Do you want to know how to become rich in your spare time? This article will show you how. We’ll talk about finding a side hustle, investing, and why a solid budget is important. Anyone can follow these steps, and with a good idea and perseverance, you could be on your way to riches.
What Does It Mean to Be Rich?
Before we can talk about how to become rich, we need to define what it means to be rich. Financially, you can call yourself rich in plenty of ways. Defining rich by income, net worth, and financial independence are some common examples.
Defining rich by income would be like saying those who make $1,000,000 annually are rich. While $1,000,000 is an arbitrary number, you could choose a threshold that sounds rich to you. For example, in 2016, the top 1% annual household income threshold was $430,600. That certainly sounds pretty rich.
Defining rich by net worth might be a little closer to how much people consider being rich. For example, millionaires don’t need to make $1,000,000 per year, they just need a net worth of $1,000,000.
A $1,000,000 net worth just means the value of everything you own minus everything you owe is $1,000,000. Like income, a rich net worth is fairly arbitrary. But, sticking with the 1% theme, the minimum net worth needed in 2016 to be in the 1% was $10,374,030.
My favorite definition for being rich is financial independence. Being financially independent simply means that your assets generate enough income to completely offset your expenses. So, if your annual household expenses are $30,000, and your assets yield at least $30,000, then you are financially independent.
Common types of “passive” income used to offset these expenses are stock dividends and rental checks from investment properties. Because you don’t need to rely on a job to survive, you are financially independent.
This also ties the income and net worth definitions together well. There’s the income from the assets, and the net worth from the assets themselves. Plus, this way, your needs alone define what it means to be rich.
So, How to Become Rich?
There are plenty of pathways to becoming rich. Some are quick and unlikely, while others take longer but are more certain. The following ideas list out many of the ways for how to become rich in your spare time. After all, there’s no reason you can’t be rich while keeping your day job!
Start a Side Hustle
Perhaps the fastest way to become rich in your spare time is with a side hustle. For those who don’t know, a side hustle is a job you do while not at your regular 9-5 job. In the last few years, side hustles have become very popular. In fact, more than 44 million Americans have a side hustle today. While the majority of people with a side hustle are millennials, anybody can have one.
Of those with a side hustle, 25% of them make more than $500 per month. And some of them can make A LOT more. Some bloggers actually make more than a $1,000,000 per year with their blogs. Obviously, if your side hustle ever gets big enough, you could replace your regular job with it. Below are some common types of side hustles.
- Delivering pizza
- Driver for Uber or Lyft
- Sell items on Etsy or Ebay
- Manage social media for small businesses
- Sell Services on Fiverr
- Start a blog
- Design websites
- Create an online course
- Write a book
- Walk dogs
- Clean houses
- Film Youtube tutorials
- Give music lessons
- Be a personal trainer
The list could go on, but I think you get the idea. Some of these ideas limit how much you can make, but others give plenty of room for growth. Just find something you enjoy, find someone who is willing to pay, and grow it from there. There are plenty of online tutorials for building a side business. Eventually, I hope to create my own!
Invest Your Money
My favorite phrase for investing is this: invest early and often. It’s a tried and true lesson. Plus, you only need a little spare time to do it. In fact, if you choose to automate the process, it takes virtually no time at all. You are not going to become rich overnight with this method. However with a little patience and sacrifice, you can build immense wealth this way.
An Individual Retirement Account (IRA) or a 401(k) are two common ways people invest their money. People like these accounts because the investment can grow without taxation (until you withdraw the money). And the gains can be significant. Since 1977, the United States stock market has grown over 11% year-after-year. With those kinds of returns, you can certainly become rich.
At that rate, a $20,000 investment can break $1,300,000 in 40 years (and that’s without ever adding another penny). Or, starting from $0 and contributing $2,250 can yield the same. As you can see, this isn’t a get-rich-quick scheme, but you can certainly become rich. You can try your own values using my handy investment returns calculator. Then, make sure you sign up for your company’s 401(k), or start your own IRA through a company like Vanguard.
Budgeting is a great way to become rich in your spare time. Without a budget, most people have no idea how much money they spend every month. They just hope they have enough. If you don’t know how much you’re spending, how do you know how much you’re saving? How do you know how much you can invest? How do you know how much you have to start your own business?
I honestly believe budgeting is the cornerstone to building wealth. Everything revolves around it. Budgeting shows you how much you make, how much you spend, and how much you have left. My favorite part about budgeting is exposing what you don’t need to spend. Do you spend $500 per month going out to dinner? Maybe you could save a few bucks by cutting back a little. Invest the saved the money, or use it to pay off debt.
I know budgeting isn’t the sexiest way to become rich in your spare time, but it works. Plus, it only takes about 30 minutes per month, if you’re doing right! The thousands of dollars you can save with a good budget can make you rich in no time.
I mention the lottery last because it’s a terrible idea and I didn’t really want to. But, I have to list it because it technically falls under the category of becoming rich in your spare time. Before I continue, let me be clear: don’t play to the lottery as your strategy to get rich. If you think it’s fun to play, fine, but don’t rely on it for your retirement. With that PSA out of the way, let’s continue.
There are two major national lotteries: Mega Millions and Powerball. Each of these cost $2 per ticket. The Mega Millions has a 1 in 302,575,350 chance to win the jackpot, and 1 in 12,607,306 to win $1,000,000. Likewise, The Powerball has a 1 in 292,201,338 chance to win the jackpot, and 1 in 11,688,053 to win $1,000,000. To be clear, these are terrible odds. Lightning striking you (1 in 135,000) or an asteroid hitting you (1 in 1,600,000) is more likely. With those odds, if I ever won the lottery, I would certainly stay in doors.
To be clear, if you want to imagine winning, and you have the cash for that luxury, then play away. We all want to dream once in a while. Just please, please, please do not buy lottery tickets for your retirement or if you don’t have the spare cash. It’s not worth it.
Now Do Something
Above, I listed three excellent ways for how to become rich in your spare time, and one terrible way. I cannot state this enough: avoid the terrible way (the lottery). But you know what? Nothing I recommended is worth anything if you don’t act on it. Reading and learning is good. It’s how we grow. But if you really want to become rich, you need to act.
I recommend a combination of the three good ways for how to become rich in your spare time. Start a side hustle that you really enjoy, and that people would pay money for. It might start small, but if you’re persistent, you can grow it into something amazing. Then, take the profits and invest them in two places.
The first place is your side hustle. Odds are, there’s room for further growth, but sometimes you need more resources to help that growth. Invest your profits to accelerate your side hustle’s growth. The second place to put your profits is the stock market or real estate. This way you can continue to grow your investments when your side hustle fully matures. This will take some time, but before you know it, you’ll be well on your way to wealth. This is how to become rich in your spare time.
What did you think about these ideas for how to become rich in your spare time? Have you tried any? Are there any that I’m missing? Let me know in the comments below!