Apparently, smoking these will NOT make you rich.

The way people get rich is not a secret. But it’s not exactly what we think it is either. I’ve been studying money and wealth through this blog since June 2011, and a few things are starting to become obvious, which I hope will help me get to where I want to be financially. It seems like there are a few obvious things people do to become rich, and although they are things many people can do, most of us don’t do it. I’m a good example of the person who has done just about everything ass-backwards when it comes to my finances, but really, I’m shaking things up and doing things much more productively now.

Really: Save As Much Money As Possible

Not: Just Make Sure You Save Something!

It’s not 10%. It’s not 20%. It’s about saving as much as you possibly can. Sure, it’s great to save 10% when you saved nothing before (I started with saving $10 per paycheck!). But if you really want to make progress, what about putting away 70% of your paycheck every week? Before you can buy a house, start a business or make an investment, you will need your own funds to get things started. I know a lot of business owners. Before they started, and even once they got going, they were saving as much money as possible. They knew those funds would be able to make money for them, so spending money before it was able to make more money was akin to wasting it. So they saved. Hustled like crazy. But it doesn’t end there. They saved as much as possible in order to put that money towards an investment, which brings me to my next point…

Really: Research and Understand Investments Thoroughly, Then Invest 

Not: Put Your Money Into Popular Mutual Funds!

As much time as I spend on the computer, I could have learned a lot more about investing by now than I have. But I get distracted. Anyways, it takes a lot to understand an investment. It could be a convenience store, a rental property or a stock. You don’t invest blindly. You figure out what you’re getting into. What’s your rate of return? How long before you recoup your investment? If you’re going to borrow money for the investment, do you have a decent debt service ratio that makes the bank or lender comfortable with lending to you? Is your interest rate reasonable? When looking at stocks, do you have an exit strategy? Are you comfortable with your valuation of the stock? Do you know why you think this stock is a good value? And as a side note, nobody gets rich investing in mutual funds. Especially not ones with expensive fees that may eat up your returns or ones recommended by Dave Ramsey’s “ELPs” (Endorsed Local Provider-don’t get me started). The point is, you have to understand your investments thoroughly before you get involved, and stay current on developments to make sure that you are still allocating your money wisely. If you care about investing, you will figure out what works for you and thrive. And it doesn’t have to be just stocks. Pauline at Reach Financial Independence is an awesome blogger example (cattle! She has freakin’ cattle!) of this as is Paula of Afford Anything.

Really: Become a Business Owner

Not: Work Hard in One Job and Hope for an Annual 3% Raise!

I know. I’m obsessed with being a business owner. Technically, I own a few businesses but they are miniscule. I’m talking about a real business that requires sustained effort to develop and maintain. Even though, as many early retirement bloggers like Mr. Money Mustache have shown that you can save considerable amounts while working in a (high-paying) salaried job, I prefer the business owner route. No job is guaranteed, just like no business is a sure thing. So if you can put your concentrated efforts into your own business, and reap the rewards yourself or with your business partners, doesn’t that seem more rewarding than working for someone else with the hope that they will recognize your efforts and compensate you accordingly? Although I think working for a good company is extremely valuable (and will show you how to run a business efficiently), I know I don’t want to work as an employee forever.

Really: Have Multiple Streams of Income

Not: Waste Your Time Earning Swagbucks!

I have a confession: I used to waste tons of time for small rewards. $35 product research surveys. $2 Amazon Mechanical Turk gigs. Practically minimum wage restaurant jobs. But that was my mentality. I figured I had time but no money so I might as well do whatever is out there to just make some money right? No. You are wrong, my former thought process. Why did I waste my time with whatever was the easiest, first offer that came to me? I don’t know. I think I was insecure. I’m still insecure at times, but I also know what my time is worth. I have some pretty cool, specialized skills and there are people out there who don’t want to do the types of things I love to do. I’m slowly working on upping my hourly consulting rate but I am also making sure that what I provide in value is awesome and worth it. But to get really rich? I need to develop multiple streams of income: like consulting, but also owning a few businesses, investments and one-off projects like developments (my not-so-secret dream: be a real estate developer a la Bluth Company).

Really: Don’t Live Aspirationally

Not: Buy it now, pay it off later!

Do rich people have nice things? Maybe, but they constitute a teeny-tiny percentage of their net worth. See, I used to have this ridiculous vision of wearing an expensive watch, which would signify that I had “made it”. But a $4,000 watch right now would constitute a chunk of my net worth and that’s crazy. When the Omega watch or AMG Mercedes represents 0.5% of your net worth, then it’s not aspirational. It’s just something you decided you wanted and could afford because it won’t change your financial future.

We all have to make big-ticket purchases. Those things might be cars, washing machines, refrigerators, engagement rings and houses. One surefire way to stay broke is to always buy the most expensive thing you can afford. You know, the fancy refrigerator with the French door (I love those!), the 3 carat diamond, that kind of thing? Sure, they’re great if you can afford it, but what if you can almost afford it? Should you get it? If you can avoid the upsell and the urge to always upgrade, you’ll reap the rewards because someone is trying to upsell you all the time. Probably right now. Don’t look.

Another good pitfall to avoid is spending your free time in aspirational neighborhoods. Think Gangnam in Seoul, La Jolla in San Diego, South Beach in Miami. I swear, these places make me feel bad about myself. Like, what am I doing wrong? Why am I not living this life of leisure? But it’s a bit of an illusion. You can live whatever life you want, it’s just a matter of committing to your goals and making it happen. Don’t compare yourself to others and you’ll be a lot happier.

Really: It Happens Slowly, Not Overnight

Not: Buy, Sell, Make a Million! 

Things build on each other. You can make one good investment and clear some money, but then what? If you want to grow your investments, you take your gains and re-invest them, instead of spending them all on consumer goods, even though that’s always tempting. All of the ideas above are about making more and saving more, but even when you’re doing all that, it will take time to build a nice portfolio (What’s nice? That’s a question for another day or “As much as possible”). Allow yourself years to build wealth. Have fun while you’re at it, live your life and do the things you want to do, but just keep growing your wealth as you go. It really is true that if you can do something consistently for at least two years and keep your focus on that goal, what you can achieve will amaze you. Just imagine what 10, 20 and 30 years of focused wealth-building will do.

But Really, Do What You Want!

I was hesitant about writing this article. Even though many people know this as basic advice, I wanted to put it all down in one place. I want to follow this advice and have the kind of wealth that I have previously dreamed of but that was it, I just dreamed of it, like “Hmm, oh that’s nice.” Many people have the opportunity to be rich, but certainly not everybody at this exact moment. If your current situation is riddled with poverty, crime, violence and neglect, you have bigger problems that, although intricately tied with money, encompass a lot of other crap you have to handle first. Wealth can help with some of those things, but understanding, awareness and education are more pivotal when you start from the very bottom.  I don’t think being rich is some be-all, end-all in life. It is just another way to be. Neither being poor nor being rich makes you any better or worse than anyone else. Your character is what you’ll most often be judged on, but I think that can change too. But if you can be rich, and you want to be rich, then go for it. Don’t listen to the advice of big names (like big brands, they’re usually about a lot of hype) and make your own path of it.