How To Build Wealth? (6 Ways To Build Wealth Fast)
Building wealth isn’t about having extra thousands of dollars sitting around for the next vacation, neither is it about becoming a millionaire – which you can if you want to- but most importantly, it’s about having your financial independence for the rest of your life.
This means financial comfort, including staying out of debt and having enough wealth to face any emergency and living comfortably.
The tips below will ensure you’re on your way to building wealth.
Ready? Let’s jump right in!
1. Change your mindset.
They say it’s not difficult to make a million dollars, but it’s difficult to believe you can make it. Changing your mindset is the first thing to do in order to become wealthy.
• Money Can Buy Happiness.
Many people think that money is evil. The truth is, the love of money is the root of all kinds of evil. Instead, view it this way; money can feed the hungry and save lives.
And if you think that money can’t buy happiness, then maybe you don’t know where to shop! Because once you learn how to use your money to buy experiences and help others, then you’ll find happiness.
• Surround yourself with people who look like your future, not like your past.
We are an average of the five people we spend most of our time with. So, make sure you surround yourself with people who share your value and are going to inspire you to become wealthier.
2. Save Money.
You can earn as much as you want, but if you don’t know how to save money, you can end up in debt. This is the case of those who won the lottery or the athletes who manage to blow off their money in a short time.
They simply weren’t familiar with the idea of saving money.
Here are some ideas to help you save money:
Budgeting is the best way to be in control of your finances and stop wondering where the money went.
This will allow you to make better decisions when it comes to spending your money, and most importantly, will also allow you to save money by allocating some money every month or week for savings.
• Live below your means.
When their income increases, people tend to upgrade their lives. They buy a bigger house in a better neighborhood, a more expensive car, a new fancy wardrobe… this upgrade means more expenses down the road because of what it takes to maintain the new lifestyle.
They end up spending more, saving little, and even getting in debt. Whatever your income is, always make sure your expenses are much less than what you earn.
• Live in a smaller house.
This goes with the previous point. A smaller house won’t just cost you less, but will also discourage you from buying more stuff to fill it.
• Hanging out with friends and family shouldn’t cost a fortune.
Instead of eating out, pack your lunch and go with your family to a beach or a park.
3. Choose your partner carefully.
In a household where one loves to spend, saving money and becoming wealthy might not happen any sooner, either that or lots of fights will take place. This might cause lots of stress and lead to divorce.
That’s why it’s important for you to be on the same page with your partner when it comes to managing finances. Money can be an uncomfortable topic, but it’s something that needs to be discussed.
Below are some questions you can ask your partner:
• How much you earn?
You can’t know for sure how much someone earns just from inspecting his spending habits. He might be charging his expenses to nearly maxed out credit cards.
• How much, what kind of debt do you have and how quickly it is being paid down?
Debt is a bad idea on its own. However, knowing what kind of debt the person has can tell you a lot. Student loans aren’t the same as credit card debt. The latter might indicate bad decisions when it comes to spending money.
• How much do you have saved?
Saving money and having an emergency fund is a good start to become wealthy. And however essential this is, not many people seem to be able to achieve.
• Do you keep a budget?
Being with someone who’s open to the idea of using a budget is important for the whole thing to work.
Related: How To Communicate More Effectively
4. Make More Money
Improving your income is important. However, you’ll also need to have multiple sources of income, as some might say, “making sure their eggs aren’t all in one basket.”.
Wealthy people go to great lengths to make sure they have money coming in from all directions.
• Become a job jumper.
The average raise an employee can expect is about 3%. Something that might not be enough for you to accumulate wealth, given that a regular job is generally our biggest source of income.
However, those who change their jobs at least once every two years are making 50% more over their lifetime compared to those who stay at the same job for a long period of time.
• Improve your skills.
Start networking and taking-in side projects. Most importantly, learn and read more in your field. Read every book that can help you improve your skills, and start attending workshops in your field.
If you’re not sure what sort of skills you need to improve, look for a job you dream of landing and read the job requirements.
If there’s any skill you’re lacking or a skill you think you didn’t master well enough, then that’s a good place to start.
• Multiple sources of income.
It doesn’t have to be tons of money, it can be something that will make you financially secure and independent in case you lost your job. Having multiple sources of income is your way to wealth building.
You can start small by having a part-time job at the weekend, freelancing, making your own product, selling things on Esty, and Amazon Handmade… but you can also go big and start investing in real estate and the stock markets.
• Make sure your assets are more than your liabilities.
A real asset isn’t your house or your car, it’s what makes cash flows in your pocket. This can be your regular job or any other source of income.
A liability, on the other hand, is what makes cash, flows out of your pocket. If you’re spending too much repairing and maintaining your house and car, then they’re a liability and not an asset.
It’s better to downsize your house and have a rental property that is going to allow cash to flow into your pocket, than having a big house that is taking cash out of your pocket.
5. Pay off your debt.
Interests can accumulate in no time and makes it almost impossible to pay them off, let alone to pay the actual debt.
Here are some ways to pay off your debt and stay away from it.
• Pay off your credit card debt and stop using them.
If you have too much debt on your credit card, look into doing a balance transfer to a card with an introductory rate of 0% APR. Some cards offer this rate for as long as 21 months.
That’s almost two years to work on the balance without having to pay interest. Then make sure you pay off the entire balance as soon as possible.
• Prioritize your debt.
Make a list of all of your debt and order them from highest to lowest interest. Then start paying off the debt that is generating the most interest. This way will save you money on interest.
• Have an emergency fund.
This money will prevent going into any debt when facing unpredictable expenses. Start with a $3,000 in an emergency fund and make it separate from your regular checking account.
Make sure you have a clear definition of what is considered an emergency. A vacation or a new leather sofa isn’t exactly an emergency!
6. Start investing.
• Educate yourself.
You should spend as much time learning about investing as you spent earning the money you’re going to invest.
The goal is “not to lose your money and not to lose everything”. It’s okay to take a risk as long as it’s well studied and as long as you don’t put all your eggs in one basket.
It’s important to diversify your investment so that any single event doesn’t wipe out your wealth. (Index Funds, Mutual Funds, individual companies, retirement accounts, etc…)
• Emergency fund comes first.
If an emergency fund is important to have in order to save money and stay out of debt, it’s especially important if you’re thinking of starting to invest the money you saved.
Focus on building your emergency fund to the proper size depending on the sort of emergency that might occur to you (like a broken car, house repair…).
• Start early.
The earlier you start investing, the more wealth you’ll accumulate. Start small, but start anyway. Whether it was mutual funds, real estate, rental properties, companies’ shares, or retirement account, there is no substitute for time.
• Tax-advantaged investing.
Tax, interest, and fees can be the biggest drain when it comes to building wealth. Choose investment vehicles that are going to allow you to minimize your tax payment.
Read more about Tax-Efficient Investing: A Beginner’s Guide
Did I miss anything?
Now I’d like to hear from you.
Which techniques from today’s post are you going to try first?
Or maybe I didn’t mention one of your favorite techniques.
Either way, let me know by leaving a comment below right now!
Wondering what to read next?
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- 10 Laws of Success That Will Change Your Life
- 21 Success Secret of Self-Made Millionaires
- 9 Success Principles Successful People Live By
- 6 Habits of Self-Made Millionaires
- How To Transform Yourself For Success: 12 Steps To Take Today To Change Your Life
- How To Use The Compound Effect To Succeed In Life
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