All of us want to be rich, isn’t it? But do we know how to become rich? While all of us have the necessary resources to get rich, unfortunately, most of us don’t use them. As a result, we remain craving wealth but without getting it.
Actually, getting rich isn’t t that difficult. There are several smart money moves that can make you rich. However, it does take some extra effort on our part. In this article, I will be discussing how smart money moves can make you rich. All of these steps are simple, though they require a bit of discipline and extra effort.
Smart Money Moves that Make You Rich
The first thing we need to remember is that working on these smart moves isn’t an overnight process. But is getting rich something we can do instantly unless you win a million Dollar Sweepstakes or Lotto? Therefore, you’ll need some time and, of course, a lot of patience to get rich with these smart money moves.
What are these smart money moves? Continue reading because now I will be discussing these smart money moves in detail. And each move is as important as the other if you’re serious about getting rich.
1. Change Your Mindset
“Before you change your purse from poor to rich, it’s necessary to change your mindset from poor to rich,” says Robert Kiyosaki, author of the bestseller, ‘Rich Dad, Poor Dad,” an American entrepreneur. And I agree with what Robert Kiyosaki says. Because you cannot think like a poor person and yet hope to get rich.
There are strong reasons why Robert Kiyosaki says so. When you change your mindset from poor to rich, you start getting newer ideas for making money. Instead of looking at the shortage of funds, you start believing you have a lot of money. This, in turn, helps you to think outside the box and start putting your money in the right places to make it grow.
Therefore, the first smart money move that you need to make is to change your mindset from poor to rich. Countless people across America and the world have done so successfully and become rich. There’s no reason why you can’t be among one of these people. Obviously, changing your mindset takes some training. However, with some patience and the right kind of thinking, you can eventually change your mindset from poor to rich.
2. Money Begets Money
One of the things that I’ve learned the hard way is that money begets money. In simple words, I mean you have to plough in money to grow money. This means investing slowly but steadily till you start becoming richer and richer.
Most of us are blissfully unaware that we can start our investment journey with as little as $5. This is possible through five amazing investment apps that you can download on your phone right now. These apps include Robinhood, Acorns, TD Ameritrade and others. These apps are free to download and use, though paid versions are also available for a reasonable fee.
For as little as $5, you can invest in stocks, Exchange Traded Funds (ETFs), Mutual Funds, currencies, cryptocurrencies and commodities. Let’s say you wish to buy a stock that costs $100, but you have only $5 in hand. It’s still possible to invest in that pricey stock. How? You can buy fractional stock or one fraction of that stock worth $5 through these apps. And when you invest more and more money, you will hold one full stock or a unit of ETF or Mutual Fund.
I would encourage you to download and use these apps because they provide an ideal way to build wealth slowly and without hurting your finances. As a matter of fact, you’re investing small amounts that you wouldn’t even miss.
Over a period of time, all your small investments become a large amount as the values of stocks, ETFs, Mutual Funds, currencies, cryptocurrencies and commodities are always moving upward despite occasional slumps. Therefore, downloading and using these apps is one of the smart money moves you can make to become rich gradually.
Here, I will point out the example of billionaire investor Warren Buffett. At the age of 11, he made his first investment by buying only three stocks of City Services. He held on to the stock despite its value going down, only to find it rising above his buying price again. You, too, can replicate this example by investing small amounts through these apps.
3. Make a Financial Plan
When writing about personal finances, I always quote this old and well-known axiom: “Failing to plan is planning to fail.” Most people can’t become rich because they don’t plan their finances properly. All of us have a vague idea of what we will do with the money. But vague ideas aren’t really concrete plans.
Normally, all rich people have short-term, mid-term and long-term financial plans for their money. That means they’re clear about what they wish to achieve within a short period, medium as well as longer duration of time. They plan meticulously about where they should stand financially at the end of a few months or even during retirement. And they work towards these goals.
A good financial plan provides you with a roadmap for your money. You will know what to do with it and how much savings and investments you will hold after a specific period of time. A financial plan also helps you find ways and means to save and invest to make your money grow.
