Dear Happy Investor, this article is about getting rich for beginners. And it is necessary too because unfortunately, beginners who want to become rich make many mistakes. I know this by experience, as I made the same mistakes. As a beginner, you will first have to immerse yourself in the material about becoming rich. Learn from others, to avoid making mistakes. So if you are reading this article because you want to become rich, then you are on the right track!
Even as a beginner, you can become rich, as long as you know how and avoid common mistakes. This article is about 6 common mistakes that prevent you from becoming rich. Take these learnings and accelerate your road to financial independence!
These are the 6 common mistakes people make that prevent them from becoming rich:
- Getting Rich for Beginners: vision and belief
- Beginner's mistake in Becoming Rich: not setting a financial goal
- Spending money on non-value-added products
- Too high fixed costs will make you less likely to get rich as a beginner
- Getting Rich for Beginners: working for your money instead of letting money work for you
- Getting Rich for Beginners: start with low-risk investments
Let's take a closer look at these mistakes, and see how we can learn from them to become wealthy ourselves as a beginner. Hint: points 1 to 4 are necessary too, but thanks to points 5 and 6 you will become really rich (if you do it right 😉 ).
Everything starts with an idea. A thought that something is possible. People are capable of immense achievements. Underlying every great achievement is an idea. The same is true for beginners who want to become rich. Unfortunately, I hear too often that becoming rich is not for them.
However, since when do you accept this illusion? Where does the idea come from that financial wealth is not for you? Nonsense. Pure nonsense. Because becoming wealthy is possible for everyone, as long as you believe in it and are willing to go all out to achieve it. This belief that you too can achieve it, is the beginning of an extraordinary life with more financial freedom.
Vision and visualizing the vision
As you start reading more of my articles, you will gain more and more faith that you too can become richer. You will need to turn this belief into a vision. I have this for myself as well. For example, I visualize my vision daily, “seeing” how I achieve my goals. This is not a higher power or superstition; visualizing your goals really helps you achieve them. This has been scientifically proven. But what is your vision? Why do you want to become rich? Is it to never have to work again, or do you want to get richer so you can do more fun things with family and friends? Whatever it is, it's your right. All I ask of you is to think about this carefully: What is it that you want to achieve? What is your vision around wealth?
I'm going to give you a personal tip though around wealth. You can do whatever you want with it. But the tip is to see wealth not as an end, but as a means to something else. Too often we see people becoming millionaires at the expense of everything, unfortunately including their family and social relationships. But isn't it that you want to become rich in order to be happier? I can guarantee you that you won't become happier with 100 million in your bank, but no one around you to enjoy it (except maybe “friends” who get horny about your money instead of caring about you). So longitudinal research shows that people with close social relationships are the happiest and live the longest. This is how I see it myself. My personal path to financial freedom is to have more free time that I can spend with my family and friends.
It's not enough to just turn an idea into a vision and belief. The next step is to turn this mindset (idea + belief + vision) into action. We do this by starting with a financial goal. After all, if you want to become rich you will also have to be goal-oriented to achieve it. Again: keep in mind that becoming rich is not the goal in itself, but a means to a happier life. Personally, I think your goal of becoming rich should not come at the expense of close social relationships. But it's up to you what choices you make. Anyway, if you want to become rich as a beginner you will need to have a financial goal.
After all, without a goal, you have no direction. You don't know where to go, nor do you know what to do to achieve it. Therefore, the question is to convert your definition of wealth into a concrete financial goal. To do this, use the SMART methodology, meaning Specific, Measurable, Actual, Realistic, and Time-bound. An example of a financial goal is: “within 10 years I want to work thirty hours a week, with a net income of 3000 euros that is supplemented by 2000 euros of passive income from my investments”.
If you want to delve more into how to set good goals, you can read my extensive article about the goal-setting roadmap. Where you can achieve all your goals in 9 steps. This is not only useful for beginners who want to become rich, but you can also apply it to your work. Goal-oriented people are more successful.
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When you have the vision and belief, as well as the financial goal, it's time to get rich as a beginner. Let's start with the easy part, which is spending less money. Saving money is not an art in itself, it is more a matter of self-discipline. Keeping your emotions in check, and ignoring social pressure. My best tip for spending less money is to stop spending money on non-value-adding products. Now of course value is very subjective. So decide for yourself what is or isn't valuable to you. But I am going to challenge you by asking you to look critically at yourself. So with every purchase, you can ask yourself the question “do I really need this?”, or the question “does it really add something to my life?”.
As a beginner, you can get rich quicker when you maintain self-discipline over your spending
Using two common examples, I can give you a good take on what I mean. We'll start with the car. Getting rich for beginners starts with the big items, which definitely include the car. A car is one of the biggest bad expenditures you can make. I do understand that you can't escape it because often you need a car for transportation to work. But why buy an expensive $20,000 car? What does that really add? Is it to reward yourself? Is it because your neighbor or your friends also have nice cars? And if you want a luxury car so badly, buy used. Because if you really want to throw money away buy a new car. So never do that 😉 . The best decision you can make is by saving money on cars.
