How to Become Rich: Building Wealth That Works for You

If you’ve ever wanted to become rich, you may have asked family members or searched endlessly online for strategies. Figuring out how to become rich doesn’t have a one-size-fits-all solution, but there are some basic steps you can follow to get into good financial standing.

I love thinking about how to grow my wealth, but getting rich feels like a very non-specific goal. My definition of rich isn’t equal to yours or plenty of other people’s definition of rich.

Although it’s not an easy path, there are some universal strategies like paying off debt, budgeting, and investing, all of which improve your odds of becoming rich. Let’s dive into some of the key secrets of rich people.

How to become rich: 8 steps

Self-made wealthy people don’t become rich by accident. So unless you were born into wealth, you’ll need to take intentional action to boost your income and build wealth.

1. Identify your goals

I’d say your first order of business, if you really want to become rich, is to decide what that means to you. Being what you define as “rich” is great, but you need something more concrete than that.

Here are a few questions you may ask yourself as you put your plan together:

• What does being rich mean? Is there a particular net worth you’d like to hit? (For example, a lot of people want to grow their net worth to $1 million.)
• What is the current state of your finances?
• What is your monthly budget?
• Would you like to achieve early retirement?

Get specific with your answers so you know your exact goals. Once you have your big-picture vision established, break it down into smaller short-term goals that are easier to achieve. By creating this roadmap, you should have a clearer sense of what your destination is and how to get there.

This is a huge regret of mine — I didn’t put a lot of thought into my finances immediately after college. I did pay off my student loans quickly, but otherwise I didn’t plan ahead for the future and missed out on some key investment gains (more on that later in this article). Bottom line is, you need to set financial goals if you expect to end up in a solid financial position five, ten, or fifty years from now.

2. Pay off high-interest debt

Nothing drags down the journey to becoming rich like high-interest debt. If a large percentage of your income is going toward debt payments, your saving and investing power is severely limited.

According to the New York Federal Reserve, total household debt rose by $109 billion in the second quarter of 2024. Credit card balances alone rose by $27 billion to reach $1.14 trillion during that period.

Debt with high interest rates, such as credit card debt, can be challenging to pay back, but it’s necessary if you want to progress. Payments on the original balances are bad enough, but tacking on interest charges multiplies the impact of debt.

For example, if you have a card with a 20% APR, a balance of $10,000, and you only pay $200 a month on it, it’ll take nearly ten years to pay it off (and you’ll pay more than the original balance in interest charges).

To take control of your debt, start by listing all your loans from highest interest rate to lowest. Consider making extra payments toward the original loan amount on your high-interest debts first to minimize the total amount of interest you might owe by the time the debt is paid off. You'll likely need to specify that the extra payment is for the original loan amount — ask your lender if there is a certain process you should follow when using this strategy.

Once you’ve paid off that first debt in full, move on to the loan with the second highest interest rate. You’re spending less money on interest charges and keeping more money in your pocket by targeting high-rate debts.

Paying off debt was the key step that enabled my husband and I to go down to one income for a couple of years when our kids were small. Then it made it possible for us both to go into business for ourselves, and we’ve never looked back. I want you to know that freedom as well.

3. Create a budget

You might hear the word “budget” and cringe. But there are many different ways to create a budget, and I bet you’ll find one that works for you.

Personally, I don’t track every single expense but instead use a variation of the 50/30/20 rule of budgeting. It’s a bit more general and still helps me stay on track with needs, wants, and savings/investing.

The key is learning how to manage your money. You can follow these steps to implement a basic budgeting plan:

• Identify costs: Write down your income streams and expenses and calculate how much you make or spend on average for each item on your list.
• Keep track of major spending categories: Examine how much you spend each month on categories such as rent, utilities, and groceries. Don’t forget to also account for discretionary spending, such as eating out or buying a new book.
• Look for areas to improve: Once you have a bird’s-eye view of your monthly cash flow, find places where you can cut back to save extra money.

A lot of people find it helpful to sign up for one of the best budgeting apps, which make it simple to track your expenses and make changes.

4. Cut your spending

I include cutting your spending as a separate category from creating a budget because it’s kind of a big step. I find it more helpful to spend a month or two tracking expenses before worrying too much about dropping expenses.

As you look over the budget or spending record from the most recent month or two, look at which expenses are necessary. You might already be a budgeting pro and have no more left to cut, or perhaps you’ve never followed a budget and you’re shocked by how much you spend eating out each month.

I wouldn’t say you can’t spend any money on things that are just for fun, but it depends on your income, savings, and goals. If you haven’t started saving money, it’s imperative to either get your spending down or your income up (ideally both!).

Trying to save money on bigger expenses like food, housing, and transportation can help you make faster progress.

Other smaller expenses can add up, though. Here are some quick ideas for spending less in order to save or invest:

• Eat at home
• Choose free outdoor activities over ticketed events
• Delay unnecessary purchases for at least 48 hours to avoid impulse buys
• Buy used items instead of new
• Try a no-spend challenge for a weekend (or a few weeks or months)

5. Pay yourself first

Anyone who wants to become rich needs to save money. You simply can’t spend every dollar you earn. What can help is to make saving automatic.

“Pay yourself first” means that even before you pay bills, you allocate something to your savings. Everyone has to be prepared for emergencies (which usually cost money), and beyond that, to save for other goals.

If an emergency happens (like your heat pump going out in the dead of winter), you need it fixed ASAP, and that’s where your emergency fund comes in.

You want to avoid having to put unexpected bills on high-interest credit cards or taking out a loan, since those can lead to even higher costs if you can’t pay them off right away.

