6 Key Signs You’re Going To Be Very Wealthy Some Day
Written by
Joel Lim
Edited by
Rebekah Evans
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Maybe you make good money now. Maybe not. One of the great things about the “American Dream” is that anything can happen to anyone, especially when it comes to either steadily building wealth or catching lightning in a bottle with financial success.
With that in mind, there are some indicators that you’ll be rich in the future — especially if you can maintain them. This could even be the near feature with the right financial planning, saving and investing. Here are six key signs you have a good chance of becoming very wealthy.
You Have Multiple Income Streams
First off, to be a part of the 1% in the U.S., you need a net worth of around $12 million, though much less than that is required to be considered “wealthy.” One sign of growing wealth the right way is your ability to bring in multiple incomes. If you’re already making decent money and you pick up a side gig, you can invest part or all of that second income to really capitalize on it.
It doesn’t have to be anything that brings in huge amounts of cash either. It could be anything from working as a virtual assistant to substitute teaching, or bringing in investment income streams from dividend stocks or rental income. Not relying on a single income stream can mean a huge difference in wealth down the line.
You Live Below Your Means
A side effect of having multiple income streams is that you can live below your means, because you can have one income fund your lifestyle while allocating all other sources to investments. Think of this like a preemptive form of financial security.
Again, the energy around money is interesting. Typically, the more you focus on making money work for you, the more money you’ll make. You start making coffee at home or even invest in your espresso machine rather than hitting Starbucks every day and you could save literally thousands per year.
You’ll choose a smaller apartment that requires less maintenance instead of a large house and you could save tens or hundreds of thousands. It quickly becomes a way of life and the more money you don’t spend, the more you can invest and grow. And that’s how your wealth really grows.
You’re Debt-Free
Now, before you can invest heavily, you’ll have to divest heavily. That is, you’ll have to divest from your creditors. Truly wealthy individuals don’t have a bunch of what Experian referred to as “bad debt.” You should only have debt that essentially works as an investment for you, like a home or piece of property that appreciates.
All other debts should be paid off at the end of the month. For example, if you have a credit card that earns you air miles or cash back, you can make purchases on the card and then pay your balance in full before any interest kicks in.
You cannot become truly wealthy if you owe a bunch of debt to a bank. If you’re not out of debt, get there fast with Dave Ramsey’s Baby Steps. Being debt-free is a solid sign you’ll be truly wealthy.
Your Investments Are a Priority
Most financial advisors recommend you invest rather than save. Far too many people spend years putting money in low-interest savings accounts, watching it stay stagnant and sometimes not even beating inflation. Then, they retire and realize they don’t have as much as they thought they would.
So why did these folks never get rich if they had good jobs, were smart with their money and never took on debt? Because they saved but didn’t invest. Savings accounts are a little better than stashing cash under your mattress — but not by much.
The average savings account will not make you rich, typically providing less than 1% APY, which means you’ll lose money to inflation, which is between 2% to 6% in recent years, according to the U.S. Bureau of Labor Statistics.
But investing your money over time can earn you 10-12% annually, which is a HUGE difference. In mutual funds, at 12% over 40 years, if you put just $500 in per month, that would make your investments alone worth $4,602,549. That’s how the rich get rich.
You Focus on Long-Term Financial Goals
One definite sign of someone who will never be wealthy is a hyperfocus on the short term. If you’re living paycheck to paycheck, stressing about paying rent and spending your extra cash on flashy items and vacations, you’re not likely to be wealthy until you shift your focus on retirement planning and beyond.
Wealthy individuals think about how their money can work for them over time. They look at the immediate and consider every purchase before making it, asking, “Does this serve my long-term goals?”
So, if you’re not in a position to consider long-term goals, that’s your work right now. Get that side hustle, ask for a raise, switch jobs and do what you have to do to start investing some money and watching it grow.
You Never Stop Learning
Finally, one of the biggest investments you can make is an investment in yourself. You should always be learning. Sometimes, you’ll find free resources online that teach you about wealth, health and habits that will make your life better.
In other cases, you may need to pay for a college education or extra courses to improve your position and pay at work. But learning is never wasted time or money and the vast majority of truly wealthy people are lifelong learners.
Caitlyn Moorhead contributed to the reporting for this article.
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