Building wealth involves a whole lot more than just a get-rich-quick scheme or a hefty dose of good luck when chasing trends in the stock market. More often than not, it comes down to making the right financial decisions, big and small, over an extended period of time. That may not sound as glamorous as winning the lottery or coming into an inheritance, but it works. Here are some simple steps to show you how to build your wealth for the long term.
I told you this would be simple. You can’t build wealth unless you first earn wealth. But this step does require some strategizing and evaluation, because simply receiving a paycheck doesn’t equal growth in your account over the long term. First, you need a consistent source of income that provides you with money over and above what you need for your essential expenses, such as housing, food, healthcare, and transportation. But if you want to benefit from the magical compound interest you hear about, you also need to find ways to increase your income over time to allow for more financial margin and opportunities to invest.
Saving money is one of those that we all know we need to do, but it’s hard to follow through in reality. There will always be some sort of expenses or temptation waiting to whisk your money away. Thankfully, there are a few ways to avoid spending that money you’ve earmarked for saving.
Budgeting is an incredibly important and underrated tool to help you spend within your means and save what’s left over. Map out all your expenses so you can see where your money goes, then set an intention to keep excess and wasted expenditures to a minimum. And when extra money comes your way, automatically increase your savings. You already know how to live on your current income, so don’t simply spend more because you have more.
To see your money grow further, take advantage of the automated savings features from your bank or retirement plan. Some 401(k) plans and individual retirement accounts will even give you the ability to automatically increase savings percentages on a schedule that you determine. Are you paying off debt like a credit card or school loan? Schedule an increase for when that debt is paid off, thereby increasing your savings. And don’t forget to save enough in your employer-sponsored retirement account to benefit from the employer match.
Last but not least, you need to invest your money. Just putting it in a basic savings account with low interest will not result in building the wealth you need for your future. The money you save needs to work for you in an investment mix that matches your risk tolerance and long-term strategy. Don’t do this alone. A skilled financial professional knows how to construct a portfolio that suits your life, your personality, and how much risk you’re willing to take. They know how the markets work and when to make changes or when to hold on.
Don’t be fooled; these steps are simple to understand, but they can be difficult to execute. How many times have you tried to break a bad habit or start a good one and didn’t succeed? That’s why I’m here. I’d love to show you how making simple changes and wise decisions can lead to you meeting your goals. No strings attached, I am here to help you and point you in the right direction. Would you like help finding out what path your current plan is on? Schedule a call and meet me virtually.