Hey, Fruclassity friends! Last week we talked about 5 Steps to Getting out of Debt. Today we’re going to talk about 5 steps to building wealth. I’m thoroughly convinced that although everyone may not have the means to achieve millionaire status (then again, if this guy did it, can you?), we can all, at the very least, improve our financial situations. In other words, we can all increase our wealth this year to higher than it was last year, and then continue on that road each and every year as we work toward greater financial security. On then, to 5 steps that will help you become more financially stable than you were last year.
5 Steps to Building Wealth
1. Choose to Live Below Your Means. How far below your means doesn’t matter, although it is true that the further you live below your means, the quicker you’ll amass wealth. The goal is that you simply choose not to spend everything you make. How can one do that, especially when money is tight? Try a no-spending challenge. Drop satellite TV, your gym membership and other unnecessary expenses. Choose big box store clothes and makeup instead of the designer stuff. Learn to cut your own hair. Stop eating out for a year. Sell off your unused/unwanted stuff on Craigslist or Ebay. There are all sorts of ways to start spending less than you make. By doing so, you can avoid debt, and have money left over to……
2. Automate your savings. Okay, I’m going to go out on a limb here and tell you that it really doesn’t matter what you’re doing with your savings, as long as you’re saving money each and every month. Whether or not you put that money into a basic bank savings account or an index fund may determine how quickly your savings will grow, but either choice will grow your wealth. Choose to treat your savings like a bill and automate it so that a certain portion of your money always, always goes into an “untouchable” savings or investment vehicle.
3. Don’t buy new cars. Unless you’re already in a position of great wealth, new cars are a wealth-sucker like little other. Not only are you losing wealth as you make payments, possibly pay interest and pay the higher maintenance costs of a new vehicle, you’re losing the “opportunity cost” that those payments could be making you would you have put them into a savings or investment vehicle. Ditto goes for other large “toys” too. Before purchasing them, be sure that having that new boat, car or whatever truly is more important to you than building wealth.
4. Surround yourself with people with like-minded goals. Whether it’s in real life or on the Internet (cough….pf blogging community….cough) it’s important not to isolate yourself as you work to build wealth. Instead, gain the momentum that comes automatically from being around those who also have a serious (and proven) interest in building wealth. By doing so, you’ll not only help yourself to stay motivated to reach your financial goals, you’ll be constantly exposed to new information that will help you find better ways to achieve greater wealth.
5. Don’t over-think it. If you’re too hyper-focused on building wealth, you run the risk of burning out. Create a wealth-building plan that works for your specific life goals and interests, and then forget about it for awhile, letting your plan do its job. If you’ve planned well, wealth will come, even if you don’t have your fingers in your plan 7 times a day. Just trust in what you’ve created (as long as you’ve created an educated, well-thought out plan) and let the wealth grow. Don’t mess with it unless you see that it’s not working for you.
The most difficult part of building wealth is being willing to set and live with a plan to get there. The before part: the part where you commit to making the plan and then create a plan you’re willing to stick with – the psychological part – that’s the difficult part. Once you get past that and commit to your plan, it’s relatively smooth sailing from there.
What tips do you have for helping people build wealth?
*Photo courtesy of epSos .de