Another example I like to use is by using my sister as an example (yes, really). She has years of debt with my parents to pay off her car (…). But she just keeps buying expensive branded products and specially branded clothes. Why pay 150 euros for a T-shirt, when you can do it for 100, 50 or even 20 euros? Not that you have to look like a bum, but if you want a brand you just know that you are paying 50% extra purely for the name. And the only reason to buy a brand is because of a certain self-image you have. Be critical of yourself! By the way, my sister can't appreciate this comment very much.
As indicated above, the easy part is to spend less money. Start with that right away. Next, it's time to cut back on your fixed expenses. Because too high a fixed cost is a crucial factor for beginners who don't get rich but want to become so. A common mistake is that when you start earning more, you also start spending more. We have already had the example of the expensive car. An expensive car also means higher fixed costs, such as car insurance. But one of the best examples of too high fixed costs is buying an overpriced house.
You see it happening everywhere. Maybe to yourself, too. People get jobs and make some promotions. Then they have a nice income, and they decide to buy an expensive house. By expensive, I mean really above 400,000 euros. This is especially disastrous for first-time buyers. When you both get a job, you really start making money. But yes, everyone wants to live large and beautiful. Because look at me be successful in my big (and especially expensive) house. Before you know it you have a mortgage of 2000 euros. This is now a typical example of how you can NOT structurally generate more income! Because imagine if your mortgage was only 750 euros. What would you do with that 1250 euros extra per month? I hope you're not thinking of spending money now! In points 5 and 6, I'll explain what you can do better with all that money, to become rich as a beginner.
Finally, a quick word about subscriptions. There is a real trend in subscriptions. Think about energy, mobile & internet, and so on. As a consumer, you have more bargaining power than you think, so you can save money on subscriptions.
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When you start spending less money and also start saving on your fixed expenses to spend even less money, you are on the right track. But the “problem” with saving money is that you can only save up to a certain point. After all, you have certain basic needs such as shelter, food, and occasional fun and relaxation is also important. So saving money in itself is not the way to get rich, but it is an important requirement for beginners. No, as a beginner, you become rich by making money work for you instead of the other way around.
The principle behind making money work for you to become rich is crucial to understand. You can read about this step by step in my book on making more money in less time. The bottom line is that when you work for money, you always get money for time. If you don't work, you don't get money. Simple, but annoying. And so we need to move away from that and look for ways of making money that allows income to come in independently of time. So whether you are sleeping, eating or working, money is always coming in. Now you can achieve this through really good ideas for passive income, or by making your money work for you. (PS: read my articles or search for “make money” or “passive income” to read all about it).
One of my best tips for making money work for you
One of my best tips for investing money is in real estate funds and stocks (tip 6). For example, I personally have very positive experiences investing in real estate funds. By the way, I also invest in stocks, but that requires more knowledge and risk. But this article is about getting rich for beginners, so my best tip is a real estate fund. Because with a good real estate fund you don't run much risk, while you do get a high return. I personally find SynVest one of the better funds to invest in, which you can read all about in my review about SynVest. For example, I get an average return of around 8% from it. This is in contrast to the very low interest rates and inflation, which are making many people poorer.
Yes, you read that right. Those who put money in their savings account become a little poorer every year. Because today the interest rate is about 0.1%. If inflation (whereby your purchasing power decreases) is 2%, you actually become 1.9% poorer. Because you can buy 1.9% less with the money in your savings account.
Or what about P2P Lending? I invest part of my assets through Mintos. The advantage is that you can get a relatively high return of 9%, while your money is liquid. With the click of a button, I have my money back. Of course, this is not without risk, but makes more sense to me than in the savings account. Mintos is the best choice because it is the largest international platform. The advantage is that you can spread the risk over 100+ loans depending on your deposit.
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Once you get to the point where you understand that investing is the best path to financial wealth, you're well on your way. In this case, there is one last common mistake in getting rich for beginners. Namely: taking too much risk with investing. As a beginner, you will first need to gain knowledge and skills. You don't play against the chess champions when you just start playing chess, do you? The biggest mistake beginners make is that they don't thoroughly familiarize themselves with investing. And that's a shame because there are definitely low-risk investments. Especially for people who have a high-risk aversion, these types of low-risk investments are attractive. Click on the link opposite to go to my article about low-risk investments. These are excellent opportunities for those just starting out in investing.
In this article, I have named 6 common mistakes beginners make when they want to get rich. For each mistake, you have read how you can avoid it and what you can do instead. If you summarize the six mistakes, you can conclude that becoming rich for beginners goes wrong with a (1) lack of direction (vision, belief, goal), a (2) lack of self-discipline (saving too little, spending too much money) and a (3) lack of knowledge (not investing, or investing too riskily). If you want to learn more about how to make the right investments though, don't miss this article on money investing!
I hope you enjoyed this article, and that you gained a lot of learning points that you can apply in practice. Be sure to read my other articles, or follow me through the newsletter or Social Media. My goal is to achieve a happier life thanks to more financial freedom and less stress, so I can spend more time on things that really matter (passion, social relationships, sports, …). And what is your goal?
I would appreciate it if you leave a comment about what you think of this article and what your experiences are with becoming rich. Then we can help each other out!