How To Get Rich: 9 Tips For Building Wealth In Australia

To become rich, you need to start by defining exactly what rich means to you. Are you dreaming about Jeff Bezos rich, or something more achievable like $1 million in your superannuation account? Are you simply hoping to have enough money so you can cut back on work and enjoy more time to purse your passion or a hobby?

No two people define rich the same way, so you should set your own financial goals and outline a plan for how to get rich on your own terms. To help shape your goals, here are some questions to ask yourself:

• When do you want to retire?
• What major purchases—a second home, an art collection, a cellar full of fine wine—are you dreaming of?
• Do you plan on starting a family or having more children?
• What does retirement look like for you? Downsizing, travelling, a holiday home on the coast?
• What kind of inheritance do you want to leave for your children and family?

Answering questions like these can help you establish financial goals and decide how much money you need to save in order to fulfil your definition of rich. Then make a budget that lets you get to work.

Not all debt is bad, but high-interest debt is downright terrible if your goal is to get rich. Part of your budget must involve a plan to crush your bad debt and maintain responsible levels of good debt, like a home loan.

The debt avalanche method is one of the most popular ways to rapidly reduce interest costs and pay down high-interest debt quickly. With this strategy, you’ll put the maximum toward your highest interest rate debt and make the minimum payments on other debts.

Once the debt with the highest rates is paid in full, you’ll roll what you were paying over to address the next highest interest rate debt and pay it off.

While you might be tempted to accelerate paying off lower interest rate debt like student loans or your mortgage, think again. You’ll save more in the long run by paying off your higher interest-rate debt first, and only then crushing that mortgage and any lingering higher education loans, such as HECS-HELP.

An emergency fund is critical to your strategy for getting rich. This isn’t your Bitcoin (BTC) stash or shares of Microsoft stock, either. Instead, it’s highly liquid cash, readily accessible in a low-risk savings vehicle or offset account, funded at levels that protect you from needing to take on high-interest credit card debt in an emergency.

Many experts recommend having enough money to cover three to six months of expenses in your fund, but the amount you need to feel safe could be greater or less than that. Either way, build your emergency fund, keep it in a savings account that earns a high interest rate, or offsets your mortgage, and remember to top it up after you use it.

The longer you wait to start investing, the longer it will take to get rich. It’s not enough to save money; to get rich you must put your dollars to work by investing in markets.

Broadly speaking, there are two avenues for regular people to get started with investing: a taxable brokerage account and a tax-advantaged super account (more on this below).

If you don’t already have one of the former as part of your financial toolkit, check out our guide to share trading platforms, which should help you get started with taxable investing.

Learning how to invest is not a simple task, but the time to get started is now. Don’t be intimidated by the process: Start small, use the educational resources that are available on the platforms above and remember that the most important thing is to sustain regular contributions to your investment accounts over the long term. Time in the market is generally considered a better option that attempting to time the market.

Related: How to Build an Investment Portfolio

If investors have learned anything from the crypto crackup of 2022, hopefully, it’s not to put all your eggs in one basket. That also happens to be one of the key concepts of investing: diversification.

Once you begin your investing journey, you need to always keep in mind that building a diversified portfolio is essential to getting rich. It protects your wealth from the big wipe-outs that can happen when you only own a single type of asset, whether that’s crypto, yesterday’s hot stock, or the new wonder investment your neighbour told you about.

Building a diversified portfolio means understanding asset allocation—putting your money into a mix of different asset classes aligned with your goals.

When you’re younger and have more time to build wealth, you can take on riskier investments because you have plenty of time to recover from inevitable market declines. The older you get—and the closer you are to your definition of rich—you should shift to less risky assets to preserve the wealth you’ve built.

The most effective way to get rich is to learn about investing yourself, but you might also consider hiring a financial advisor to help you maintain your investment portfolio.

The more money you earn now, the faster you’ll be able to achieve your goal of getting rich. Boosting your earnings potential today helps you build a virtuous cycle of earning more, investing more and getting closer to your goals.

Perhaps the easiest way to boost your income is by seeking advancement in your current position—although if that’s not in the cards, don’t be shy about considering a career change. Some ways to up your earnings include:

• Document your achievements, then use them to strengthen a request for a raise.
• Seek out mentors to help you build the skills you’ll need for higher-paying positions.
• Improve your skills through classes or additional education.
• If the steps above aren’t realistic, consider changing careers to take a job with better salary prospects.

Beyond your primary career path, you can also increase earnings with a side hustle or by starting a small business. A side hustle doesn’t have to last forever, but it provides a great income supplement to help you pay down debt or increase your investing budget.

Related: Best Passive Income Ideas for 2023

The FIRE movement—it stands for financial independence, retire early—could be something worth learning about if you want to get rich sooner rather than later.

Adherents of the FIRE approach to investing attempt to cut all expenses as low as possible to maximise the amount of money available to invest. Instead of spending money on car loans and insurance, for instance, a FIRE practitioner would forgo owning an automobile and riding a bicycle everywhere, no matter what the weather.

This is an extreme example, and we wouldn’t really want you to give up owning a car. But some of the movement’s rules of thumb could be useful, like the rule of 25, which tells you how much money you need to achieve financial independence, aka getting rich. The rule calls on you to save 25 times your annual expenses before retiring early. For example, if you spend $35,000 per year, you’d need to save $875,000.

FIRE strategies can help you get rich quicker than you might without an aggressive savings plan. If you’re ready to supercharge your wealth-building goals, this list of FIRE blogs can help you learn about the movement.

Superannuation is often overlooked as a form of investment, with many Australians placing it in the set-and-forget category. It’s something we’ll think about when we reach preservation age, which will be 60 for most of us.

However, as a long-term investment vehicle it’s hard to beat, especially if you you’re in a high-performing fund. Super is taxed at only 15% in the fund, while most investment returns are taxed at your income tax level, which for most of us is higher than 15%. This makes super a great option for middle and high-income earners, and what’s more it takes advantage of compound interest, amplifying your returns over a long time period.

In addition to your employer’s obligatory contributions, you may wish to make additional super deposits through salary sacrificing. You can add up to $30,000 of pre-tax income to your super per year.

Check out Moneysmart’s retirement planning calculator to estimate how much you are on track to earn in your super fund by retirement, as well as how much difference making additional contributions will make to the final balance.

Related: Best Default Superannuation Funds for 2023

There’s a reason the phrase “get rich quick” is usually followed by the word “scheme.” That’s because there are vanishingly few ways to get rich quickly, and anyone telling you that’s not the case is probably trying to defraud you in a scheme.

As we’ve outlined above, getting rich means knowing what you want and having the discipline to do what it takes. This all takes time, but it is doable—and it’s worth it. Make a plan and stick to it, and you’ll see progress when you take the right steps to build wealth.

If someone whispers that they have a “sure thing” and you “can’t lose,” get away from them as quickly as possible. Just know that nothing’s certain, few things happen as quickly as you’d like, and getting rich is your reward for a plan well-executed—with patience.