How to Get Rich

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How to Get Rich
By eHow Personal Finance Editor Step1 Decide what 'rich' means to you. Does it mean money for everything you need? Money for everything you want? Enough to retire where you live now? Enough to retire and live in Costa Rica? Step2 Start saving. Most experts agree that investing 10 to 15 percent of your gross monthly income creates a very comfortable nest egg for later years. Step3 Take advantage of compound interest, earning interest on your interest by letting investment returns accumulate and build on themselves. Step4 Resist temptation, whether that means a brand-new car right out of college or weekly dinners at nice restaurants. Invest the money you save by buying a used car or going out only twice a month, and you will have thousands of dollars more at retirement. Step5 Take care of yourself. This will reduce medical costs later on in life, as well as extend the years you can work and save. Step6 Go to college. By one study, college graduates earn roughly $20,000 more per year than people with just a high school diploma, and a post-graduate degree nets $20,000 more than a bachelor's. Step7 Get married. Married people are generally healthier than singles. Plus, they can economize on expenses, and they have more to invest. And because married people live longer, they can work and save longer. Step8 Enjoy the ride. Don't be so concerned with amassing a fortune later on that you neglect to enjoy life now. Strive for balance.

Tips & Warnings






Use a planning calculator (available in personal-finance software or on financial Web sites) to learn how much you need to save per year to achieve a specific goal. Little expenses add up. Switch to regular coffee each morning, rather than a double-shot, half-caf foamy latte. Put the extra $1 or $1.50 you save in a mutual fund, and you could have $90,000 more at retirement. Figure out how much you'll need to maintain your current lifestyle. Ask a financial adviser for help if you need it.

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Don't waste the money you do have on 'get-rich-quick' schemes, lotteries or gambling.

How to Die Rich
Step1 Write down your financial goals. Think about your "sky's the limit" dreams in all areas of your life and start devising out a plan to get there. See 16 Set Goals. Step2 Become an inveterate saver (see 228 Design a Savings Plan). Sock away at least half of every pay raise and other windfalls like bonuses or tax returns. Make systematic investing your longterm goal once you've put away a six-month emergency fund. Step3 Put your money to work. Even if you think you don't have much to invest with, open an account with a mutual fund company that includes no-load funds and low expense ratios. With a diverse portfolio, you can reasonably expect to earn 8 to 10 percent annually on your investments over the long haul. Step4 Know the difference between wants and needs, and make conscious spending decisions: Would you rather have the latest cool gizmo or put your money someplace where it can do something for you? Spend significantly less than you bring home and save the rest. See 15 Live With Less. Step5 Be aware of what you're charging on your credit cards. If you're carrying a balance every month, read step 3 again. Think of how much further the money you pay in interest charges could go if it was going directly into an interest-bearing account or an IRA. See 227 Get Out of Debt and 241 Plan for Retirement. Step6 Start your own business. The majority of millionaires make their fortunes the hard way, not by inheriting it. Self-employment entails significant risk as well as rewards. Work hours and company policies are yours to decide; revenue is yours to control. Risk-takers and innovators stand to gain the rewards of running a successful business. Step7 Hire a pro. A good financial planner can help you balance your portfolio with smart investments. Don't abdicate responsibility for your money, but do create a solid working relationship with your planner. If you can't afford to have one manage your money, many financial planners will review your portfolio and make recommendations for a onetime fee. Step8 Concentrate on spiritual wealth instead of financial gain. If the point of being rich is so that you can be happy, why not just skip ahead to 501 Be Happy?

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Tips & Warnings
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Set aside some money for a good biographer. See 244 Make a Will, 247 Plan Your Estate and 239 Track Your Investments.

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Americans tend to save less and carry more household debt than people in many other industrialized nations. Count on yourself, not on Social Security. When it comes to future Social Security payments, many economists have this to say to a young person entering the workforce: "Ha ha ha!" As the population ages, too many old people will be receiving payments while too few young workers will be paying taxes to support the system. See 241 Plan for Retirement.



