7 Tips for Creating Wealth

by Ryan

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.

Reduce spending

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.

Invest wisely

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?

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{ 10 comments… read them below or add one }

Tanja January 28, 2011 at 5:26 am

Very wise Ryan

The easiest thing really is: spend less! It always helped me to write down what i was spending. Like that i could see how much i was spending on what and after a while i could figure out WHERE i could safe and found ways of avoiding.
-For example only 1-2 drinks when i go out instead of 4 reduces your spendings in half already, also).
- Why not use your bike instead of sitting in the bus?
- Participate in fun things that are for free
- Eat less fancy things, cook your meals yourself..
- buy less “things” you dont really need..
… there are plenty
Tanja´s last blog post ..I WANT TO KNOW!

Get Happy Life January 28, 2011 at 10:57 am

Tanja, your tips are rather concrete actions and a matter of implementation, while Ryan’s are somewhat general. Although I find some of them overlapping, I still think they are good advices that one should consider.

I enjoy reading this blog, although I miss Ryan replying to comments as before.
Get Happy Life´s last blog post ..How to be a True Friend

Alicia January 28, 2011 at 10:41 pm

Thank you for the seven tips. Knowing what your money is doing and smart investing is important.

Mareeyah February 2, 2011 at 6:09 am

That’s what millionaires do… pay themselves first. I try to save around 50% of my salary often times. Also, to reduce spending, I try to get stuff for free instead of buying them. Joining Freecycle has helped me a lot in acquiring freebies.
Mareeyah´s last blog post ..Lavender- Periwinkle and Pink

Investing Newbie February 3, 2011 at 1:36 pm

I’ve never been a fan of paying yourself first. I actually like paying yourself last. Pay your bills first! Then see what you need to survive (operating expenses) and then save the rest.

I also find that doing it in that order will provide a pretty concrete incentive for you to change your habits. Whether it be cutting costs or making more money, you’ll see where you need to target so that you can save more.
Investing Newbie´s last blog post ..Net Worth Update – February 2011

Sire February 5, 2011 at 2:05 am

I remember with both business that I started that there was a time at the beginning when I couldn’t pay myself a wage. I would have loved to but all the money had to be pumped back into the business so that I could grow it. Once things started taking off not only was I able to pay myself the wage I was missing out on earlier I was also able to invest some of the money,
Sire´s last blog post ..Do You Want To Outrank The Probloggers

Financial Samurai February 7, 2011 at 7:20 pm

Hey Ryan! How’s life? Whatcha up to?
Financial Samurai´s last blog post ..Book Review &amp Giveaway- Debt Free For Life by David Bach

Walter February 7, 2011 at 9:08 pm

I think you have elaborated the important factors here in creating wealth. Actually, it is really up to us whether we want to create wealth for ourselves or not. But I think that the best way for creating wealth is making investments and be wise about it, just as you have mentioned here. :-)

Roman Soluk February 9, 2011 at 6:15 am

Simple but effective tips! Thanks Ryan for this nice post! I’ve enjoyed it so much!
Roman Soluk´s last blog post ..How to Seduce Your Own Husband

Charlie February 24, 2011 at 6:19 pm

Ryan,

I like your common sense approach to the idea of wealth building. These are ideas that were passed down from past generations but seemed to be missed by the last generation. Reducing spending and living within your means is something missed by the credit card generation who just believe spend it now and pay for it later. If more people would take on this attitude with money the country might not be in the shape it is in.

Charlie
Charlie´s last blog post ..Quote of the day 02-23-2011

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