Have you ever taken the time to consider what it takes to build wealth in your life? This is not a sprint, it is a marathon. This is not all about playing the lottery or going to casinos in Las Vegas. This post is about foolproof ways that have been followed by many and have been proven over and over again to be effective.
So here, I have put together those 7 strategies on how to build wealth as you run your life’s marathon.
Mind your career
What I mean by this is that you, first of all, make sure that you are in the right career for you that you look forward to going to every day. If you do not enjoy your career then you need to find the career that best fits you as an individual and that you can make money at.
So you may need to ask yourself if you really are in the career that makes you happy. Yes, I said “Happy”! You really do have one life to live on this earth and it makes no sane sense to spend most of the time allotted to an endeavor you hate or does not make you happy.
So instead of working and getting paid at what you can do, why not start to explore the career that will make you happy and then go for that? I am only suggesting this, but it is your choice.
You then need to focus on being the very best in your chosen career. You need to understand that you are offering to your employer or others if self-employed a set of skills that people are willing to pay for. This means staying focused in such a way that you are flexible in the current trends of your career and staying on top of it.
Financially educate yourself
As you are making money, you need to have a lifelong education program about financial issues. This includes such topics as the time value of money, the various forms of risk such as inflation risk, systemic risk, investment risk and so forth.
You need to understand investing in stocks, bonds, mutual funds, Exchange Traded Funds, Alternative Investments, offshore banking. Start to understand the tax code and tax deferral versus tax-free.
You need to understand your investments inside your employer-sponsored salary reduction plans known as 401(k) or 403(b) plans and so forth. The reason is you want your hard earned money to start working at least as hard as you do.
You may think, well that is not my cup of tea. That is for my spouse or my financial advisor to understand. Are you really serious? Then what happens if your spouse goes away as in death or divorce? What happens if the advisor goes away?
You see, no one cares more about your money than you do. So it would be a good idea to become educated over time on these various forms of investing. Just make it part of your adult lifetime learning experience.
Start a saving program
When you start earning money in your chosen career, the very first creditor you should be paying is yourself. Consider this that you are the most important person that needs to be paid first from your hard work. So always pay yourself at least 10% from every paycheck.
You can start by investing in your employer’s plans or your own IRA first before taxes. Then start a savings program that pays you first, and you do not touch it unless for extreme emergencies. This is no matter what else is going on in your life. Save it and forget it, let it build up.
The result will be that you will have built up saving in tandem with your debt reduction management. This will result in building confidence in your life that you are going in the right direction.
Build your credit
As we live in a credit-driven economy, access to borrowed money is important. However, this is a tricky one. You need to understand that you cannot borrow your way to wealth creation unless it is used as leverage.
To build wealth, you have to use the power of leverage. Leverage is simply the ability to use a little bit of money to create a massive amount in return on that investment. This can create wealth and is, for the most part, the only way to properly use other people’s money.
Using credit for your personal residence, a vehicle or even consumer cards will not create wealth. However, when used properly, it can be a blessing. So building your credit is to be used only for limited situations or leveraging for business or real estate investments.
Start a business
The wealthiest people in the world are not employees. They are business owners. They created and started a business even if on the side. This does not mean that you are not focused on your career; it simply means that you are accepting the fact that having another source of income is powerful and rewarding.
The concept here is that you need to come to the realization that you are in fact your own business enterprise. Even if you are trading your time and talents for an hourly wage, you could start a business on the side using these same talents and expertise.
With the advent of the Internet, creating an online business is easily at your disposal. So start to think creatively, get out of your comfort zone just a little and start your side hustle. You will learn a lot.
Invest in the stock market
This is in addition to your retirement accounts. To build wealth, I will expand this to more than just a brokerage account and invest in stocks. I will include alternative investments, direct placements, and even investing in businesses overseas, both public and private.
With the advent of crowdfunding, you can get in with very little money and invest in a privately held business before it goes public. Just understand that stock market investing is nothing more and nothing less than being a part owner of a business, either public or private.
Invest in real estate
The wealthiest people in the world have invested in Real Estate. I think Donald Trump comes to mind, or Robert Kiyosaki comes to mind along with many others. This is a real business and a great way to build wealth. You can invest in real estate in several ways. They are:
- Direct ownership of rental properties
- Investing as a partner in a Limited Liability Company set up to purchase and manage real estate rental properties
- Real Estate Investment Trusts that invest in a wide range of types, from multi-family, commercial properties, hotels and even paying parking lots.
- Real Estate Mutual funds that actually hold real property
These are just a few of the ideas on investing in real estate. You should do your homework before investing.
Why not investigate how you could start out by purchasing just one single family rental property for positive cash flow. This is not that difficult to accomplish, and you will learn a lot about direct real estate investing. This is such a great way to start learning and making money at the same time.
I hope that I’ve given you some thoughts about wealth creation and that these strategies will serve not just as a reminder but as part of your thinking for the rest of your life. These seven strategies on how to build wealth should be ingrained in your thinking.