How to Grow Wealthy

Being “rich” can mean different things to different people, but to most, it means having the financial freedom to achieve your goals and live the life you want.

I am great at giving advice; I am not always so great at taking my own advice. So, when it came to helping my clients understand why they weren’t rich yet, the easy part was explaining the culprits, because I was all too familiar with most of them.

Regardless of our upbringing, education, profession or lifestyle, most of us are not where we want to be financially and our reasons are probably more similar than different.

The good news is that it is never too late to become rich if you, like me, are ready to own up to the reasons you’re not and do something about it.
Want to know why you aren’t rich yet? Keep reading.

You spend money like you’re already rich.

Sure, it feels good to buy expensive things, whether it’s a luxury car, designer clothes, a big house in the suburbs, or an overseas vacation. Even if you don’t necessarily buy expensive items, if you consistently buy stuff you really don’t need, it still adds up fast.

But the shopping high only lasts until the guilt and regret set in or the credit card bill arrives. Most of us are guilty of living beyond our means and using credit cards more than we should or spending money we can’t really afford.

The problem is that as long as you continue to spend more than you have, you can’t start building wealth. Chronic overspending and high-interest, revolving credit card debt are your worst enemies when it comes to financial success.

Spend like you’re poor and you are much more likely to become rich.

You don’t have a plan.

Without clearly defined short, mid and long-term goals, becoming rich will just seem like an unattainable fantasy. And that turns into your go-to excuse for why you shouldn’t bother saving or stop overspending.

As we say in the financial industry: those who fail to plan, plan to fail. Creating a financial plan may seem overwhelming or intimidating, but it doesn’t have to be.

Whether you do-it-yourself or decide to work with a financial professional, the process simply starts with prioritising your goals and writing them down. Put that list where you can see it on a regular basis. Visual reminders go a long way in helping you stay on track.

You don’t have an emergency fund.

I know you’ve heard this a hundred times: you need to have at least six months of income saved in an emergency fund. And yes, it’s much easier said than done.

However, too many people get hit with a major unplanned expense, whether it’s a medical bill, or an unexpected job loss, accident or illness that’s led to a drastic reduction in income.

When these things happen - and they do, more often than you might think- not having a financial safety cushion can make the situation much, much worse. If you’re forced to borrow for such eventualities, you’ll end up sinking deeper into debt instead of saving to become rich.

You started late.

With every year or month that goes by without saving, your chances of growing your wealth decrease. Time and compounding interest are your two best friends when it comes to growing money, so wasting them really hurts. Just like exercising, the hardest part of saving is starting.

Even if you’re in debt, making little money or have a lot of expenses, you can still save something – no matter how small. The sooner you get into the habit of saving - regardless of how much - the easier it will be for you to continue and eventually increase those savings.

Even if you start saving late, you can still grow your wealth if you’re committed enough. But you need to start. And the best time is now.

You’d rather complain than commit.

Life is too expensive.” “I’ll never get out of debt.” “I don’t make enough money.” “Investing is too risky.” I’ve probably heard every excuse for why someone isn’t saving, investing or planning in general.

It’s easier to be lazy and let bad habits fester than to commit to - and follow through on - changing them. It’s no wonder obesity and debt have so much in common.

As long as the complaining, excuses and finger-pointing persist, so too will not becoming rich. Instead, take responsibility for your bad habits and focus on what you can do to change them.

You live for today in spite of tomorrow.

It is really hard to think about retirement and other distant fantasies when we have needs and wants now. The bills have to be paid, the family must be fed, the car has to run, school fees have to be paid…the list is endless.

The problem is that impulsive and overly-indulgent behaviour commonly lead to debt, spending money you might have otherwise saved. Do yourself a favour: Ditch the “buy now, worry later” mindset and instead, adopt a “save now, get rich later” mindset.

You are a one-trick investor.

You might be lucky enough to become rich by betting all your money on one type of investment. Just like you might be lucky enough to win the lottery. But that’s not a strategy for getting rich.

One of the worst financial mistakes most people make is putting all their money eggs in one basket. Sure, the stock market is on a run and real estate is on an upswing, but are you prepared for when the tides turn?

And if you are invested in all fixed-income securities like bonds and stocks and think you’re safe, inflation should make you think again. Your investment portfolio needs to include a good mix of investments with varied levels of risk and return potential and liquidity (so you can get your money when you need it).

You don’t automate.

Here’s the secret to saving: Automation. Saving is seamless when it’s automatic. Unfortunately, we are not born to be savers. We are impulsive and greedy by nature. Being responsible requires much more discipline.

However, automation forces us to be responsible without too much effort. And all it requires is setting up regular transfers from your salary or bank account to a savings or investment account.

Without it, you are much more likely to spend money you could be saving. Even if it is a seemingly small amount that you automate, those steady investments make a big difference over time.

Automate whatever you can whenever you can; and then increase your savings amount periodically.

You have no sense of urgency.

You might think you don’t need to worry about getting out of debt or saving because someone, or something else will save you. Maybe it’s a pay raise, a new job, an inheritance, a rich spouse, or the lottery you’re counting on.

Whatever “it” is, you use it as an excuse to put off taking steps on your own to grow your wealth. The problem is that very little in life is certain. Who knows what will actually happen, or not happen, so why not focus on what you can control now?

You’re easily influenced.

Maybe you live with a chronic over-spender or a typical day out with your girlfriends involves shopping and splurging out in a restaurant. We all have negative influences in our lives that threaten our chances of becoming rich.

The superficial, materialistic, sensational culture in which we live is probably the biggest one. The trick is not giving in to temptation.

How? Some of it is making conscious choices to avoid putting yourself in vulnerable positions. But most of it is having the willpower to keep the goal of becoming rich in the front of your mind, especially when you are tempted to sabotage yourself.