Finances: How to Get Rich – The Formula (4 Steps) – Understanding Money

Do you want to know how to get rich? Guess what, it is possible for anyone and you can be rich too you just have to understand how money works.

As long as you can learn how money works, you will be on your way to accumulating massive wealth.

So without further ado, here 4 steps to becoming rich.

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1. Create Streams of Income

The saying is true: “to make money you’ve got to have money,” and this applies here. If you have not been lucky enough to be born into wealth and you were born a millionaire then most likely this step means that you have to get a job.




At the very beginning stages it is important to start generating some money that you can later use it to do more advanced things such as investing in to a business and investing to make your money work for you.

2. Create More Assets Than Liabilities

Owning your own assets is an integral part to becoming rich. However, most people spend a majority of their lives accumulating liabilities which is bad.

So, you may be asking what is the difference?

Here are their respective definitions:

An asset something that you OWN that can be either sold for cash, or pays you steady income on a fixed schedule. Examples of this include: real estate, a car (that you OWN), jewelry, stocks, bonds, or artwork.

A liability  is debt that you are responsible for paying back to someone. Some examples include: mortgages, car payment, credit card payments, or money you owe to a friend.


With that being said, most people in society sign up for too many liabilities and it is the reason why the majority of people on the planet, struggle financially; and it’s because most people sign up for liabilities.

Credit card companies and banks understand that most people want things that they cannot afford; They also understand that most people will NOT be able to pay them back. This is why they charge interest, and they are collecting HUGE profits using this strategy!

Now, it is up to you to take the power back into your own hands. Stop being the consumer  and piling boat loads of debt and focus on owning your own assets. You see, every time you sign up for a liability that is more money that comes out of your pocket which gives you less money that you can invest and grow. Essentially, having liabilities leaves you stuck, which is where most of society is-stuck in DEBT.

To become rich and avoid being like everyone else, avoid accumulating liabilities and eliminate the ones that you already have. Unless you are investing in a product that will help your business grow or something along these lines, do not use your credit and live a frugal lifestyle below your means so that you can accumulate money to invest in a business.

Stick to this rule: If You Can’t Afford Something With Cash, You Cannot Afford It. Credit is the BANKS money. So don’t buy it and fall in the debt trap! 

3. Start Your Own Business

Now that you have gotten out of debt and have covered your basic needs with your sources of income. Now it is time to use that money to feed your business. At the core, this is important to do because it gives you protection against one of your income sources failing. Plus, there is no better way to make a lot of money than with your own business—the sky is the limit. Also, if you lose a job, or one of the markets that you invest in goes sour you will always have your business to fall back on.

Here are 2 basic ideas:

An Online Business this is a business that primarily operates virtually and it is the hottest market right now. Billions of dollars are moving in to this market. You can provide coaching, services, sell books, sell programs, you can make passive income from a blog, YouTube, etc. Really the options are limitless there are sooo many ways to make money online.


Sell Products Nothing like selling hard products. There are many different kinds of ways to do this. There’s the old school way of opening up a brick and mortar store and selling a product to people that way, but the downside is that it is expensive (rent, electricity, etc) or you can start a business on amazon and sell directly to consumers that way.

These are just a two basic type of businesses, but there are THOUSANDS of others that I have not mentioned here. Find something that you are passionate about and create your business around that passion.

4. Become an Investor

Now that your business is growing and you have some significant income being generated, now it is time to go all in with your investing. Take sums of money and distribute them towards different types of investing. This is called diversifying.

The reason you want to diversify your investments is because at any given time one of them can fail. For example with a stock, the company could go out of business or with real estate a hurricane can destroy your property.

Here Are Some Different Types of Investments:

Stocks/Bonds/Forex Market these are the basic markets that allow you to invest in companies and currencies. Some are risky but have high payouts and some are safe with low payouts. Have investments in both. These investments will pay you consistently over the life of their life and pay you dividends, coupons, and capital gains that will boost your bottom line nicely over time and grow your wealth.

Stock Market Diagram

Real Estate this is when you are investing in land or a structure such as a house or building. The nice thing about this is that once you have tenants living in your property, you will be getting consistent rent checks monthly. Also, real estate is GREAT for making PROFIT. If you chose, buy a property and fix it up and then sell it for more money. Many people make a killing doing this.

Hard Assets these are assets such as jewelry, cars, and artwork. Literally, there are so many things that you can buy that have great value to others and that will appreciate in value over time which you can then sell for a profit. Another great source of investing.

With that being said, again, these are just a FEW types of investments that one can make. People who are wealthy, are at this stage—investing. Once you have the power to invest, you don’t have to work anymore because your money literally works FOR YOU.


As long as you follow these steps and keep these principles in mind, you will be rich in no time. The key is, once you have established your own business and have investments lined up, you will be down the right path of accumulating massive wealth.

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