4 Simple tips to become Rich

Everyone wants to be rich, but the path to success is incoherent and indistinct. It’s a common misconception that you just need to be lucky to be rich.

History has umpteen examples of rags to riches stories, where their determination and perseverance carved the path to their success.

Whether you’re just starting or looking to enhance your existing wealth, there are tried-and-true methods of growing your wealth and achieving financial independence.

From smart investments and budgeting techniques to developing a growth mindset and building multiple streams of income, there are numerous ways to increase your wealth and secure your financial future.

In this article, we’ll explore some proven strategies for becoming rich and living the life of your dreams that are inspired by the audio show “How to become Rich''.

This show is available on the Headfone app, and it focuses on emphasising the importance of financial education and gives a detailed account of how rich people do things differently.

Here is a peek into the learnings from the show.

1. Work to learn and not just to earn money

Instead of chasing a higher salary, focus on developing new skills that will help you achieve financial success in the long term.

Focusing solely on earning more money is one of the biggest mistakes people make. It’s important to focus on learning and acquiring new skills rather than picking high-income jobs that are temporary and will not be fruitful in the long run. This is especially true in the early stages of your career.

By focusing on learning, you become more valuable to your employer, increase your chances of promotions, and open new growth opportunities. Every job is a chance to build skills, gain experience and broaden your knowledge. Even if it's not your dream job, the skills and experience you acquire can be beneficial in the long run.

For instance, if your goal is to work in marketing, you can start by working in customer service. You'll learn about the customer experience, communication and problem-solving skills that are valuable in any marketing role.

Additionally, incorporating your interests into your work can increase engagement and motivation, leading to better performance and career satisfaction.

2. Assets and Liabilities

Building wealth requires a clear understanding of the difference between assets and liabilities.

Assets generate income, such as real estate properties, stocks, bonds, and businesses, have the potential to grow in value over time. Liabilities are expenses that do not generate income, such as consumer debt, car loans, and credit card bills.

Robert Kiyosaki explains this precisely in the book 'Rich Dad Poor Dad'. He writes "An asset puts money in my pocket and a liability takes money out of my pocket".

For example, if you buy the latest phone on EMI you will have to clear your instalments every month from your salary which is taking away money from your pocket and by the time you have cleared your instalments the phone is already outdated.

While if you invest in Mutual funds and pay your monthly SIP after a few years you would have accumulated 15 to 20% more than what you have invested which is adding money to your pocket.

Remove Liabilities

The goal should be to remove our liabilities and add on to our assets. This can be achieved through budgeting, avoiding lifestyle inflation, and paying off debt as soon as possible.

Lifestyle Inflation refers to the tendency to increase spending and upgrade one's lifestyle as income increases, rather than saving and investing. This can prevent reaching financial goals and put financial security at risk.

To avoid lifestyle inflation, have a budget and stick to it, align spending with values and priorities, and keep long-term goals in mind.

Liabilities such as consumer debt and credit card bills can prevent you from achieving financial freedom, as they often carry high-interest rates and can quickly add up.

Invest in Assets

Investing in assets before paying off liabilities is a crucial step in building wealth and achieving financial freedom. By concentrating on your assets that have the potential to appreciate and generate passive income, you can create a strong financial foundation that can sustain you over time.

Examples of assets include real estate and stocks, which can provide a steady stream of rental income and dividends, respectively.

Investing in assets diversifies your portfolio and reduces market risk.

Having multiple sources of passive income can provide a safety net during tough times and enable you to take calculated risks and invest in high-return opportunities. However, it’s important to invest wisely, seek professional guidance, and maintain a long-term mindset. Building passive income streams takes time and effort, and there is no guarantee of success, so it’s crucial to be patient and persistent.

By removing your liabilities and adding on to your assets, you can set yourself on the path to financial independence and long-term financial security.

?3. Taxes

Taxes are often seen as a tedious subject, but they play a crucial role in building wealth. Yes, Building wealth.

By understanding tax laws and regulations, you can make informed decisions about your finances, minimise your tax bill, and have more money for savings, investments, and other wealth-building activities.

Running a business allows you to take advantage of tax deductions and credits, reducing your taxable income and saving you money. For example, you can deduct business expenses like rent, utilities, supplies, and travel from your taxable income.

Ignoring taxes can be costly, so it's important to think of them as a tool, not a burden. By investing time in understanding tax rules, you can use tax laws to your advantage and grow your wealth.

4. ?Financial Education

Financial literacy is a critical aspect of personal finance that enables individuals to understand and make informed decisions about money and investments.

The 4 key aspects of financial education are Accounting, Investing, Market and Law.

With the rise of consumer debt and the complex financial landscape, financial literacy has become more important than ever.

Having a sound knowledge of accounting helps you in budgeting and keeping a track of your finances.

The key benefits of investment literacy include making wise investment decisions and taking control of your financial future. Wise investment decisions help you grow your wealth.

It is also crucial to know the market well and understand the law, your investments will make sense and give good returns if the market is ripe for investments. Knowing when and where to invest is as important as knowing what to invest.

Financial success is not just about intelligence or luck – it’s about tapping into your inner financial genius. We all have the potential to become financially savvy and attain our financial goals. It is all about what you can do to invoke your inner genius to become wealthy.

The Audio show How to Become Rich on the Headfone app beautifully explains the basic nuances of financial literacy. From setting clear goals and creating a plan to investing in your education and surrounding yourself with positive influences to adapting the right path to become financially savvy and attain your financial goals.?