For some of you, this might sound expensive, but it isn’t: Hire a good financial advisor or financial consultant, as they’re known. Usually, freelance financial consultants charge per hour only. Therefore, you can actually decide how much money you wish to spend on getting a good financial consultant.
You can find financial advisor or financial consultant who is qualified and certified to help you make your money grow. They have links with various banks, insurers and asset management companies. They can help you chalk out a superb financial plan depending on your income and expenses. Therefore, whatever you’re paying a financial consultant is also an investment of sorts.
If you want still cheaper options, you could go for a robo advisor. These come from various banks and financial companies. What are robo advisers? A robo advisor uses computer-based algorithms to calculate your income and expenses and reveal how much money you could actually save and invest. They also give you details of various plans available for you to invest and their anticipated outcomes over a period of time.
4. Understand the Time Value of Money
The simplest smart money move you can make right now is to understand the Time Value of Money. Obviously, this might sound like rocket science right now, but it’s not. I’ll explain it in simple terms.
Let’s imagine you have $200 in hand. Of these, you put away $100 in your bank account and don’t touch it for a year. And the other $100, you keep at home and leave it alone. If the bank is paying an interest of 4.5 percent per year, the $100 you saved in your account becomes 104.50 after a year. However, the $100 you kept at home remains $100 only.
But over year, the value of money dropped. Let’s consider this drop at two percent. That means the $100 that you kept at home can now buy you stuff only worth $98. While the $100 you saved at the bank can buy you things worth $102.50. That means you still have $2.50 extra, even after considering the drop or Time Value of Money.
When you understand the Time Value of Money, it becomes easier to understand how much your savings or money you hold would be after a year or after 10 years. This further enables you to invest your money so that you get more returns than the loss in value caused by the Time Value of Money.
The value of money is always dropping. Therefore, you have to defend your finances against such a drop. The only way to prevent your money from losing value due to time is to invest it in a manner that fetches very high returns.
5. Use the Magical Savings Formula
There’s a formula for savings. I call it the magical savings formula. In fact, it is very simple to learn and use. This formula is Income- Savings= Expenses. This means you deduct your savings first from the income. And whatever remains after this deduction should be your expenses.
Unfortunately, most of us use this formula wrongly. Hence, we cannot become rich. We save what’s leftover from the income, and that too, if possible. That’s the wrong way to save if you’re really serious about getting rich.
When you deduct and keep your savings aside first from your income, it becomes easier to plan where you will spend your money with what remains. That way, you can make a budget for everything- from education to household needs, food and entertainment. The important part here is to stick to your budget so that you don’t have to dig from the savings.
This formula works like magic because it helps you save a lot of money by preventing unwanted expenses. If you take a deeper look around your household, you’ll find there are countless unwanted or frivolous expenses. And these are all easy to weed out when you have a proper budget for every essential thing for the household.
6. Use Budgeting Apps
While we’re still on the topic of budgeting, we can easily understand that it’s not possible to maintain tabs on where your money is going. After all, we have daily expenses too. Therefore, use a best free budgeting app. Most of these budgeting apps are available for free download and use, though paid and premium versions are also available.
You can set heads for all expenses and designate a specific budget. These apps warn you whenever you’re exhausting the budget under any specific expense head. They also alert you if you’re exceeding the set budget. This helps you keep tabs on almost every expense in your household.
These budgeting apps are ideal also for persons who don’t keep accounts of how much money came in or where it was spent. You can link your bank account, credit card and debit card to these apps. That way, you can track every single Cent that came in as income and every dollar you spent as an expense.
A good budgeting app actually helps you to get control over your expenses. They’re ideal for every individual and household or even a business. You can always modify or change the amount of money that you wish to spend under a certain head. However, you must be honest about maintaining and managing your expenses within that budget since overstepping one is very tempting.
