海角大神

The media likes to paint a certain picture of what it means to be rich 鈥� huge mansions, expensive cars, high-powered Wall Street or tech-startup-type jobs. If you buy into that image, being rich may feel like an impossible dream.

But the truth is that most 鈥渞ich鈥� people live very normal lives. You probably wouldn鈥檛 even know they were rich if you saw them because they don鈥檛 fit the stereotype. Most rich people are a lot like you and me. They just know a secret that, while incredibly effective, isn鈥檛 very sexy.

The secret to getting rich

The secret to getting rich is as powerful as it is unexciting: live below your means.

That鈥檚 it. The bigger the difference between what you earn and what you spend, the sooner you鈥檒l find yourself with enough money to do what you want with your life.

Now, I realize that 鈥渓ive below your means鈥� may sound obvious or trite. That doesn鈥檛 make it easy. It鈥檚 actually much harder than it sounds. Many of the people you see with big houses and fancy cars are up to their eyeballs in debt, which means they鈥檙e violating this basic principle. They aren鈥檛 rich at all. They鈥檙e in debt.

The challenge is recognizing that you can鈥檛 amass real wealth if you try to keep up with such people. Real wealth comes from spending less than you earn, again and again, month after month, year after year. It鈥檚 a slow and steady process. It isn鈥檛 particularly exciting. But it is the surest way to reach your biggest financial goals.

Practical ways to live below your means

So if the key is living below your means, does that mean holding onto your ratty old futon from college rather than buying a comfy couch? That kind of thing is certainly an option. But here are some more practical steps to could consider:

1. Ditch your big monthly bills. Switch to a聽. Or聽. Technology is allowing us to do more for less, and you can take advantage.
2. Automate saving by transferring money out of checking and into savings at the beginning of every month. This forces you to live on less.
3. Increase your savings rate by 1% every six months. Set a calendar reminder to help you remember. You鈥檒l hardly notice the difference, and it will really add up over time.
4. Put 50% of all raises towards savings. You still get to increase your lifestyle, but you do it in a sustainable way.

Redefining rich

Central to all of this is redefining what it means to be rich. If you need a huge home and an expensive car to 鈥渇eel鈥� rich, then this advice won鈥檛 work for you. But if you define affluence as the ability to spend time with friends and family, to travel, to do work you love and to stop worrying about money, then living below your means is all it takes.

Real freedom is the ability to make life choices that make you happy. Frugality puts money in your pocket so you can do just that.

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