Getting rich quickly – it’s that elusive dream that so many of us share. Somehow, if we learn how to get rich quickly, then all of our problems will evaporate. But is there really a way to get rich quickly?
And, even if you do, does it really make life that much better?
Sure, getting rich quickly, even if you start out with nothing, is possible (if it weren’t, nobody would ever play the lottery!), but it is by no means guaranteed.
On top of that, having more money doesn’t mean your life will suddenly be perfect. Getting rich quickly also doesn’t guarantee you’ll stay rich if you don’t know how to manage your sudden wealth.
Here, we discuss some common get-rich-quick methods and show you why relying on these tactics is not a good substitute for a solid financial plan.
Instead, if you want to get rich, we’ll let you in on the real way to do it. Spoiler alert: slow and steady is the way to go.
How to get rich quickly…or not
There are people all over the internet promising that they know the secret to how to get rich quickly. While they aren’t all scam artists, most offer false promises that rarely end up paying off.
Watch out for the following “how to get rich quickly” ideas, none of which are sustainable paths to creating wealth.
While you could get lucky, you’re more likely to lose money than make it if you try to get rich quickly with any of the following:
1. Playing the lottery (and counting on it for your income)
Do you believe that winning the lottery, an act of random luck, is a reliable shortcut to becoming wealthy? If so, you might have what Tom Corley, a financial expert who studies the habits of the rich and the poor, calls a “lottery mindset.”
Someone with this mentality is likely to take uneducated risks with their money, such as gambling. These activities are seen as quick ways to get rich but rarely ever pay off.
While putting a few bucks into a scratch-off ticket here and there isn’t going to get you in debt, it’s not likely going to make you rich, either.
Your odds of winning the Powerball are 1 in 292 million. So go ahead and play a game if you’d like, but don’t count on it to make you rich.
2. Joining a multi-level marketing company (MLM)
Have you ever heard of Young Living, an essential oils company, Herbalife, a dietary supplement company, or LuLaRoe, a clothing company? All of these are multi-level marketing companies or MLMs.
Often touted as easy ways to get rich quickly, work from home, and run your own business, you should be wary of MLMs. These companies often target women and, in particular, stay-at-home moms. They are not the get-rich-quick businesses that so many promise to be.
How do MLMs work?
When you join one as a “distributor,” you usually have to purchase the company’s inventory upfront and then must sell that inventory. Sounds straightforward, right?
Well, while you can make a little money selling the inventory, the real way to make money in an MLM is by recruiting new distributors underneath you. Then, you make a commission based on their sales.
The main problem with MLMs is that you are forced to purchase a lot of inventory upfront and it is often very difficult to sell. Which leaves you stuck with excess inventory that you’ve spent a lot of money on and no income.
Sounds bad, right? Well, if you need some hard evidence that an MLM is not a way to get rich quickly, here it is: according to AARP, only 25% of people make any sort of profit with an MLM, and the profit isn't high. Only 3% made at least $25,000 or higher.
3. Day trading
You might have heard that day trading is a surefire way to get rich quickly. What is day trading? It’s a volatile and risky form of investing.
Day traders purchase and sell securities on the same day, usually on the foreign exchange (forex) market or a stock market, hoping to make a profit.
For example, a day trader might purchase stock in the morning at a low price and hope to sell it later that day at a higher price. The catch is, if the price of the stock goes down before they sell it, the trader suffers a loss.
Successful day trading requires time, knowledge, and excess capital reserves to cover any losses. Needless to say, it is risky and is not as simple as it is sometimes presented, so it’s generally not recommended for the average investor.
Another thing to watch out for when it comes to day trading are MLM forex scams. Yes, the same MLMs that sell essential oils and leggings also dabble in day trading.
Specifically, forex trading, which is a form of day trading. Watch out for forex scams and don't fall for one.
(By the way, don’t confuse day trading with the type of investing that we recommend for building long-term wealth. That type of investing (the good kind!) is covered in the Clever Girl Finance book, Clever Girl Finance: Learn How Investing Works, Grow Your Money.)
4. Investing all (or a lot of) your money into one company
It's easy to see situations where this worked for a small number of people and assume it will work for you. Sometimes (rarely) investing a lot of money in one company can pay off.
And it can be one of the ways to get rich quickly if you happen to find the next big thing. (Such as Apple or Microsoft.) There are also cases like the GameStop phenomenon, but the circumstances were unusual.
Typically this is another one of those get-rich-quick schemes that are little more than a gamble with your money.
If you want to become rich, it's far better to have a diversified portfolio and a solid investment strategy. Rather than betting all your money on one company, invest in several by trying out the far safer option of mutual funds or ETFs.
