How to Get Rich: A Beginner’s Overview

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Everyone has their own reasons they want to get rich.

The lifestyle, being able to travel, freedom of choosing when and what to work on, being able to spend more time with your family and watch your children grow up. 

You want your kids to have more opportunities than you had growing up.

You’re tired of putting in countless hours at a job that pays well but doesn’t really appreciate you.

Money is not the endgame, it’s a tool that allows you to design your lifestyle. 

One way to measure how far in the journey you are is to calculate your net worth.

Net Worth Definition

Net worth is a way to measure the monetary value of a person, company or sector. 

Why Focus on Net Worth?

I like to focus on net worth or net income instead of just income when talking about how to get rich because you can have high income but a ton of monthly bills and you’re still living paycheck to paycheck.

We’ve all heard stories about people living paycheck to paycheck while making six figure salaries.

This lifestyle is very common in large cities like SF and NYC.

If you focus on growing your net worth you don’t have to worry as much about unexpected bills because you have a cushion in your finances.

Income becomes only half the equation.

Net Income Formula

Net Income (or Net Worth)  = Assets – Liabilities

Add up all your assets, subtract all your liabilities, the result is your net worth. 

Assets are anything owned with positive value. This can be money in a savings account, the value of your house or any investments, etc.

Liabilities are any owed money. Examples are student loans, mortgages and credit card debt.

You can create a spreadsheet from scratch to figure all this out yourself or make things a little easier and use a service like Personal Capital.

(I actually use Personal Capital to track my net worth. You link your accounts and it does the work of updating for you.)

Now we know our starting point, let’s get into the details of how to build net worth.

Securing Income You’re Already Making

You’re reading this article to learn more about how to get rich. But, what if your income that your family depends on is suddenly not there? 

What if your boss calls you in to his office at 4pm on a Thursday, asks you to shut the door. The next thing you know you’re clearing out your desk, someone changed the password on your computer and you have a lot more free time on Friday to recover from a hangover.

That’s one example of why it’s important to have an emergency savings account. (And side hustle businesses if you’re into that.)

This is the part of the article that people don’t want to think about but it’s important.

Warren Buffett has a famous quote about investing (which we’ll go into later) but I like to apply it to my overall financial freedom strategy.

“Rule no. 1 Never lose money. Rule no. 2 Don’t forget Rule 1.”

Warren Buffett

Life and Disability Insurance

I admit that I didn’t think at all about insurance until I got married and my wife had our child. We have a friend that is a financial advisor who helped set us up to protect our incomes.

In an ideal situation you already have plenty of coverage from life and disability insurance from your job. 

I didn’t.

So now I have additional policies.

If a tragic event happens you want to know that your family will still be taken care of.

We’ve all heard about crazy people pushing someone onto the tracks waiting for their train home or people that have been in car accidents with no fault of their own.

This is where life insurance comes in. I have a policy that would more or less replace my current income for the rest of my spouse’s life.

If you’ve ever calculated your retirement number this quick math to figure out how much insurance you need should sound familiar.

Take your salary and multiply by 25. That’s it, you’re done.

I also wouldn’t recommend life insurance to everyone. 

If you’re young, single, and no one is depending on your income to live on; you probably don’t need life insurance.

How to Pay Down Debts

Automate as much as you can when it comes to finances.

I do this myself because otherwise I’ll end up spending the money on food.

Figure out any monthly bills in your budget and set them to autopay from your checking account.

If you follow a Dave Ramsay approach you’ll want to eliminate all debt.

One popular Dave Ramsay technique for getting out of debt is the called the debt snowball.

Figure out how much you can regularly pay extra and set up your accounts to automatically make those regular payments.

His approach works for a lot of people. If you follow through with it you’ll be in a good place with your finances.

I don’t think all debt is bad. 

Without my student loans I wouldn’t be in the salaried position I am today.

Without a mortgage I wouldn’t be able to buy a house.

Would I be in a better position if I had the same salary but no student loan or mortgage payments? Absolutely. How do you know which debts to pay down?

Pay down the debts with the highest interest rate first.

This could take some time, especially if you have a high balance of credit card debt.

You might see a lower balance on one credit card and think that you can pay that off quicker. 

If getting the small first win helps jumpstart your savings and paying off debt, do it.

Mathematically if you pay down the highest interest first you’ll save more money in the long run. 

Compound interest is great when it works for you and frightening when it’s against you.

Credit card interest rate can average around 15% for people with excellent credit and around 20% with good credit.

Every month you pay the minimum the credit card company is adding 20% to the remaining balance.

You probably know from experience that this adds up very fast. I know I do.

Pay off what you use on your credit cards each month.

Credit Cards

I use my credit card for basically everything I buy.

I’m at the point that if I run out of coffee at the office and stop by a cafe for a caffeine fix on my way in I’m charging a couple dollars on the card.

I also make a point of paying off my full monthly balance every month.

Tip on Credit Card Use:

Treat your credit card as if it were a debit card. 

Use the amount of money that you have available in your checking account to limit how much you can buy on your credit card.

