How Average People Get Rich is really quite simple, but few have the dedication to achieve it. If you think you’re one of those people then keep reading.
For years I’ve written articles on how to build safe, stable long term wealth on a middle class income. I’ve read all the bestselling personal finance books like Rich Dad, Poor Dad, the Automatic Millionaire, the Wealthy Barber etc. I’ve also listened to countless hours of financial podcast and personalities like Ramit Sethi (I will teach you to be rich) and Dave Ramsay. All of these resources provide a pretty basic road map for How Average People Get Rich.
SAVE MONEY
From my own experience I can say that becoming financially secure is a process that took about 10 to 15 years. It all began with a very simple decision to save 10% of my gross income for retirement. For the average person out there, the most important financial decision you make is to start saving something for the future.
GET OUT OF DEBT
As much as possible stay out of debt. This is undoubtedly the toughest challenge for people because most of us start our adult lives with some form of debt. If you’re deep in debt and looking for ways out, check out Dave Ramsay on YouTube. I don’t agree with everything he says, but he’s probably the best financial guru for those seeking to get out of debt.
Most middle class people have some long term debt like mortgages, car loans and student loans. As you save and invest a portion of your income, you should also try to pay down some of these other long term debts. I used unexpected windfall money, like overtime shifts or bonuses, to pay off our home mortgage in under 8 years.
So my advice to all of you is to get out of debt and stay out of debt. This is especially true for those of you who are thinking about borrowing money to invest whether in stocks or real estate. I’ve been there done that. While I don’t have a horror story about the experience, I will say that the rentals cost me a lot of personal time and stress that just made it not worth it. When I borrowed money to buy income generating dividend stocks I just felt like I was taking too big of a risk for a relatively small reward in the scheme of things.
The older I get, the less risk I want to take with my hard earned money.
INVEST IN INCOME PORTFOLIOS
If you can manage to save some of your income and stay away from debt as much as possible, then you’ve already doing better than the vast majority of people out there. But to build wealth and grow rich you need to invest that money in things that give you compound growth.
For people just starting out, the stock market is the easiest place to start investing. Things like index funds that track the broad market are probably the best starter investment for retirement money.
For years I’ve said that the biggest problem people have is they don’t have enough money. So outside of your retirement account you should consider investments that pay you interest or dividends. Today (January 2024) it’s not hard to find a safe investment money market funds or high interest savings account that pay 5%.
Beyond that there are Blue Chip Dividend stocks that pay 3% to 6% dividends. Build a portfolio or buy an ETF that holds a basket of them. These dividend ETFs currently yield around 4.75%. This is tax efficient income if held outside of tax-sheltered accounts like RRSPs and 401ks.
Over time these income portfolios will grow and pay out more and more cash. You can either use this cash to fund your life or reinvest it to supercharge your portfolio.
I love income portfolios because they provide a lot of financial security for average working people. Especially if they lose their job. In the event you lose your job income portfolios can cushion the financial blow to some extent. And this makes us more resilient.
DONT BE A VICTIM, BE RESILIENT
Becoming more resilient is very important for the average person trying to reach financial freedom. We are ultimately responsible for our future. We don’t look for government hand outs, nor do we blame the Man (or Big Corporations or Wall Street) for keeping us down. We also don’t accept defeatist attitudes and statements like: “you can’t get ahead anymore” or “the rich get richer.” Instead we ask ourselves “what can I do to make more, earn more, save more and invest more?”
Save, Invest, Build Wealth and Prosper
In case you’re wondering here’s where we park our money and some financial services that we use (please note these are affiliate links where we receive small compensation for signups and sales):
For our precious metals and coin capsules, we use Silver Gold Bull because they price match and offer fast, insured, delivery.
We also own some crypto currencies like Bitcoin and Ether through Shakepay. If you’re interested in buying some here is our referral link to Shakepay and get $10 to try it out. We buy Bitcoin on Shakepay and transfer it to a Ledger cold storage wallet to keep our crypto secure.
For our Daily banking we use Tangerine because they offer incredible products and no-fee banking.
For investing we use a combination of TD Waterhouse (for legacy investments) and Questrade because it offers incredible value with low cost stock purchases and free ETF purchases. If you haven’t done so already, check out my Questrade Review to see why it’s the best deal around. Get $50 in Free Trades when you signup for Questrade through this link.
Please note: this page contains affiliate links. As an affiliate, this blog receives a commission for each sign up for Tangerine, Shakepay, Borrowell, Questrade, Amazon, Silver Gold Bull and Bluehost.