So as you’re looking at your budget and finding ways to cut costs, be sure to pay yourself first. I like to set up automatic transfers (monthly or biweekly) into savings. This way, I never actually see that money, so I’m not tempted to spend it unless a valid reason comes up for withdrawing from savings.

You can have multiple savings accounts if it helps you to keep them separate. One can be earmarked for emergencies, and others can be for future goals such as a down payment, a trip, or replacement appliances.

6. Start investing as soon as possible

Here’s another part of that financial regret I mentioned earlier: I didn’t think through my finances, which also meant I didn’t learn about investing. I wish I’d started investing as soon as I started my first job, even though I didn’t make much. However, I do have a coworker to thank for dragging me to a meeting where we set up our retirement accounts to kickstart things a few years into our careers.

Investing your money is often one of the best ways to build wealth over time, assuming that your investments are successful. If you keep all of your money in a basic bank account, you risk devaluing your cash due to inflation. Investments are often a smarter way to save (and there are ways to lower your risk).

Invest in stocks, mutual funds, or exchange-traded funds (ETFs) to join the market as early as possible and take advantage of the power of compound returns.

For example, let’s say you invest $1,000 per month starting at age 30. With a 7% rate of return, you’d have over $170,000 after 10 years, $500,000 after 20 years, and $1.15 million after 30 years. The earlier you invest, the more time you have to earn compound interest.

There are two main account categories for investing money in the stock market:

• You can use tax-advantaged retirement accounts, such as an employer-sponsored 401(k) or an IRA.
• You can use one of the best brokerage accounts such as Stash, Betterment, or SoFi®. Legendary investor Warren Buffett recommends beginning with a diversified portfolio by including ETFs that track major stock market indexes, such as the S&P 500.

If you contribute to a 401(k) or 403(b) plan, take advantage of any employer match benefits on a portion of your contributions. The matched amount represents an immediate 100% return on your investment, so it’s worth maxing it out whenever possible. (I wish I could have done this, but as a public school teacher, that wasn’t an option.)

You can also cherry-pick stocks, bonds, and other investment vehicles, although this increases your risk. I wouldn’t recommend trying to “time the market” or put all of your money into one or two companies, for sure.

7. Increase your income

There’s only so much money you can save with the income you have. If you want to accelerate your debt payoff and increase your investment contributions, look for ways to make money and increase what you earn. For example:

• If you are content with your current employer: Consider asking for a raise or working toward a promotion. Speak with your manager about your career goals and find out what steps you can take to progress towards them.
• If you are open to looking for a new position: Consider taking a course or earning a certification that might put you in the running for a position with a higher paycheck. Make sure to negotiate any job offer before accepting it.

Aside from your primary income, you can also consider one of the best side hustles. Whether you drive with Uber, freelance online, or start your own business, there are many creative ways to turn your talent and entrepreneurial spirit into extra income.

I know it’s not always easy to simply earn more money, but if your expenses exceed your income or you’re unable to save for the future, you may need to find a way to do it. Sometimes you can even add a side job for just six months or a year in order to make progress on your financial goals.

8. Build a wealthy mindset

If you’re used to financial struggle, you might not believe that becoming wealthy is possible for you. Or you may even think there’s something wrong with being rich. These limiting beliefs make every other step much more difficult to achieve.

That’s why cultivating a wealth-building mindset is essential to learning how to become rich. It may take consistent, intentional effort to be successful and grow your wealth.

If I tell myself that rich people are selfish or evil, I won’t do the work required to become rich myself. Or if I’m constantly telling myself I can’t be financially successful, guess what? I’m more likely to give up on my side hustle or spend money instead of investing.

Of course, wage inequality and wealth inequality exist. Some people face far bigger systemic obstacles than others, and some groups have historically been denied opportunities to build wealth and pass it down to their descendants. This is really upsetting and something we need to continually improve as a society.

But if you believe that becoming rich is impossible for you, you may not take the steps needed to achieve this goal. Cultivating an abundance mindset and letting go of limiting beliefs aids you in your efforts to build wealth.

How long it takes to become rich

As we’ve said, becoming rich means different things to different people. Some may feel rich by building a net worth of a million dollars or more. Others may be looking for financial freedom that lets them retire early. How long it takes to get rich depends on how you define “rich.”

According to data from the Survey of Consumer Finances, the average age of millionaires is 61 (up from 57 a few years ago). A key takeaway from that is that a lot of millionaires tend to reach that milestone by investing over several decades. It’s usually not luck, but perseverance. I love that, because it makes wealth attainable to more of us.

You’ll need to do some calculations to figure out your timeline for becoming rich. Look at your dollar-amount goal, how much you can invest every month, and go from there. And remember that your savings rate will probably fluctuate over the years, so you should regularly revisit your budget and your goals.

Some retirement experts recommend saving enough to replace 70% to 80% of your pre-retirement income. So if you make $100,000 per year, you’d need $70,000 to $80,000 per year in retirement.

Using a retirement savings calculator can help you determine how much you’d need to retire and when you can hit this goal. Look at how much Social Security you’ll get and other sources of income as well.

While this becoming-rich approach doesn’t offer immediate gratification, and it may take many years to achieve, it can set you up for financial stability in your golden years.

FAQs

Bottom line

Learning how to become rich begins with defining what that means to you, then setting short-term goals that gradually bring you closer to these goals. For most of us, paying off debt, saving money, investing for the future, and increasing your income are beneficial steps along the journey.

Becoming wealthy will take time and effort, so don’t expect a get-rich-quick scheme to work. Learn how to make money, explore the best investment apps, and get focused on your financial goals.