If you have to use a debit card instead to get used to the idea, try it for a couple months.

Put the credit card away, buy everything on your debit card for a couple months. Keep the credit card for emergency only.

When you get used to buying only what you can afford then you can start using the credit card again and rack up points.

Keep spending as if your credit card is a debit card though.

If you have ever eliminated credit card debt and felt that relief you don’t want to get back in it.

How to Save Money


I actually have 2 budgets.

One I got from my financial advisor friend. It’s detailed, I filled it out once and haven’t really looked at it again. 

The other one I made myself. It’s got the bare bones but gives me an understanding of my monthly spending.

I check it every month or so and update if there is a change in recurring bills.

The reason you need a budget is to figure out where your money is going.

There are many apps and tracking software that can help you get started or you can download my budget templates and get started now.

One is detailed, the other is more basic. Use the one that you are more comfortable using long term and updating as necessary.

Emergency Fund

Automatically set aside a percentage of your income to an account that will serve as an emergency fund. 

This varies by individual, but I personally like to have around 3-6 months income saved in one account that only gets touched in case of emergency.

I set up my checking & savings accounts to automatically move 20% of my income straight into my emergency savings account every time I get paid.

Save what you can, you’ll be surprised that when you don’t see the money in your spending account how much you really can live on.

One money saving app that I have used in the past for automatic saving is Digit. 

This step might take some time. It took my wife and I several months to build up to an amount we were comfortable with.

But the security of knowing that if another recession hit and I lost my job I know I can survive on these funds until I find another source of income.


Congratulations on making it this far. 

You’ve learned how to protect your income and have a cushion in case of emergency.

Remember that 10% or more you’ve been saving in the emergency savings account?

You’re going to keep setting aside that hard-earned money but now this money is going to work for you

In a normal job with a salary an employee is trading their time for money.

When you’re investing, you’re trading money for more money.

If you can reach the level that your investment income can cover your normal expenses, you’re financially independent. 

You don’t need to keep working, but you can choose to keep your job.

One way investing works is through compound interest.

Compound Interest

Albert Einstein once said, “Compound interest is the eighth wonder of the world. He who understands it earns it… he who doesn’t… pays it.”

You have experienced the magic of compound interest if you’ve been in debt.

You get a credit card bill and pay the minimum, the company adds their 20% and that’s your new balance.

Next month you pay the minimum again and the credit card company adds their 20%.

Here’s the catch: the new 20% is added to the full bill, which includes the 20% that was added last month.

That’s the compounding and why getting into debt can feel like a trap.

Put yourself on the receiving end of compound interest instead.

One way to do that is through dividend growth investing.

401k, IRA & Retirement Accounts

The 401k’s and other retirement accounts that I’ve participated in are invested in the stock market.

Often there is a survey to determine how much risk you are able to tolerate and a fund is recommended from there.

How Much to Save in 401k

If your job offers a retirement account with a company match, the minimum you should be automatically saving is to get the full match.

This is free money that your company is giving you for investing in four future.


This is one way banks make money. 

You keep your savings at the bank and they pay you interest. They loan your money out at a higher interest and keep the difference.

You can become the bank and loan your money to people that need it for their business, etc.

You can make personal loans, join a group or use apps.

Side Hustles & Businesses

Use some money to start a business or start doing what you already do as your job on the side.

Do you have free time in the mornings? Start walking dogs in the neighborhood. Once you get going, hire someone to walk the dogs for you.

It might at first feel like your are buying yourself a second job but with the right structure you can work you can oversee your business and continue to reap the benefits.

I used to work at a local car rental company.

The owner built it up, still came in and worked everyday, even in his 70s.

But he didn’t have to.

He hired a manager that handled the schedules and all the day to day.

That manager hired staff that she could trust.

He hired a mechanic that managed the garage.

The owner could’ve easily stayed home most of the time and periodically checked in with his managers.

But he loved the business and went to the office 6 days a week.


When you buy a stock you become a partial owner of that company.

That’s why it is a good idea to invest in what you know.

There is a lot that goes into stock market investing, so I cover that in its own article.

Most people are going to buy either an index fund, a managed fund or individual stocks.

If you want a simple path, buy an index that tracks the US Market and minimize your fees.

One popular company that offers index investing is Vanguard because of their low fees.

Nowadays you can invest in funds and indexes for low to no cost through most brokerages. 

Find the index that you would like to invest in and work backwards to see which brokerage fits your needs best.

Real Estate

There are many ways to get into real estate investing.

Most people think they have to be a landlord or know how to fix a house and flip it.

While those are popular ways and can be profitable, I put together a list of ways to get into real estate investing.

Yes the list even includes apps that you can use to invest in real estate from your phone.

If you would like to join an online community that most likely has a local presence in your area check out

That is not an affiliate link. They have built up a large and very knowledgeable community built all around real estate investing.

Wrap Up

Hopefully you have a pretty good overview on the basics of how to get rich.

Knowledge will only get you so far, now you can start taking actionable steps to controlling your finances.

Comment below with any questions, clarifications, or topics that you would like to see covered in more detail.

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