Diversification is key because it's much more likely that you'll succeed when you invest in a wide range of companies.
Why getting rich quickly isn’t usually the answer
Some people who figure out how to get rich quickly end up living richly for the rest of their lives. Others, however, fall into financial trouble pretty quickly. They don’t know how to manage their finances and keep their financial security.
It’s up for debate whether lottery winners are truly cursed (there are examples of the "lottery curse" everywhere, but there are also plenty of winners whose luck does not run out).
While the curse might be up for debate, there are multiple examples of when winners do go broke.
What can we learn from this? Falling into money quickly, whether it’s through gambling, getting an inheritance, or any other way doesn’t guarantee that the money is going to last. If you don’t have the foundation for proper money management, it is likely to disappear quickly.
This is why learning how to really get rich, which we’ll talk about next, is the true key to lasting financial success.
How to really get rich – it takes patience and focus
Getting rich takes time and patience. Slow and steady methods will almost always beat out a quick fix.
There’s nothing glamorous about the following tips but, guess what? They work.
If you follow this advice, you won’t get rich quick, but you will get rich. And that’s the end goal, after all, isn’t it?
1. Make more money
While making more money will not make you a self-made millionaire overnight, ramping up your earnings is definitely one way to get rich.
Little by little, your added income will amount to greater wealth over a long period. There are so many ways to make more money, including:
2. Invest in your education and your personal development
You are your best asset. Investing in yourself and your education certainly takes time and dedication in the short term. But the payoffs in the long term can be great.
While you do not have to invest in your education to grow your wealth, if you do so smartly, this is definitely one of the best ways to build a strong foundation. Along with education often comes more opportunities, options, and higher salaries.
Just be sure before you take on student loans that you have a plan for paying them back. Huge student loan debts could keep your net worth negative for long after you’ve left school and make financial freedom difficult.
3. Learn about personal finance
Education isn’t limited to college or trade school. Educating yourself about personal finance is just as crucial if you want to get rich.
Instead of trying to learn how to get rich quickly, put your efforts into learning how to make your money work for you.
Wondering where to start? Depending on your learning style, there are options for everyone. Clever Girl Finance offers totally free courses on topics ranging from investing to financial wellness to everything in between.
4. Create and stick to a financial plan
What should you do with all of that information you’ve gained by educating yourself about personal finance?
Well, the next step is to put your knowledge to use, which is the last piece of the puzzle to really getting rich.
When it comes to creating (and sticking to) a financial plan, these basics steps should get you started on the path to long-term wealth:
Create a budget
A budget helps you track your expenses, buy only what you can afford, and build up your savings. It makes it easy to operate with a plan when it comes to your personal finances.
Build an emergency savings fund
Emergencies can happen anytime, and they can ruin you financially. If you have an emergency savings fund in place to cover any unexpected expenses, you won’t have to resort to costly methods like credit cards or unsavory lenders to pay for your emergency. And that helps build your wealth and protect your future.
Pay down your debt
Whether it’s credit card debt, student loans, or other debt, if you want to get rich quickly, paying off your debt is a necessary step.
Make paying down your debt a priority if you want to get rich. While it might take a while, if you stick to it, you’ll be well on your way to getting rich.
Investing is one of the easiest ways to grow your money. Investing can be intimidating at first, especially for those who are risk-averse or who have never invested before, but it really is worth it.
How to stay rich
What it means to be “rich” is different for everyone. For some, it might mean not having to think about money.
For others, it might mean having enough money to leave an inheritance for their grandchildren. Whatever “rich” means to you, once you’ve reached that level of wealth, you still need to work to maintain it.
Here are some ways to stay rich (and increase your wealth), because nobody wants to work all those years to get rich and then lose it:
1. Live below your means
Don’t be tempted to spend extravagantly once you’ve reached your financial goals. It’s often said that people get rich by earning money and they stay rich by spending less money than they earn. Aim to spend below your income and avoid lifestyle inflation wherever possible.
2. Diversify your income streams
Lastly, those who stay rich tend to diversify their income streams. In addition to investing in stocks and bonds and keeping a robust emergency fund, rich people usually have multiple sources of income.
Slow and steady wins the race to riches
You can get rich quickly, but it’s not something to bank on. For most of us, the path to riches is filled with years of hard work, patience, and smart financial planning.
If you do all of that, you don’t have to count on ways to get rich quickly to fulfill your financial goals.
And if something like winning the lottery does happen (hey, someone has to win, right?), you’ll have already built your wealth, educated yourself, and will know exactly how to manage your new windfall.