How do you get rich? Getting richer can seem unattainable, especially for the middle class. However, building and maintaining wealth requires the same strategies, regardless of your financial class. Dave Ramsey‘s shared his top six tips for getting richer in one of his blogs and below we will explore his wealth-building tips.
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There are only two ways to generate more investable money: increase your income or lower your expenses. Increasing your income is one of Dave Ramsey’s top tips for getting richer. Working to increase your income creates extra money to allocate toward building wealth. There are different ways you can increase your income, such as asking for a raise or starting a side hustle.
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The other way to create more free cash flow is to lower your expenses. Ramsey suggests cutting extras completely out of your budget and only focusing on essentials. This means meal planning to save on groceries, eliminating unused streaming services and turning lights off to save on utilities.
Another tip for getting richer is to eliminate debt. Ramsey believes that spending this month’s income to pay for debt (aka: the past) doesn’t let you take full advantage of wealth-building strategies. By eliminating your debt, you can reclaim your paycheck and use today’s money to get richer.
Emergencies are unavoidable. However, by having an emergency fund, you won’t face a financial disaster or derail your wealth-building plans. According to Ramsey, your emergency fund should contain enough money to cover three to six months of living expenses. If an unexpected expense arises, you can tap into this fund and avoid taking on more debt. Once your emergency fund is fully funded, you can start working on other goals, such as paying down debt or investing.
Ramsey suggested investing 15% of your gross household income as a great way to get rich. Consider using multiple accounts to meet this percentage, including an employer’s 401(k), a Roth IRA, an HSA and a brokerage account. However, you don’t have to complicate this. If you like the investment options in your employer’s 401(k), up your contributions to 15% and be done.
Social media is filled with influencers and financial “gurus” who are trying to sell you on different products or services. Getting richer requires you to avoid these trendy scams. For example, an influencer might sell a guide on how to get rich. This isn’t a necessary purchase. All the information you need to build wealth can be found online for free. Don’t try to get rich quickly. Instead, focus on tried and trusted strategies, like consistent contributions to the stock market.
