Wealth: everyone wants it, but few people really know what it takes to get it. Getting rich is a combination of luck, skill and patience. You must have some luck; then take advantage of that luck with wise decisions, and continue to weather the storm as your wealth grows. We're not going to lie-getting rich isn't easy-but with a little tenacity and the right information, it's definitely achievable.
Step
Method 1 of 5: Invest
Step 1. Put money in the stock market
Invest money in stocks, bonds, or other investment vehicles that provide a good enough annual return on investment (ROI) for your retirement. For example, if you invest $1000 and you get a reliable 7% ROI, that means you earn $70,000 per year, minus inflation.
- Don't be tempted by day traders who tell you how to make quick and easy profits. Buying and selling dozens of stocks every day is like gambling. If you're unlucky-which is easy-you could lose a lot of money. This is not a great way to get rich.
- Instead, learn to invest for the long term. Choose good stocks with solid fundamentals and excellent leadership, in an industry that is poised to grow in the future. Then let your stock sleep. Don't do anything to it. Let it go through the ups and downs. If you invest wisely, you should be able to earn a lot of money.
Step 2. Set aside a retirement fund
Fewer people are saving for retirement. Whether retirement savings will become obsolete or not, you should plan to save for yourself in the future. Retirement accounts are sometimes not taxed or the taxes are deferred. If you keep enough money in various retirement accounts, they can retain wealth for you in old age so you can really enjoy it. Based on Law No. 11 of 1992 concerning Pension Funds, in Indonesia there are 3 types of Pension Funds, but only 2 types are applicable, namely:
- Employer Pension Fund (DPPK). This pension fund is established and managed by the employer's company and provides defined benefit and defined contribution pension plans for all of its employees.
- Financial Institution Pension Fund (DPLK). This pension fund was established by banks or life insurance companies for the general public, both employees and independent workers.
Step 3. Invest in real estate
Relatively stable assets, such as rental properties or land with the potential to be developed in an area that is growing steadily, are good examples. For example, some argue that apartments in Manhattan are almost certain to grow within five years.
Step 4. Invest your time
For example, you may enjoy having free time, so you give yourself a few hours a day to do nothing. But if you invest those few hours into getting rich, you can have 20 years of free time (24 hours a day!) by retiring early. What can you sacrifice now to get rich later?
Step 5. Avoid purchases that depreciate quickly
Spending $500,000,000 on a car is sometimes considered a waste of money because the car won't be worth half of it in 5 years, despite all the effort you put into it. Once you take the car out of the showroom, the value of this car decreases by about 20%-25% every year you own it. Therefore, buying a car is a very important financial decision.
Step 6. Don't spend money on silly things
Making money is hard. But it gets hard and painful when the things you buy with your hard-earned money are financial black holes. Re-evaluate the things you buy. Try to find out if they are really “worthy”. Here are some examples where you shouldn't spend a lot of money if you're planning on getting rich:
- Casino and lottery tickets. Only a few are lucky to earn money. Most lose money.
- Habits like cigarettes.
- Crazy margin additions like sweets at the movies or drinks at the club.
- Skin darkening and plastic surgery facilities. You can get skin cancer free outdoors if you want. And do rhinoplasty and botox injections look as good as promised? Learn how to age gracefully!
- First class airline tickets. What do you pay with an additional IDR 10,000,000? Hot towels and 4 inches of extra legroom? Invest that money instead of throwing it away and learn how to sit with the majority of the other passengers!
Step 7. Stay rich
Getting rich is hard, but staying rich is even harder. Your wealth is always affected by the market, and the market can go up or down. If you become too comfortable when the market is good, you will quickly return to zero when the market is falling. If you get a promotion or salary increase, or your ROI goes up by a few percent, don't spend the raise. Save just in case business slows down and your ROI drops two percent.
Method 2 of 5: Get Rich Through Career
Step 1. Excel academically
Be it a four-year university or vocational training, some people manage to pursue further education after high school. In the early stages of your career, your employer has little to rely on except for your educational background. Better grades usually lead to higher salaries, though not always.
Step 2. Choose the right profession
Check out salary surveys that show the average annual income for a particular profession. Your chances of getting rich are less if you pursue a teaching career rather than a finance career. At the time of writing, here are some of the highest paying jobs in America:
- Doctors and Surgeons. Anesthesiologists earn a phenomenal $200,000+ per year.
