Building Wealth Is Easier Than You Think

building wealth

Building wealth isn’t exactly easy, but it definitely doesn’t have to be hard either. It’s more about discipline and routine than intelligence. Intelligence and knowledge help once you get to the more advanced stages, but when you’re starting out, all you really need is a plan and the willingness to stick to it. I’m going to share with you a few things that I did early on to start building my portfolio.

Building Wealth – But First, A Little About Me

I’m a 40-year old guy, married once for a little over a year, and then divorced. We moved too fast and things just didn’t work out. But, that is a story for another day. It’s all good now — I’m happily in a relationship with the right woman. I’ve owned two houses in my time. The first one was from 2005 till 2011. I sold it, lived with my dad for a few years, and then purchased another place in 2015, where I currently live and hope to keep as my forever home.

I graduated undergrad back in 2000 with $0 to my name. Eighteen years later, I have a portfolio just north of $600,000. I don’t claim to be a genius, and I have never received an inheritance. My stepdad is a very savvy investor and has taught me a lot, but most of my wealth building has been from persistence and discipline. There are a thousand ways to build wealth. Here are a few get you started.

Set It and Forget It

Shortly after college, I set up an account with a brokerage firm and automatically had money transferred from my checking account to my brokerage account on the first business day of every month. I never missed the money because it wasn’t ever there for me to spend. I set it up so that part of it would go toward my ROTH IRA and the rest to a taxable brokerage account. Most of it went into a few mutual funds early on. As I learned more about investing, I started to put some of it toward individual stocks.

The point is, I automated the process. Instead of trying to remember to save on a regular basis it became automatic.  The actual amount that you save isn’t important at first. Just make an effort to save something. And do it consistently each and every month. You can increase the amount as you earn more over time.

Watch Your Expenses Carefully

This one is important especially for younger people just starting out in life. The temptation is often to start consuming things as soon as you get your first “real” job. New cars, apartments full of furniture, electronics, clothes, the list goes on. Stay disciplined and try not give in to these temptations — try to live more minimalistic.

Don’t get me wrong, it’s ok to spend some money and have fun, but it’s all about moderation. Remember your long-term goal of saving and stick to it. I kept my “beater” car for about two years after I graduated college. I would have kept it longer, but it broke down beyond what was reasonable to keep repairing. I replaced it with a used vehicle that I kept another six years. Although I could have purchased a brand new car, I had a goal of setting aside money to save and invest.

Basically, you are avoiding temptation, you are avoiding peer pressure, you are ignoring what your friends and coworkers are doing, and you are building wealth. Don’t forget to have a little fun and live a little. You just need to do it in moderation and within the parameters of your budget, which brings us to the next point.

Create a Budget

If you don’t have a budget, you need to create one. How detailed you make it is a matter of personal preference and circumstance. If you’re just starting out and you’re struggling with finances, I’d suggest creating a detailed budget that tracks every penny. If you are more disciplined with money or are more advanced financially, then a looser budget may be all you need. I use the latter. But, at a minimum, you need to have an idea of how much comes in and how much goes out on a monthly basis.

It’s difficult to save and live below your means if you have no clue where your money goes. If you need help, a quick Google search will give you plenty of resources to create a budget  If you want to do it yourself, Excel will work just fine. Simply tracking your income and your expenses will be a huge help in your journey to financial success.

Identify and Work Toward Goals

What are your goals in life? With finances, with your career, with your relationship? If you don’t know, you need to figure that out. You also need to write them down and read them to yourself on a regular basis. It will be hard to achieve financial goals or any other life goals without a purpose and plan to get there. Know your motivation and pursue it. Do you want to be a millionaire in 10 years? Do you want to buy a house in three years? Do you want to get a promotion at work? Figure out what you are working toward, make a plan to get there, and work at it constantly until you achieve your goals.

This is by no means a complete list or anything advanced. But, it is a good place to start and will hopefully motivate you to start saving and investing for your future and your goals. There is nothing overly difficult about saving and building wealth. You just need a plan and the discipline to stick to it. Good luck with your saving and life goals!

Do you have any tips for building wealth? Share with us in the comments below!

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Comments

  1. Amen to all of the above. However, instead of setting a budget I would actually track your spending to the penny in order to try to identify trends in your spending habits. I also find the act of tracking each penny as and when I spend as a natural reminder to ask myself whether I need to make the purchase or not.

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