Building wealth is a long process. Not many inherit a fortune and windfall gains are equally rare. That doesn’t imply everyone cannot aspire to build substantial wealth over a lifetime. Such a quest does require a lot of patience, meticulous planning, and timely executed tactics. Building wealth may seem daunting, but it is possible and a few simple secrets can assist you in your journey.
There are innumerable books about wealth. “The Millionaire Next Door” lists many common traits among people who have amassed significant wealth. “The Millionaire Mind”, “Secrets of the Millionaire Mind”, and “Think and Grow Rich” are some amazingly helpful resources you may want to check out.
Common Attributes of Wealthy Individuals
Wealthy people have many common attributes, similar to how those who mismanage their finances often commit the same mistakes. Here are some of the attributes you will find in most people who have accumulated wealth with even more ideas here at Dough Roller.
- Wealthy people set goals and chart a path to achieve them. They do not wait to get lucky. Their financial goals are clear. They have a vision and chalk out the essential steps to reach the preset milestones.
- Wealthy people are proactive with savings and investments. Most wealthy individuals who retire early begin investing in their twenties and consolidating their wealth through the thirties.
- Wealthy people prioritize stable employment or a dependable source of income. Many wealthy retirees spend three to four decades with the same company. Hence, they cash in on pension benefits, a considerably high salary to end their career, and a significant 401(k).
- Wealthy people rely on experts. They don’t try to work on their taxes. They entrust professionals to do what they are best at. Building wealth needs more than reading what the experts in various niches have to say. One has to go out and mingle with some of these experts. Any time spent on an unproductive engagement, personally or professionally, is a wasted opportunity.
- Wealthy individuals are always protective of their financial assets and credibility. Your credit score, for instance, is an asset. Those who mismanage their credit score often do not get the financial assistance when required. It should also be noted that a high credit score leads to a considerably lower interest rate on significant purchases, such as a house or a car.
- Building wealth demands more than one source of income. Employed individuals can have investments. Self-employed professionals or entrepreneurs can diversify to have multiple sources of revenue. A single source of income is usually shackling and becomes a hindrance to attaining financial independence. Many wealthy individuals earn recurring returns from their investments, government benefits such as social security, pension in case of retirees, part-time work, and rental income, among others.
- Wealthy people like to be busy. The most common imageries of wealth are sailing on a yacht, driving a luxury car, and splurging money on nonessential indulgences. In reality, those who spend a lifetime building wealth are working most of the time. One can be busy with a second job, learning a new skill, exploring a new business idea, or understanding concepts that can help to acquire more wealth.
- Wealthy people do not indulge in unnecessary spending. They do not practice austerity, but all their expenses are calculated and they pull back the reins whenever there are some red flags. They are also proactive with their savings. If they are not using something, they are going to stop paying for that service. They don’t buy products that have no significant utility in their lives. They have stringent budgets, not just weekly or monthly, but for an entire year.
- Wealthy people understand that money is not the endgame. They do not rely on money to secure happiness, to feel exuberant, or to establish themselves as superior to others. They recognize that money is essential for many things in life, but it is not an end in itself.
- Wealthy individuals are disciplined. They are not only financially disciplined but also in the context of their overall lifestyle. Most of the wealthy people who have worked hard for almost their entire lives do not party every evening and attend balls every third day. They are patient, pragmatic, and committed.
Simple Ways to Start Building Wealth
There are a few simple realities you must remember if you want to accumulate and sustain wealth. First, you must have a steady income, preferably from more than one source. Second, you must save money, ideally even before you begin spending what you earn. Third, you must steer clear of debt. Fourth, you should create and preserve wealth. Below are a few simple ways to start building wealth.
- Have a monthly savings target. Choose a sum that you are comfortable with and what you can practically set aside. Do not touch this saving, even if the going gets tough.
- Look for rewarding interests to grow your savings. You should specifically search for savings programs where there is compound interest. The effect may not be too fascinating in a few months, but the net gain after several years, or decades, can be life-altering.
- Start investing. Many people wait to become rich before they consider investing. Those who are rich today had started investing when they had little to spare. Invest in mutual funds, buy some stocks of a reliable company, and forget about it and look for sensible business investment opportunities around you.
- Consider a Registered Retirement Savings Plan. You will not only be able to park your savings, but you can also get a tax refund.
- Plan an emergency fund and protect it. Many people save regularly and then use the fund whenever there is some financial trouble. Your savings and the emergency fund cannot be the same account. The money set aside for emergency is your rainy day fund. The savings are your steps to acquiring wealth.
- Secure a line of credit, from a bank or some other financial institution. Credit cards are a hindrance to building wealth, even if you are cautious and methodical with its use and repayment. Line of credit usually has a much lower rate of interest than the cards.
- Consider a Registered Education Savings Plan. This will not only set aside a fund for the education of your children, but you will also secure a tax shelter. There is a federal grant of twenty percent on such savings worth as much as five thousand dollars per annum.
- Always get experts whenever you are considering a major investment. For instance, seek the assistance of a mortgage broker when you buy a house and need a home loan. Banks or lenders pay these mortgage brokers a finder’s fee. You can avoid all the hassle, yet secure a favorable proposition. A mortgage broker will get you the lowest rate for your home loan.
- Consider a Tax Free Savings Account. This can help your short term and long-run savings program. TFSA can save you as much as five thousand per annum and you do not pay tax on withdrawal or earning.
- Finally, you should consider financial advice. Wealthy people do not try to be in charge of everything. They rely on expert advice. Financial planning, taxes, investments, contracts, and savings programs, among others, are quite complex. You should also consider different types of insurance to protect yourself, your dear ones, and your nest egg.
Disclaimer: This content does not necessarily represent the views of IWB.