Every task that a person intends to do looks difficult to do until and unless he knows the formula or the method on how to do it. For example if I want to cook a biryani, I need to know the recipe or the method on how to cook a biryani, and if I don't know the method then I might land myself in a mess. Similarly if you are thinking and you intend to become wealthy then first of all you should know the formula on How to become rich ? When you know the formula or the recipe for performing a particular task then that task eventually becomes easy to perform or achieve. Becoming rich a dream which each of us perceive so let us see what steps can be taken practically to become rich in the shortest possible time without any side effects.

The first tip on how to become rich is to Look at money a bit differently.

If you want to be wealthy, you need to think a bit differently than ordinary people.  If you think that you will get wealthy by just trading your time for money then its really tough if not impossible for you to get truly wealthy.  The formula in the long run as to how to become rich is to make your money work for you. Once your money starts working for you generating more money, you are eventually on your path to riches.

The second tip on how to become rich is to Realize the power how small amounts can help you.

One of the biggest problem with people is that they always feel that they that for them to starting investing and making money work for them, they require huge amounts of funds, so eventually they never get a big amount of funds at any point time and they don't even start their journey towards getting rich.  The first step is to take baby steps.  Even if you have 100 dollars to spare, invest it.  If you get a 15% return on this investment then by the end of a year you have 115 dollars to invest for the second year.  At the end of the second year you will be earning 15% on 115 dollars so you will get an amount of  132.25 dollars to invest at the end of the second year to start your third year, at the end of the third year assuming your rate of return as 15% only still you will have a amount of 152.09 at the end of the third year. Soon the law of compounding will take over and you investment will continue to grow. It should not surprise you that the above example will yield you 100% return of your initial investment in just 5 years and 300% return in 10 years. Do you get the idea, the point is to start as soon as possible irrespective of the amount.

The third tip on how to become rich is to Pay off your Debts

Yes you need to cut down on your expenses, and pay off all your debts which have an element of interest attached to it. Your savings will start to increase massively once you pay off your debts and save on all the interest money. This saved money can then be invested to generate more and more income.

The fourth tip on how to become rich is to Think hard on how you can save more

For you to start on your path of getting rich, the major step is to think on a daily basis on as how you can save more money to invest.  This is a important step because the more money you put into right investments, the more returns you will get. For example if you invest 100 dollars then your return is 15 dollars if we go by the 15% rate of return, but if you are able to invest 200 dollars then at the end of the period you have 30 dollars so the more money you put to work for you the higher the return so the point I want to make over here is try to save as much money as possible at least till you start getting back your desired income.  See in the initial phase it will look difficult for you but soon you will start enjoying it. Always think of your money as your employees so the more employees you have the less work you need to do. For example if you start your business as a one man show then you have to do the sales, marketing, accounting, logistics, warehousing etc. but what if you have 5 people to take care of these 5 activities then you can just relax, your employees will do all the work and you will be generating income based on their efforts.  This works out exactly the same way when you make money work for you.  Your money works for you and starts generating more money so you are always free to do other things and very soon your money will be able to make a full time income for you without any involvement from your part. Do you get what this will do for you. You can devote more time for your other activities and maybe for other businesses.

The fifth tip on how to become rich is to Take advise of experts to invest your money.

Till the time that you are confident of investing your money at the right place its worth to seek the advise of experts as to where to invest your money. This reduces your risks of losing your money considerably.  In the book “The Richest man in Babylon” the author points out to this important point. At the same time you should strive for the knowledge of investing money so that at a point you are able to do it by yourself but till you reach that point of expertise, the above advise is recommended. I have seen many people who put their entire savings in the wrong place and lost all their hard-earned money. So avoid this mistake and always take the advise from the experts of the field in which you want to invest.

The sixth tip on how to become rich is not to put all your eggs in one basket.

You must have heard this saying a lot of times and it's indeed valuable. When you start with a small amount you can start in a certain field but as your investment grows relax yourself by diversifying your investments in different sectors. For example you can have some money invested in the Real Estate, some in the stock market, some in the commodity market etc. Over time you can invest more in that sector which is giving you maximum returns but always advisable to invest in different sectors so that if any uncertain events happen in a particular sector, your liability is limited to the investment in that particular sector.

The seventh tip on how to become rich is to Always prepare a budget for your spending's.

Let us understand by what I mean by a budget.  A budget is nothing but a plan on how you are going to handle your money. For example you get a salary of 5000 dollars so you prepare a plan or budget as to how this salary of 5000 dollars will be distributed to the maximum benefit. So you allocate 1000 dollars to your food, 1000 dollars for your rent and housing, 1000 dollars for your entertainment and clothing and you put 2000 dollars in your investment schedule. Budget is important as this will help you to reach your investing targets. For example if you decide that your investments needs to be 2500 instead of 2000 then you have to just adjust your other expenses to reach a figure of 2500 dollars in investing. When we do budgeting our mind will find ways and means to achieve your set targets.  It will also help you to condition your mind for investment. Don't take my words for it. Starting budgeting even if you feel you don't need it for the time being, you will soon see the enormous benefits of budgeting.

Finally in a nutshell, we can conclude that if you really want to know the formula of how to become rich then its simple you need to save and invest your money in proper channels and let the money generate income for you.