How To Get Rich

Rich - A person is considered to be rich or doing well if he has enough resources at hand. To be exact, the dictionary meaning of Rich is "Having abundance of resources". The resources available should be enough to take care of your present need and future requirements. Typically resources mean money.

Any person has to deal with two things when dealing with money

Income And Expenses

Here are the broad classification of relationship between Income and Expenses.

• If Income <>
• If Income = Expenses, the person can just about survive. Still not a good condition
• If Income > Expenses, he/she is doing well. But could do better.

By the above definitions/conditions a person's wealth/Net-worth can be defined by

RI = Income - Expenses

It follows that for a person to be rich, RI should be a BIG positive number. Once one attains a BIG positive RI, he/she is on the fast track top become rich.

But how do we attain a BIG positive RI. Typical approach of any person would be to try and increase one's income. This is easier said than done. Increasing one's income is not always in our hands. And this may also require considerable investment of time and resources, of which we might not have enough of either.

But is increasing income the only way of BIG positive RI? Of Course Not. If you see the equation again.... RI also depends on Expenses.

A Person becomes rich if he/she is able to make his income far outweigh expenses.

As said increasing income is not easy and not in necessarily in our hand. But unlike income, in most cases, expenses are in our control. (at least 90% of the expenses).
Soooo..... DECREASE EXPENSES.

Our typical expenses can be divided into four categories.

1. Basic Living Expenses - Includes spendings on food clothing, electricity, rent etc.
2. Health Expenses - Doctors, Hospitalization etc.
3. Entertainment/Luxury Expenses - Movies, Eating out, TV, Funky clothing/footwear, jewelery. Basically a BIG lifestyle and extravagances.
4. Misc/Other Liabilities - Recurring maintenance costs, old Loan EMIs. Stupid reckless decisions.

Of the above four points; 1 and 2 are required and unavoidable expenses. Expenses under the header of Health Expenses can be taken care of using health/medical/life insurance. And the cost of these insurances are also low. Of the total expenses made by any person, 1 and 2 account for at the most MAXIMUM of 40%.

The remaining 60+% of expenses come under the header of point 3 and 4. These expenses can be controlled by setting targets to follow and limiting/channeling our desires. If we are able to control expenses under 3 and 4 we can see a much bigger surplus income. i.e. Profits/Savings.

This Surplus income/profit if saved YoY and invested properly would get us rich in no time.

Thus one can get rich without increasing one's income.

The discussion on how to decrease expenses is to be decided in an individual basis. Such discussion is out of scope of this document.

So Guys Reduce expenses... Keep saving... Keep investing .. GET RICH QUICK

Most of us know the details given above. It is so stupidly obvious. But we invariably choose to ignore it. Give it a shot... It is much easier than we think.