Every year, billions of dollars are lost to scams–many of those scams of the “get-rich-quick” variety. People who easily fall for these tend to be those who want a one-way ticket to the “good life”. I don’t think there are shortcuts to wealth accumulation. It takes a lot of time to build wealth. Getting rich quick is possible, and you can read my article on the topic for more info, but highly unlikely. Building your wealth slowly is better for you in the long run.
What does having wealth mean? It means having an abundance of money and with it many personal freedoms that most people can only dream of. It means being able to pursue a passion, travel the world, or buy anything without looking at the price tag. Also, it means living in comfort and financial security and not having to worry about the next bill payment.
Everybody wants to be wealthy, but few are willing to admit that wealth accumulation takes time and effort. But if you follow these 10 steps, building wealth will be easier:
There’s a popular saying that goes, “you need money to make money.” There’s some truth to this, but everybody can leverage a resource for wealth accumulation: time. You can make your time into money by getting a full-time job. This will get you at least the minimum wage, but any amount is enough to start building your wealth. Once you have a consistent flow of income, you’ll be on the right track to wealth.
Many high-paying jobs don’t require specific degrees or educational backgrounds. Check out my article on the topic with this link.
Debt is what stops many people from building wealth. This is because whatever money you would save would go to someone else. Not only does it prevent you from saving, but it also makes you feel like your money isn’t your own.
This is why you should try to avoid debt if you’re still building your wealth. If you already have debt, then don’t be too alarmed. You can use methods to eliminate debt, which you can find by checking out my article.
Once you have a consistent source of income, it’s time to start budgeting. Setting up a budget will help you have an easier time accumulating wealth. This will help you determine how much money you actually need to spend every month. That way, you can plan out how much of your income you can save. Usually, I recommend saving about 20% of your income.
After paying your debts, the first thing you should be doing with your savings is building a dedicated emergency fund. This fund will ensure that you won’t become bankrupt in the event of a tragedy. You should save about six months’ worth of your necessary expenses, such as food, bills, and rent.
Another thing that a budget helps with is that it forces you to live within your means. There is rarely a good reason to spend more than your budget allows. By spending less money than what you make, you’re ensuring that you’ll be growing your wealth.
You’ll eventually find yourself moving up a few tax brackets, though. This doesn’t mean your lifestyle should follow. Wealthy people don’t spend their money unnecessarily. Even if you have more money in the bank, it doesn’t mean you should stop your wealth-accumulation habits.
You can’t go wrong with maxing out your retirement fund contributions every month. Money from retirement funds is pretty much guaranteed and completely tax-free. Investing in your retirement fund means that you’ll be able to enjoy the golden years of your life without working. If you are going to invest in your retirement funds, you should do it ASAP because of one thing:
This is the primary reason that you should be investing in retirement early. Compound interest is interest upon interest. When you invest earlier, you’ll get more free money because you’ll receive more interest through the years.
Allow me to break it down for you:
Let’s say you invest $1000 dollars into a fund with a 10% annual interest rate in 2022. That means you would get at least $100 every year. So in 2023, you would have $1100. But in 2024, you would have $1210. Where did that $10 come from?
While your initial investment was $1000, you earned $100 from the interest which adds up to $1100. This means that the next year, you’re earning 10% interest on $1100 instead, which is $110. That means you get an extra $10 for doing absolutely nothing other than investing a year earlier. Over the span of 10 years, you would have earned double your initial investment off of interest alone!
If you’re older and just starting to invest, don’t worry about missing out on compound interest. Better to begin investing late than not to start at all.
Just like a house, you can’t just stop caring about your wealth after you’ve built it up. You have to maintain it and ensure that it lasts. This is why you have to keep yourself open to new ways of building wealth. When it comes to learning more about wealth, it’s best to keep an open mind.
Learning about wealth accumulation is best done with people in your circle. You trust these people, and you want to see them succeed. That’s why you should put yourself in circles where you can learn from your peers.
That’s why you should join my financial fam. You’ll have access to exclusive information and personal financial advice from me. Plus, it’s 100% free!
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Dollars Makes Cents by Shaquana, Financial Coach and Wealth Expert, resources helps professional millennial women of color with the tools and skills they need to eliminate their debt, amplify their savings, and build generational wealth — without having to compromise their lifestyle.
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