People are fascinated with the idea of building wealth, but most never quite get around to sitting down to really figure out what it will take—and to make an informed, practical, actionable plan to pull it off.
However, successfully accumulating enough money to provide financial freedom takes just that: serious thought and careful planning. Not to mention patience and discipline. These aren’t necessarily the most exciting words to anyone’s ears, but they’re requisite concepts for building wealth over time.
The following 15 wealth-building tips are fundamental to the process. Take them to heart, and then get started.
- Reduce your cost of living as much as possible. The larger the gap between your income and your spending, the faster and more reliably you can build wealth. Look closely at your spending habits and monthly expenses and cut out any you honestly don’t need. And don’t overlook those small, seemingly insignificant purchases like a daily cappuccino; they add up—and could add up to considerably more wealth over a few decades if invested.
- Have emergency savings set aside. Being forced to take out loans or rely on credit cards to bail you out of a tough financial situation can be a major setback to building wealth.
- Earn more money. It’s easier said than done, but never stop looking for ways to increase your income. Remain open to new job opportunities and find secondary sources of income. They’re out there.
- Don’t fall into the trap of increasing your living expenses as you earn more money. It’s all too common and counterproductive to wealth building.
- Talk to a professional financial planner about investing in a traditional IRA, Roth IRA, and/or 401(k) to accumulate money for your retirement. Also ask about stocks, bonds, mutual funds, and other investment possibilities that make sense for your current financial situation.
- Adopt a long-term, low-risk, diverse investment strategy in financial markets. Avoid getting too caught up in short-term volatility, “timing” the market, and high-risk investments.
- Automate your finances as much as possible. Set up automated monthly bill payments. Link accounts and set up automatic transfers to savings accounts, retirement funds, and other locations to stay on track with your financial plans.
- Pay off debt in the order of highest interest rate to lowest interest rate. Make minimum payments on all but your highest interest debt, putting as much cash as you can towards this one item until it’s cleared.
- Make real estate investments in growing regions. These are a smart source of additional revenue that can continue to increase over time.
- Consider becoming an entrepreneur. Outside of investments, owning a business is the primary path to significant wealth building.
- Don’t overpay taxes. Work with a tax and accounting professional to ensure you’re not unnecessarily losing money and that you’re getting every possible tax benefit.
- Read. A lot. Especially the advice of self-made millionaires and billionaires. And about how to invest more successfully.
- Don’t wait! The sooner you start saving and investing, the more wealth you’ll build. Everyone always looks back and wishes they’d started when they were younger.
- Remember that genuine wealth building is a gradual, long-term process that requires planning, patience, and consistency. Don’t get caught up in get-rich-quick fantasies.
- Focus on a positive mindset and believe that you deserve to be rich. It may sound odd, but many people subconsciously self-sabotage their wealth-building efforts because they’re wrapped up in negativity about money and doubt about their ability to become truly financially successful.