How to Live With Less

As we get nearer to a total credit card economy, getting ahead has become more important than staying out of debt. As people become overwhelmed by working ever harder to pay for more stuff, frugal living is a hot topic. Proponents of voluntary simplicity or living below your means (LBYM) make conscious spending decisions to live a full and rich life.

tep1 Set Up a Budget and audit your own spending habits. Compare your expenses (including debt) with your income. If you're consistently spending more than you earn, it'll be no surprise that you're carrying a larger and larger debt load. Step2 Make a list of short-, medium- and long-term financial goals . List in detail what you'll have to give up in order to meet each. Give yourself a reasonable period of time to practice your new spending habits in order to see progress. Step3 Go through your belongings and cull as much as you can. Step4 Favor quality over quantity, and buy the best you can afford. You'll save money in the long run since high-quality items last longer and require less maintenance. This applies to adult clothing, furniture, electronics and cars. On the other hand, buy used quality kids' clothing and toys every chance you get. Step5 Use cash as much as possible, and debit cards for household bills and purchases so the money is immediately deducted from a checking account at no interest. Step6 Put a small percentage of each paycheck into a savings account. Step7 Refinance your mortgage at lower interest rates after paying off high-interest loans first. Step8 Consolidate credit card debt in a low-equity line of credit or low-interest credit card. Step9 Cancel needless subscriptions. Get rid of magazines you don't read, cut off your cable and pick up a book from the library instead.

Tips & Warnings
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Charges made using your debit card are automatically deducted from your checking account--and therefore are interest-free. Barter everything--babysitting to sewing to carpentry and plumbing--with family and friends. Type "barter groups" into a search engine for a wide range of bartering sites, groups and links. Buy pre-owned quality items. Cruise secondhand and thrift stores for quality and designer clothes at a fraction of their original price.

How to Reduce Your Holiday Spending

Sometimes we find ourselves paying off last year's Christmas presents when the new holiday season is upon us. With a little planning, you can reduce or eliminate that after-Christmas debt.

Instructions
Difficulty: Moderately Easy

Things You’ll Need:
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Christmas Cards Shopping Subscriptions

Step1 Decide how much money you can afford to spend (or want to spend) and write it down. Stick to it. Step2 Pay cash, and avoid using your credit cards. Step3 Buy only one present per person, and maybe a few stocking stuffers. Step4 Buy only for those people you really care about. Send cards to the rest. Step5

Watch for before-Christmas sales. Not only will you save money, but your shopping will be done way ahead of time. Step6 Use your talents and make presents. Bake gingerbread and cookies, or craft your own ornaments. Give needlework, ceramics, framed photographs or craft items. Step7 Donate your time as a present. Offer to clean your sister's house, baby-sit your brother's kids for the weekend or give 10 free tennis lessons to your niece. Step8 If you are mailing packages - especially overseas - choose lightweight items that won't run up postage costs. Step9 Buy Christmas cards, decorations and wrapping paper right after Christmas. They are always on sale, usually for half price. Step10 Shop at after-Christmas sales for next year's gifts. The savings can sometimes be enormous.

How to Buy Nothing
Ownership can be a burden. Once you buy something, you have to carry it around, fix it, remember where you put it, and keep it clean. Experiment with the freedom of buying nothing and embrace Henry David Thoreau's sentiment that "he who owns little is little owned."

Instructions
Difficulty: Easy Step1 Practice reverse snobbery. Express contempt for people who mindlessly buy things. This has two benefits: It raises the act of not buying things to a lofty moral height, from which you can denigrate others, and you get to enjoy the irony of simultaneously being a snob while making fun of other snobs. Step2

Go to shopping malls and department stores and briefly let your materialistic impulses loose. Try on a bunch of sweaters and choose three or four. Add a few ties or scarves. Walk around for a few minutes enjoying your stack of loot. Then put it back on the shelf and walk out. Think about how unnecessary that stuff is. You probably already have something just like it. What a relief to not have more junk around the house. Step3 Get satisfaction from money saved, not money spent. Set up direct deposit so that 10 percent or more of your paycheck goes automatically into a savings or investment account or buys United States savings bonds. Step4 Become a scrounger. Old bicycles, furniture, building materials, vehicles, books and clothing are everywhere, once you start looking. Become skilled at resurrecting old stuff and finding uses for it. Take pride in being an eccentric recycler. Step5 Look for barter opportunities. Swap your homegrown vegetables for repairs on your house, for example. Some cities have local barter networks where credits can be earned and exchanged for needed services. Because no money is exchanged when you barter, you might be able to avoid paying taxes, which can mean a substantial savings. Just make sure the assets that are exchanged are like-kind, otherwise you will still have to pay taxes on the exchange. Step6 Consider having a "buy nothing Christmas" this year. You can find details at BuyNothingChristmas.org.

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