how this is the bare minimum? A few million dollars is hardly enough for a really rich lifestyle like what I described above.
On 500k a year and clearing 250k you will be making 2.5 million every 10 years.
1 million a year, that’s 5 million every 10 years. Now we are talking.
I know the above income levels are extreme but the point is that’s how much you really need to be making if you really want to be rich. But it’s amazing how many people don’t actually know how much they need to make to achieve their goals. They haven’t done the maths or analysed what they need to do.
People will read a popular “get rich” book that tells them that in order to get rich you need to buy assets! So without thinking much more into it they work at their 50k a year job and buy an investment property, this property gives them an extra 20k a year in income and now they are bringing in 70k a year. Over time they may buy another 1 or 2 properties but they will never be rich. And then they may wonder why the popular books advice never worked. I am writing this article so you don’t fall victim to basic advice that is an empty promise.
Most people who are rich are business owners that run successful businesses and have paid off their initial upfront cost. You will probably not get rich working for someone else. The exception is if you are in a job paying over 200k a year. Examples of high earning jobs are CEO’s, some managers, medical workers like surgeons, general practitioners, real estate agents, pilots flying the A380’s and 747’s real estate agents and other high commission sales job and a few other jobs.
But to earn millions are year, you need to be self-employed, and you will not get there working a job with an average salary investing in stocks or property. If you are serious about becoming filthy rich, you will need to own a successful business.
Yes of course actors, athletes, singers, lottery winners and people who inherit millions are all rich, these are rare examples and the probability of you being in this category is extremely low.
Think of it like the difference from driving from one side of the country to the other compare to flying.
The car travels at 100kph or less and the plane is travelling at 900kph, if you drive it will take days or even weeks if you live in a big country like Australia or America but if you fly it will only take a matter of hours.
This is what most self-help “get rich” books won’t tell you; those books are good at explaining how to become wealthy, which is good, but not RICH.
I’m not trying to discourage you; I’m just trying to explain what it takes to get rich if that’s what you really want. There is nothing wrong with wanting a Ferrari or a mansion by the sea. And if that’s what you really want then you need to do what it takes to achieve that. Work out how much money you need and then break that down into income goals. In general 200k a year will earn you the million in 10 years.
You also need to ask yourself if starting and running a business is for you, because you will probably need to work many hours and take some risks and the business might not even succeed. And if it does succeed can you see yourself running the company and everything that goes with it? The problems with employees, suppliers, the paperwork, the headaches etc etc? Sometimes being rich may seem nice when you see that guy cruising around in brand new Lamborghini Aventador but in reality all week he may have worked many hours running his stressful company.
And like I said above, a lot of people who own companies and are really rich didn’t get rich until their 40s, 50s and 60s because it takes time to build the business, pay off the upfront cost and start killing it.
A very good book that explains how getting rich works is The Millionaire Fastlane by MJ DeMarco. (not an affiliate link) Read it!
Thanks for reading my article. I hope you enjoyed it and learned something.