There is actually no secret to being wealthy. But so few people become wealthy, that it might as well be a secret. The question is not, “Does this work?”, but rather, “Am I willing to do this?” You don’t need to know more, but to do more of what you already know.
There are three aspects to becoming wealthy: how much you spend, what you spend it on and how you think about your spending. Most people have little control over how much they earn. Your pay depends on the job you have, what your education was and what your experience is. It may also depend on who you know. There are things you can do to increase your income, but more income does not guarantee more wealth. I personally know people who earn over $1 million dollars in a year, who burn through all of it. Most people will agree that living paycheck to paycheck is not wealthy. And it doesn’t matter what the size of your paycheck is, if it’s all gone at the end of the month.
The first part is spending less than you earn. This means that, almost ironically, becoming wealthy means spending less than you could. If you spend everything you earn, or more, you’re not moving ahead towards wealth; you’re either standing still or moving backward. Different people have different strategies for saving money, and it’s important that it suits you. Saving money shouldn’t be about sacrificing your happiness or your health. But as long as you ensure there’s money left over almost every month, and then put it away somewhere, you’ll be making progress.
The second part is what you do with the money you save every month. There are many choices and, especially early on, it doesn’t really matter what you do, as long as it holds its value. Using it to buy a new boat or car would cause your savings to lose value (unless you are restoring an antique). If you put the cash in a bank savings account, it’ll still be there when you want it. At first, the difference between saving $1200 per year and $2400 per year is much greater than putting $1200 to work at 4% vs. 8%. If you don’t see that, figure out what each would be worth at the end of three years. Becoming wealthy takes a collection of skills, but saving is the base. After developping that habit, you can then focus on investing wisely. If you’re still saving $100 per month, but have accumulated $200,000, the difference between 4% and 8% return in a year becomes much more significant.
The final part is the way you think about your wealth. It may be a cliche, but it really is the difference between seeing the glass half-empty or half-full. If your family earned over $10.00 per day ($3,652/yr USD PPP) in 2005, you had more income than 80% of humanity or 5.1 billion people (source). Do you think of yourself as rich? Some people will never be rich. Maybe they’re trying to keep up with the neighbor that has a big house, the neighbor who has a fast car and the neighbor who has a boat. The problem is, those three are separate families and it’ll take a lot of resources to keep up with all of them. Or maybe they’re just married, trying to have the same lifestyle as their parents, who are 30 years ahead. Or maybe they just think of themselves as always needing more. Other people will never be poor. They’re grateful for what they have and they always think of themselves as having enough. If I see a five dollar bill on the ground, I’ll leave it there, because I don’t need it and I bet someone else needs it more.
To be truly wealthy is a frame of mind. It means knowing that you have enough, through spending less than you earn, through being productive with your assets and through being grateful for what you have. Instead of comparing your situation to those who have more, you will be mindful of the vast majority of humanity who lives on much, much less.