When you read all the financial advice about building wealth and getting rich, it can feel like it’s out of reach for the average person, but that couldn’t be further from the truth. According to the experts, anyone can get rich if they take the right steps.
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Ramit Sethi, the self-made millionaire and host of “How to Get Rich” on Netflix, has three top tips for getting rich on an average salary. So, how can you do it? Here’s what Sethi suggests.
Begin Investing
The most important step to getting rich and building wealth is to think outside your savings account and start investing your money. Sethi has always been a proponent of investing in a simple S&P 500 index fund instead of trying to find some secret investment that needs an advanced degree just to negotiate. The goal is to invest whatever you can to build the habit and to have compound interest on your side.
Sethi once said he believes in saving 10% and investing 20%. He said you should strive to increase the amount you’re investing by 1% every year. The trick is to invest your money automatically, so you don’t rely on willpower. You don’t have to see the money leave your bank account when you automatically invest your funds. The most important step is to invest continuously at all income levels.
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Negotiate a Better Salary
“Learn the skills of negotiating your salary and getting paid what you’re worth,” Sethi advised. Your full-time job should compensate you according to the value you bring to the company.
If you have an average salary now, it doesn’t mean you’re stuck. Once you’ve built the habit of investing your money consistently, the next step is to find a way to increase your income, so you have more to invest.
The best way to increase your income is to find a way to get paid more at work. You can try to speak with human resources about increasing your salary or search for a similar role in a different company.
At this stage, it’s essential that you do your research and look for information about what other people are making in similar positions. You can reach out to recruiters to find information about salary ranges, so you know what to aim for. You should strive to constantly increase your salary, so your pay doesn’t stay at the same level for years.
Start a Side Hustle
Sethi’s final step in getting rich on an average salary is finding a side hustle that will bring in some additional funds. As you’re investing your money and working on increasing your salary, it’s crucial that you look for other options for making more money. A side hustle can help you reach your investment goals more quickly, and it could provide the resources to treat yourself as well.
Whether you are trying to pay off your credit card bill or just worried there won’t be any Social Security left when you retire, having a passive income stream will cushion any financial shock. What are side hustles worth looking into? Here are some popular ideas:
- Rent out your home or list any space you may have on Airbnb
- Try pet sitting or dog walking through Rover
- Looking into any services related to AI that you can perform
- Offer freelancing services on a platform like Fiverr or Freelancer.com.
In an interview on CNBC, Sethi stated the importance of reaching out to your network to get feedback on what you’re good at. He feels that too many people will wait 20 years without taking action when they should be looking for that idea.
Your side hustle can be a passion project, such as creating logos on Fiverr or a side business you start around selling crafts on Etsy. You can get into freelance work or try something in the gig economy, such as delivering food. The goal is to choose a side gig, and then use the extra funds to have more money to invest.
While these steps may seem overly simplistic, the reality is that most people tend to overcomplicate building wealth. When asked why people don’t follow these steps, Sethi said, “Real investing is boring. It’s like watching paint dry.”
Caitlyn Moorhead contributed to the reporting for this article.
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This article originally appeared on GOBankingRates.com: Ramit Sethi Shares 3 Tips for Becoming Rich on an Average Salary
