Creating wealth is far from rocket science, but it does take discipline, a consistent mindset, and the right set of knowledge. Although I can’t instill discipline into anyone reading this post I can give some basic tips for creating wealth to set you in the right direction. If you’d like to create more wealth in your life here are 7 tips to get you started.
Accept responsibility for your financial future
You are in the drivers seat of your financial future and to creating your wealth. If you’re 99% of the population nobody is going to create wealth for you so you’re going to have to do it yourself. Accept where you are today and that you alone are going to be the driver to make this happen.
Pay yourself first
One of the oldest concepts of personal finance is to pay yourself first. The top budget item on your list should be the amount that you want to save or invest. For most that number is 10-15%, but if you’d like to retire earlier you might want to pay yourself 50% or more before accounting for other expenses. If you can’t afford to do this, consider finding additional streams of income.
Know what your money is doing
Do you know exactly what each dollar you have is doing? If it’s all sitting in a checking account that’s not bearing any interest you’re actually losing money through inflation. Consider giving each dollar you have a job. Hire your dollars to make more money for you rather than sit there being unemployed dollars.
If you want to save or invest more, consider reducing your spending. Many of the most wealthy individuals lived well below their means for the majority of their lives in order to create more wealth in the long term. Cook at home, do fun things that are free, and enjoy a simpler lifestyle to achieve lower expenses.
Earn more at your job
Your job is most likely your largest income stream and it’s the place where you can actively affect how much you make. If you have a job you have the ability to negotiate for a raise or bonus, or perhaps even gain a part time job to create even more income.
Generate additional income streams
If your only income stream is your job consider creating additional streams of income such as another job, investments, or moonlighting as a freelancer or online business owner.
Depending on your risk tolerance invest accordingly. If you’re not too far off from retirement or just can’t stand the thought of losing money a 100% asset allocation into stocks might not be your best bet. Likewise be careful who you’re taking financial advice from. Are you trading stocks based on what you see on TV, or are you analyzing income statements to determine if a company is a good buy?
Creating wealth isn’t a very difficult concept, but does take patience, sacrifice, and gaining knowledge on how you can increase you income, reduce expenses, and use your extra money to invest and increase your overall wealth.
What are some other tips you have for creating wealth?