When the topic of wealth comes up, typically there are two different responses; some enjoy speaking on their life’s accomplishments and earnings, while others attempt to steer the conversation into a contrasting direction. Unfortunately, there isn’t a real-life “Share the Wealth” card that we can get handed on any normal day, but there are a few steps that you can take that might get you just a little bit closer to achieving your desired wealth.
Stay Clear of Debt
In order to be debt-free, you first need to pay off any pre-existing debts that you may already have. This could include: student loans, credit cards, and medical debts that are taking a chunk of change out of your pocket and making saving a challenge. This is much easier said than done, as some people spend the rest of their lives paying off student loans alone. If you are able to pay off any debts you may have, it will provide you with a much smoother foundation for building wealth, and will take out a load of stress when comes time for saving.
Budget, Budget, Budget
It’s easy to lose track of your spending when you are living comfortably, but what about when you are trying to build wealth? That’s when budgeting comes in; budgeting provides you with control over your spending. It can also help you to know exactly what money goes where and when. If you blow all of your money and leave none for that sink repair, you might find yourself in a tough situation and left with a leaky sink. It’s best to come up with a system to keep track of your money, which will ultimately help with managing your finances and make sure you have enough left over to stash into savings.
“A budget is telling your money where to go instead of wondering where it went.”
– Dave Ramsey
Meet With A Financial Advisor
Meeting with a Financial Advisor is a smart idea, even if you aren’t looking to build wealth. Financial Advisors can help you see the big picture, assist in risk management, and even help you optimize your taxes. Receiving professional financial guidance will help you to stay organized, and allow you to benefit from their knowledge and experience. Although there are great benefits, hiring a financial advisor can have it’s costs too. It is an investment in itself, but can carry great weight within your journey to building wealth and make sure that you are staying on the right path.
Downgrade Your Lifestyle
Although downgrading your lifestyle can feel like a step backwards, it is really the key to helping you move forward. Seeing if there any extra expenses or added costs that may not be necessary or that you may not be aware that you are paying can add up over time. Downgrading your Hulu subscription from Ad-free to having Ads is a tough transition, but even the small savings count here. Prioritizing your expenses and living a low-maintenance lifestyle will speed up the process as you are saving, and maybe even teach you a lesson or two about living in luxury.
Spend Less Than You Earn
The golden ticket of saving. If you don’t like living paycheck to paycheck, spending less than you earn is the perfect way to save. When more money is coming in than going out, it’ll be easier to stack up the cash and set it aside. Making a profit on a daily basis is ultimately the goal, but having a steady source of income and low living expenses will make having a daily profit possible. Calculating your daily profits and evaluating your expenses will help you decide if you need another form of income, to cut back on some expenses, and really see how profitable your current income has been for you.
When it comes to building wealth over time, the easiest way to do so is through investing. Investing a consistent amount over an extended duration of time is a key that many millionaires will tell you is how they built their fortune. Stocking money into retirement accounts such as a Roth IRA or 401(k) earlier on in life will leave you with more play money when comes retirement, and ensure a comfortable lifestyle after your active income has come to a halt. Keep in mind that as you invest, you are also building interest, so over time you will walk away with more than you put in, especially with the use of compound interest. If applied efficiently, the money that you save can earn you money, so it’s important to make sure you have enough saved to invest with financial security still set in place. Investing your savings could provide you with passive income for you for the rest of your life, and also provide you with your desired wealth over time along with the security and financial freedom that we all hope for when retirement comes.
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The ambitions that come along with the idea of building your desired wealth and preparing for retirement will help to carry you throughout the process, but we can’t forget about one important key here; patience. Although we may be eager for the opportunity to reach our financial goals sooner rather than later, we have to remember that the building process takes time. Whether it be passive or active income, it’s important to make sure that you are saving and investing throughout the accumulation that will continue to build and get you one step closer to financial freedom. Through that, you may be able to achieve your financial goals, and possibly even withhold your own version of the famously known “Share The Wealth” card.