Also Read: 10 Mobile Apps to Save Money
7. Chop Away Unwanted Expenses
As I mentioned earlier, there could be several unwanted expenses in your household. These could include subscriptions to magazines that you don’t read, cable TV channel packages that you seldom watch, electric lights and appliances that you forget to switch off when not required and so on.
Take stock of all such expenses and eliminate them as soon as possible. That would save you a considerable amount of money, which can then be utilized for investments in various plans that would increase your net worth.
As a matter of fact, the number of cord-cutters in the USA is steadily on the rise as more and more people take to Over the Top or OTT services, which cost far less or are even available for free in some cases.
About 12.9 percent of the American population cut the cable TV cord in 2024, while figures for 2020 are awaited. This means that 33 million Americans no longer subscribe to cable TV. That’s because they’ve found cheaper or even free alternatives to cable TV. And you could be one among them, too.
Actually, an average American spends nearly $600 per year as out of pocket expenses on useless subscriptions and fees for services they don’t use. A bulk of gym memberships, for example, in the US, go unused for a better part.
You could also save a lot of money by lowering such unnecessary expenses in your household. There are plenty of ways to do so, and surely, a closer look at your expenses would reveal where you could save money.
Also Read: Why We Spend Money on Useless Stuff and Ways to Stop
8. Get Rid of Student Debt
About 45 million Americans owe a collective $1.7 trillion to banks and other lenders in the form of student debt, says a news report on the CNBC website. On average, a student graduates from college with $30,000 as student debt. And it takes about seven years of working for most students to get rid of this debt.
This debt has a very negative impact on your life. A student debt delays buying your own home, it ruins your credit score. It can cause a later marriage in life and also affect money that you should keep away for retirement.
Therefore, one of the smart money moves that can make you rich is getting rid of student debt at the earliest. Due to the unemployment triggered by the Covid-19 pandemic, lots of Americans are already in default of their student loans. And if you’re among these, you should take immediate steps to address the situation that can have serious effects on your later life.
9. Eliminate Credit Card Debt
Having a credit card isn’t bad. In fact, all of us use one. However, having a credit card becomes bad when you’re unable to control spending and allow the Annual Purchase Rate or APR to build up.
Generally, all credit card issuers allow you to pay a part of your outstanding bill at the end of each billing cycle. However, they don’t tell you that when you pay only a part of the credit card bill, they add some APR. And the longer you delay paying off the entire amount, the APR accumulates at a compounding rate. This means that APR gathers more APR, and sometimes, you might end up paying more than double for something you bought using a credit card.
This money that you’re paying as APR goes out of your pocket and eats into your household savings. It can prevent you from saving more money and investments to make it grow.
Therefore, one of the smart moves to get rich that you can make now is try and minimize and get rid of your credit card debts at the earliest. Remember, a credit card isn’t a permit to spend freely on unwanted stuff. Instead, it’s a safeguard that you could use when you need money for essential expenses and emergencies.
10. Working During Free Time
How many hours of the day are you wasting? Considering that we work for eight hours, another hour of commute, and sleep for another eight hours, with one hour for our personal hygiene, we still have six hours left. And in these six hours, we can spend at least a couple of hours working as freelancers or on a side gig to make extra money.
There are lots of freelance jobs available that can pay you a lot of money. And working on them is usually during your free time, with flexible hours. This is the best way to earn a side income that can be saved or invested in the future.
You can find lots of freelance assignments at websites such as FlexJobs.com, Upwork.com, Freelancer.com, Guru.com and Fiverr.com, among others. All you need to do is sign up on these websites and create an amazing profile. Most of these websites don’t charge you fees for joining. Instead, they take a small commission from your earnings. FlexJobs.com, however, works with a membership plan.
It’s also possible to find online and offline side-gigs on websites and apps such as Gigwalk.com, Amazon Flex, Airbnb and several others. In fact, there are as many as 25 websites and apps that can help you earn money on the side.
You can use all the 10 smart money moves to get rich. In fact, you can also adapt these smart moves to suit your own situation and circumstances. As you can see, there is no reason why you can’t get rich. All it requires is some extra effort.