- Oil engineer. Engineers working for oil and gas companies can earn good salaries. Most of them receive $135,000 per year.
- Lawyer. Lawyers earn $130,000 a year, making this a lucrative profession if you can dedicate time and work your way up the ladder.
- IT managers and software engineers. If you are great at programming and a genius at computers, this field promises a good income. IT managers routinely earn $125,000 per year.
Step 3. Choose the right location
Go where the good jobs are. For example, if you want to pursue a finance profession, there are more opportunities in big cities than in sparsely populated rural areas. If you are looking to build a start-up company, you might want to consider going to Yogyakarta. If you want to be successful in the acting world, go to Jakarta.
Step 4. Get a start-up job and climb your career ladder
Play numbers game. Apply to many places and do many interviews. When you land a job, stick around to gain the experience needed to move up the ladder.
Step 5. Change jobs and employers
By changing the environment, you can get a raise, experience a different company culture, and reduce risk. Don't be afraid to do it often. If you are a valued employee, your current employer may also offer a raise or other benefits if they know you want to leave.
Method 3 of 5: Reducing Cost of Living
Step 1. Try extreme coupon collection
You definitely feel good when you get paid to take home the things you use regularly. Yes, you heard right. If done right, you can actually get “paid to use coupons”. In the worst case scenario, you will save a few hundred thousand rupiah which could be saved for an emergency. In the best case scenario, you will get lots of free stuff and get richer in the process.
Step 2. Buy wholesale
It's not always the best way to shop, but it's usually the most efficient. If you can borrow or buy a membership for a wholesaler like Indogrosir, this can make a significant financial change. In some cases, you can find branded products that are discounted from a few thousand to several tens of thousands of rupiah.
If you are hungry and like chicken, buy 4 cooked chickens at Carrefour for example. In the afternoon when it's on discount, sometimes the price can drop to half. That way, you can eat ten full meals, and each is only half the usual price! Freeze uneaten chicken
Step 3. Learn how to canned food
Indonesia is a country that wastes the second most food in the world. Surprising isn't it? In fact, fruits such as mangoes, apples, and oranges can be preserved and stored for consumption at a later date. Be smart about buying what you actually eat. Wasted food is wasted money.
Step 4. Reduce your electricity bill
Electricity, gas, and air conditioning can cost quite a bit of money in your monthly budget if you let them. But you don't want that, do you? You can do things to keep your house cool during the dry season and warm during the rainy season. You might even consider investing in or making solar panels that channel the sun's natural energy into electricity. Keep your bills low and the money you can save will help you get rich.
Step 5. Perform a home energy audit
A home energy audit allows you to find out how much money is flowing out of your home in the form of lost energy. Whether it's cool air in the dry season or hot air in the rainy season, lost energy is generally a bad thing.
You can do your own energy audit if you want, but you can also hire someone to do it. It's just that, you have to spend more money if you ask someone else for help. At the same time, if that means you decide to re-insulate the house and save around $5000 per year, this might be an investment worth trying
Step 6. Go hunting or foraging for food
You may need to invest in equipment and permits, but if you already have one, it's an easy way to get your own food. If you're against killing animals, it's actually quite easy to find food, depending on where you live. But make sure to look for foods whose origin and nature you are sure of. Getting sick or poisoning is never fun.
- Go hunting for deer, duck or turkey
- Go fishing or fly fishing
- Choose edible flowers, pick wild mushrooms, or forage for food in the forest
- Start gardening or build your own greenhouse
Method 4 of 5: Save Money
Step 1. Set aside savings first
This means before you go out to spend your paycheck on a pair of shoes you don't need, put money into an account you don't touch. Do this every time you get a paycheck and watch your account balance grow.
Step 2. Create a budget
Create a monthly budget that covers all of your basic expenses and leaves some “fun” money behind. Don't spend more than that. Sticking to your budget and saving money every month is the surest way to get rich.
Step 3. Downgrade your car and home
Can you live in an apartment instead of a house, or have housemates instead of living alone? Can you buy a used car instead of a new one and use it only occasionally? This is a way to save a lot of money every month.
