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   wealth

HOW TO BUILD WEALTH ON ANY INCOME – FEW EASY STEP TO FINANCIAL FREEDOM

 

How would your life be different if you were no longer worried about money? Maybe you’d sleep better and have less anxiety. Perhaps you’d be able to put those monthly money fights with your spouse to rest. More importantly, you’ll be able to create a better financial future for your family.

 

If that sounds like a dream to you, I’ve got great news. now with iworthsaving.com you can create a life free from financial worry no matter where you are right now.

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WHY BUILD WEALTH?

I feel like there’s an underlying belief in our culture that money is evil. We’ve all heard phrases like, money is the root of all evil and Mo Money Mo Problems. But money itself is amoral. It’s a tool that good people can use to create more good in this world.

By building wealth for you and your family, you’ll create more wealth and abundance in this world. You start with your own family by passing your wisdom and habits down to the next generations. Then you extend your reach by giving generously to causes that are important to you. And some of you will start businesses and help your vendors and employees build wealth for their own families. Abundance is contagious.

 

Money isn’t the end all be all. And money doesn’t guarantee happiness. But you can’t argue that a good person can do more good with money than without.

 

 WHAT IS WEALTH?

A high income does not guarantee wealth. There are plenty of people earning $250,000 per year who have nothing to show for it. Neither do fancy homes and cars indicate wealth. In fact, according to Thomas Stanley, author of The Millionaire Next Door, most millionaires don’t drive Maseratis and live in mansions.

 

I define wealth by net worth – what you own minus what you owe. For example, you might own a home worth $250,000, two cars worth $30,000, retirement accounts worth $100,000, and an emergency fund of $10,000. The value of what is owned is $390,000 – not bad.

 

Let’s say the balance on the mortgage of that aforementioned home is $200,000. Then there’s $20,000 owed on the cars, plus $40,000 in student loan debt, and $10,000 on the credit card from that European vacation. That’s $270,000 that is owed, making your net worth in this scenario $120,000.

 

Just like there’s no amount of exercise can compensate for a poor diet, you can’t out earn bad spending habits. No matter how much money you earn, you can create wealth by owning more and owing less.

 HOW TO BUILD WEALTH

I don’t consider myself an expert investor and we’re not actual billionaires (yet). That said, I’m happy with where we are and our average return on our investments. Like most people, we’ve made some mistakes, but we learned so much along the way. We truly built something from nothing.

 

Had I known then what I know now, I would have started saving and investing earlier. I also would have spent less and saved more.

 

While we started saving as soon as we had real jobs, we only focused on retirement savings. I would still invest in retirement accounts for all of the reasons I outlined in Step 3. But I also would have invested more outside of that. Our lives would be very different right now had we matched our retirement savings with non-retirement investments.

 

But we can’t change the past. And the lessons we remember are the lessons we learned the hard way. So we take what we’ve learned and apply it with gusto and share our lessons with the next generation. Here are the nine most important things we’ve learned about building wealth.

WAYS TO BUILD LASTING WEALTH

GET YOUR MINDSET IN CHECK.

The way we think and feel about money affects how we deal with money. You will never build wealth if you believe that money is the root of all evil. If you have a scarcity mentality and believe that someone gaining wealth means that someone loses, you can’t have a healthy relationship with money.

 

KNOW YOUR WHAT AND YOUR WHY.

I’ve been budgeting and diligently tracking our expenses since 2011. I have a pretty good idea how much we need to live our current lifestyle. And based on history, I can predict how much we’ll need in the future.

 

You can figure out how much you need by following the tips in Step 1. To figure out how much you need down the road, check out the resources I shared in Step 3.

 

Equally, if not more, important is understanding your why. Why is it important that you sacrifice today for a better future tomorrow? Maybe you want to ensure that your children don’t have to struggle the way you did. Or perhaps you want to leave a legacy by supporting a cause that’s near to your heart. You might simply want to reduce the stress in your life and your marriage. Whatever it is, figure it out and keep it top of mind.

 

STICK TO A BUDGET.

As I said in Step 2, whether you make $30,000 or $300,000, you need a budget. The less you spend on wants and impulse purchases, the more you can use to build wealth.

Whether you make $30,000 or $300,000, you need a budget

INVEST YOUR MONEY.

Use your money to make money. You could invest in stocks or mutual funds. Be sure to check out the benefits of investing in retirement. As I mentioned earlier, you may want to consider investing in stocks and funds outside of your retirement account.

 

Real Estate is another great way to invest. And I’m not talking about your home here. I’m talking about income generating properties such as rentals properties, vacation rentals such as Airbnb, farm land, or commercial spaces.

 

I’m not an investment professional, but I have two important pieces of advice I’d like to share.

 

The first is buy low and sell high. I’ve been in the game for close to 20 years and I’ve seen plenty of ups and downs. Trying to time the market is impossible, so I just consistently invest money each year. Where I see people get in trouble is the frenzy of bubbles.

 

I was in college during the dot-com bubble and I recall many of my classmates taking out student loans and cash advances to buy stocks. We all know what happened there. Then there was the real estate bubble of the mid-2000s of which many of my peers are still recovering. Be cautious when everyone is in a panic to buy.

 

Which leads to my second piece of advice. Avoid the bubble frenzy by playing the long game. Every time the aforementioned bubbles burst, people panic and sell off, walking away with huge losses. Instead, I buy investments with the intent to play the long game and hold on indefinitely.

INVEST IN YOURSELF.

One of the best ways to build wealth is to increase your income. One of the best ways to increase your income is to invest in yourself. This does not mean you should take out $100,000 in student loans to get a master’s degree in underwater basket weaving.

 

Invest in things that have a good return on investment. This could be anything from formal education to self-education. It could include books, seminars, conferences, online courses, or coaching.

 

It doesn’t have to cost a fortune either. The library offers a plethora or free resources. Or you could apprentice or take a community education class. A great place to start might be educating yourself on investing and building wealth.

 

BUILD A BUSINESS OR SIDE HUSTLE.

Here’s another thing I wish we would have started earlier in life. There are so many great reasons to start a business or side hustle. Small businesses are great ways to increase your income and create more freedom and security in your life.

 

Then there are the tax benefits! Although his name sparks controversy, I like the way Robert Kiyosaki explains this in his book Rich Dad Poor Dad. He uses the CASH FLOW Quadrant to show how the tax laws in the US make it more challenging for employees to get rich. While investors are able to make their money and taxes work for them.

© 2019 by iworthsaving.com

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iworthsaving.com is for entertainment & educational purposes only. Material shared on this blog does not constitute financial advice nor is it offered as such.

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