5 Hard Things You Need to Do to Get Rich

Getting rich is not just about knowing what to do; it's about consistently following through on those actions. To build substantial wealth, you may have to say no even when you can afford to say yes. Getting rich may mean taking some calculated risks and sticking to a plan, even when you'd rather change course.

The Standard Advice Isn't Enough

Spend less than you earn, invest, avoid unnecessary debt, and give your money time to grow. These are the standard pieces of advice that everyone knows, but knowing what to do isn't necessarily the difficult part. Consistently following through on those actions can be the true challenge.

1. Live Below Your Means Even When You Don't Have To

Living below your means is different from simply being able to pay your bills. As your income increases, there's pressure and a natural desire to upgrade your house, car, vacations, and other lifestyle elements. Those large purchases can quickly erode the wealth that you've built up, setting you back from your goal.

What's more difficult is letting that gap between your income and spending grow. Upgrading your lifestyle may be tempting, and you'll need self-control to stay focused on your goals and to continue living on less than you make. Avoiding lifestyle creep is key to building wealth, since it leaves more money available to invest and build your assets; that's where the real wealth-building power lies.

Compound interest, in which your earnings start to generate their own earnings, can accelerate your path toward becoming rich. There's nothing wrong with enjoying your money, and doing so periodically can help to keep you motivated to continue working and building wealth. The issue is letting every raise permanently increase your cost of living through an expensive upgrade like a larger house or a new car.

2. Get Comfortable Watching Other People Spend More Than You

Your friends, neighbors, and colleagues may have a bigger house, a new luxury vehicle, or seemingly endless vacations, and you'll need to get comfortable with that scenario for years. Trying to keep up or even using their situation to justify your own spending can divert money from investing and other long-term goals.

Remember that appearances can be deceiving, and you can't tell much about someone else's financial situation simply based on what they own. A high-spending lifestyle isn't necessarily evidence that someone's wealthy, and they might be financing their lifestyle through debt. If you're patient and don't try to keep up with others, you'll make more progress toward your own financial goals.

3. Put a Set Amount of Money Away Before You Can Spend It

It's essential to be intentional about saving money. Saving whatever happens to be left over at the end of the month often isn't enough to build substantial wealth. To build wealth, you may need to treat investing as one of your biggest recurring expenses, which means setting aside a meaningful amount of money to invest each month.

As your income grows, revisit and increase your 401(k), IRA, and brokerage contributions. Consider implementing a dollar-cost averaging strategy, where you invest a fixed amount of money at regular intervals, regardless of the market's performance. This can help you smooth out market volatility and avoid making emotional investment decisions.

4. Build an Emergency Fund to Cover 3-6 Months of Expenses

Having a solid emergency fund in place can provide peace of mind and help you avoid going into debt when unexpected expenses arise. Aim to save 3-6 months' worth of living expenses in a readily accessible savings account. This fund can serve as a cushion to help you weather financial storms and avoid dipping into your long-term investments.

5. Continuously Educate Yourself on Personal Finance and Investing

Building wealth requires a long-term perspective and a deep understanding of personal finance and investing concepts. Continuously educate yourself on topics such as compound interest, tax-advantaged accounts, and investment strategies. Stay up-to-date with the latest market trends and economic news to make informed decisions about your investments.

By following these hard but essential steps, you can set yourself on the path to building substantial wealth. Remember that getting rich is not a one-time event but a continuous process that requires discipline, patience, and persistence.