Step 4. Reduce expenses
See how you spend money and lose it all. For example, avoid visiting Starbucks every morning. The Rp30,000-Rp50,000 you spend on luxury coffee every morning if you add up to Rp250,000 per week, or Rp13,000,000 in a year!
Step 5. Monitor your expenses
To increase your efficiency by reducing expenses, you must monitor them. Choose an app that can help you monitor your expenses like Money Lover or Mint, and keep a record of each of your expenses. After about 3 months, you should know what most of your money is being spent on and what you can do to suppress it.
Step 6. Make wise use of your tax return
For example, in 2007 alone, the average American tax return was $2,733. Even though tax returns in Indonesia may not be this big, you can still use the money to pay off debt or raise an emergency fund, instead of spending it on something that will soon lose half its value? If you invest your tax returns wisely, this money could be tenfold in the next few years.
Step 7. Say goodbye to credit cards
Did you know that the average person who uses a credit card for shopping ends up spending more money than those who use cash? This is because parting with cash is painful. Using a credit card is not so painful. If you can, say goodbye to credit cards and see how you feel when you pay with cash. You may end up saving a lot of money in the end.
If you do maintain a credit card, do things to reduce spending. For example, use a credit card that has been paid for with cash (debit credit card) and pay off your credit card bill on time each time, to avoid interest
Method 5 of 5: Managing Home Ownership Loans
Step 1. Reset your mortgage
Get a lower interest or 15 year loan instead of 30 years. That way, you only pay an additional few hundred thousand rupiah every month. However, you will save hundreds of millions of rupiah in interest.
For example: A $200,000,000 loan for 30 years has an interest rate of $186,500,000, so you're actually paying a total of $386,500,000 over 30 years. On the other hand, if you are willing to pay an additional few hundred thousand rupiah (for example, Rp. 350,000) a month by converting it into a 15-year loan (usually with a lower interest rate, for example 3.5%), you will pay off the loan in just 15 years. and the good news is that you will save Rp.123,700,000 in interest; it becomes money in your pocket. So talk to loan staff about your options
Tips
- Pay off your bills with the highest interest, then focus on paying the bills with the next highest interest until you are completely debt free.
- Try to cook at home and do household chores yourself. Avoiding professional services such as laundry and housemaids can save you a lot of money.
- Always take advantage of any opportunity. Sell items that are no longer used, even the smallest items.
- Write down all the things you buy, and see where your money goes.
- Having multiple sources of income will secure your financial status when compared to having only one source.
- There is no free money in this world unless you inherit it and even so, you have to manage it wisely or you will lose it too.
- If you are going to take out a new loan, make sure it is for something that will generate income.
- Keep your credit history clean as most companies need a capital injection to grow. You will not be able to get credit if your credit score is low.
- Surround yourself with self-made billionaires. Get all the information you can about how the rich make a lot of money and what they do to maintain their wealth.
- Buy clothes in the fall or spring when they are more discounted.
- If you want something big to fulfill a momentary gratification, distract yourself with small satisfactions instead of giving in to big temptations. Stay away from designer clothes or bags, but buy ice cream or watch a movie. A movie ticket for IDR 50,000 is a lot cheaper than a bag for IDR 2,000,000, but it gives the same feeling of doing something “just for you”.
- Don't waste money on what you want but don't need, and spend money on what is necessary.
- Every night before going to bed, put all your change (especially coins) in a jar. This will take some time, but after about a year, your coin amount may be at least IDR 500,000.
- If you often go to bars and clubs, forget about it once in a while. Go one week, then skip the next two.
- Keep your personal expenses as low as possible and reinvest in your company until you are financially independent. This means waiting until you can grow your home and business for 6 months without any money coming in and without a loan.
- If you're going to spend a lot of money on something specific (such as a new car, when your current one is still running well), force yourself to wait a month before buying it. Ask a trusted family member or friend to save your money if the temptation is too great. Take some time to consider the true cost of what you're looking to buy, the pros and cons, how much this will delay your aspirations versus instant gratification, and how the money could be better spent.
- Only buy what you need, not what you want. Stop impulse buying and stop comparing yourself to others, buy what you need, “not” want. Be wise with your money––if you don't need it, don't buy it. Make good choices carefully.
