So you want to get rich huh?  Well you’ve come to the right page then because I’m going to take you step by step through the process of firstly becoming financial secure, secondly building your wealth and lastly protecting your income and investments so that you can truly be wealthy.

But it all starts at the beginning.

Laying the Foundation

The first steps to getting rich is to make sure that you have a good financial system in place.  Yes that means a budget and a savings account.  But don’t worry I’ll try and make it as simple and fun as possible.

Step 1: Setting up an emergency fund.

Before you do anything else you need to have an emergency fund set up so that you can cover any unexpected expenses that come up during the year.  I recommend putting $2,000 in that.

$2,000 is usually the amount that most families will need over the course of one year in emergency expenses.  Of course if you are a single you might need less, but generally it’s good to have a nice buffer in case the worst happens.

Step 2: Creating a budget.

The next step is to create a budget so that you know how much money you have coming in and how much you have going out.  I’m actually a fan of super simple budgets so that you don’t have to think about what you are doing and everything becomes on autopilot.

If you follow my super simple plan of budgeting then you have no excuses not to follow it.

Step 3: Pay off debt.

You should have know on a page called how to get rich that I’d include a section of paying off debt.

There are actually two different ways to way off debt and over the years I’ve changed my mind on the best way to do this.  It used to be that I favoured paying off the highest interest rates first, but I’ve since moved to using an approach that pays off the lowest balances first and then moving up.

The reason I like this method better is that it gives you a sense of accomplishment after each card or loan is paid off, rather than slogging away without seeming like you are getting anywhere.

Step 4: Start your BIG Savings Account

Now you can get into the fun stuff.  The real steps to getting rich.  Your savings account.

This is different from your emergency account which you should already have, this savings account is for those BIG sexy purchases like a car, house, diamond engagement ring, trip to New York etc.  Those awesome things that you think only rich people can afford (well guess what, if you save for it, so can you!).

Getting Your Money To Work For You

So you’ve got all the basics down pat, now it’s time to get a little more serious about getting rich and that means finding the right accounts for your money, investing some of it, and even supplementing your income if you want.

Step 5: Making Sure You Have Your Money In High Interest Accounts

Saving money is a whole lot easier if you have your money in an account that rewards you with some lurvely high interest.  Most of the best high interest accounts are online only accounts, so in this article I look at some of the best one’s in Australia.

Step 6: Investing Your Cash

So saving, while very important, is going to be SLOOOOW work.  So now it’s time to think about speeding things up a bit by investing some of it.

Investing your money can be scary for some people (cough, GFC, cough cough) so it’s understandable that you might be a bit wary of investing back into the stock market or managed funds but if you have time on your side (like five years AT LEAST) then historically it’s shown that you’ll do quite well with the stock market usually averaging around 10% p.a. over time (and yes that includes both good and bad years).

Once you have around $10,000 in your savings account, you might consider putting any EXTRA money into stocks or managed funds.

• Investing in Managed Funds – Yes or No? (article coming soon)
• Investing in the Share Market (coming soon)