10 Strategies to Build Wealth

While the estimated number of wealthy people?continues to increase steadily, a lot of ordinary folks are being left behind. If you are one of?these people, it probably means that you are?not doing something right. But hopefully, that’ll?change that today. By the end of this guide,?you will know about all the best channels which?you can use to build wealth. So stay tuned!

Number 1: Educate Yourself First

If we ever want to change our financial status,?you must begin with our mindset. You can start?adjusting your mindset by becoming acquainted?with the basics of financing.

It’s crazy that?some people are employed but are still clueless?about some basic concepts like how to file their?taxes. While some people choose to ignore this or?think they can just get someone to do it for them,?this is the wrong approach. Familiarizing?yourself or at the very least, knowing how?to file your own taxes, is a good idea.

Also,?acquaint yourself with these basic terms;?income, expenses, net worth, return on investment,?passive income, financial independence,?and so on. In addition, read all the books you can find?which are related to finance. If reading is not?your thing, you can listen to podcasts or anything?that’ll make you financially aware. The point is?to never stop learning.

While in the process, you?should also be cautious because the internet has?all kinds of information; while some are true,?others are misleading. If you want to find out?the best information, a good bet is to check?out all the successful investors. Follow their?social media pages, and blogs, because they should?have some pretty insightful things to tell you.

Number 2: Get A Regular Income Source First

If you want to become wealthy one?day, and you don’t come from money,?then friend, you better have a plan. The thing is, you can’t just wake up and decide?that you want to start accumulating your?wealth.

FIRST, YOU’LL NEED A GAME PLAN,?WHICH SHOULD FACTOR IN YOUR SOURCE OF INCOME,?WHETHER THAT WILL BE A REGULAR JOB OR A HUSTLE.

Once you have saved up enough, you should then?start researching ways in which you can grow?what you have saved into something substantial.?This might mean, investing in the stock market,?starting a business, or getting an education?and certification for a high-income skill. Whichever one you choose, make?sure you are also mentally prepared for it potentially, not working?out, and having to start all over again.

Number 3: Make A Budget And Stick To It.

For some reason, some people think that it’s?unpopular to have a budget. That having a budget,?and setting a limit on your spending?is being too strict on yourself. However, what they fail to see is that?budgeting has a plethora of benefits.

First,?you’ll become disciplined and stop yourself?from overspending on things that aren’t a?priority. This can certainly help you to?build your savings and eventually your wealth.

PERSONALLY, I USE THE 50/30/20 RULE, WHICH?IS QUITE SIMPLE YET VERY EFFECTIVE. 50% OF MY?EARNINGS GOES TO ESSENTIALS LIKE RENT, FOOD, OR?HEALTH CARE. 30% GOES TO MY NEEDS LIKE SHOPPING?OR ENTERTAINMENT, AND 20% GOES TO MY SAVINGS.

By planning your income this way, you’ll find your?wealth growing steadily each month. In fact, it’ll?seem quite effortless. The main point of budgeting?is to reduce your spending and maximize your?savings. It’s pretty much like trading one thing?for the other, with the only difference being?that saving is way more beneficial than spending.

Number 4: Build An Emergency Fund.

Imagine this scenario, you have an early 2000?Toyota Corolla, which for several years has??served you well. However, it’s getting old?now, and it’s starting to develop a couple of?problems now. It’s your only car and you rely on?it a lot for work and commuting. If anything bad?were to happen to it, you wouldn’t know where?the money would come from to replace it. But?one day the worst does happen, and your car?breaks down.

The repair bill is enormous and?you aren’t sure where the money is going to?come from. Your only choices are, selling an?investment to pay for the repair, or go into debt?which you will have to pay a high interest on.

I’m guessing you’re probably frowning right?now because these are not the best option in?the world. If you want to avoid such stressful?decisions, you’ll have to build yourself an?emergency fund. Life can be very unpredictable.?

For example, in the car example I just talked out,?if your car broke down in the middle of nowhere?and you’ve got no insurance? Here is where the?emergency fund would have come in and saved the?day.?This is just a fund you ought to keep that?will help you in times of unplanned situations?that require urgent funding.

Although some wise?investors have already taken that step and now have an emergency fund, they sometimes forget?that a good emergency fund should be able to take?you through 6 to 12 months of living expenses. The need for such a fund was made clear for a lot of people during the recent pandemic when?many lost their jobs and had no form of income.?

Once you’ve started building your emergency fund,?you can just put it in your savings account where?it’ll be easier to access if the need arises.

Number 5: Invest Money.

Now that you’ve built yourself an emergency?fund, it’s safe for you to start investing?so that your money can start growing.?There are a variety of options where you?can choose to invest your money, but first,?you’ll have to do your homework because you?wouldn’t want to invest in something?you’ll not be able to keep up with.??

You can begin to invest in stocks by buying them on the stock exchange.?And if you didn’t know, owning stock is almost like having a piece of the company,?and you’ll profit from the slightest?rise in the price of shares as well as?dividends that’ll be paid out. Although?they are, at times, riskier than bonds,?their risks vary depending on the corporation.?

If you’re not comfortable with stocks,?you can choose bonds.?These act like IOUs (which is an informal documents acknowledging?debt) from a company or government. Technically,?if you buy bonds, the issuer always gives you?their word to give back the money with a profit on top after a certain period. You’ll also have to do proper research?on the types of bonds you’re taking to?avoid any surprises; get to know?the bond rating agencies assigned.

Alternatively, you could go for mutual funds.?This?simply means you buy a pool of securities. Most of the time, it includes stocks, bonds, or a mixture?of both. Although mutual funds are quite risky,?they also bear very good rewards in the end.?What you’ll need to be aware of as a young?investor is that all three work well but are still?risky. All it takes is the right time to invest.

Number 6: Automate Your Financial Life.

Most of us are familiar with how stressful handling money can be. From the bills?and debts to savings and investments, it?sometimes feels like it’s too much. At times,?we tend to spend the money we weren’t supposed to?or end up forgetting to pay certain bills because?we are too busy. Luckily for you, there are a?couple of ways to get this done automatically.

MANY FINANCIAL ADVISERS WOULD SUGGEST THAT YOU?HAVE A FIXED PERCENTAGE THAT IS DEDUCTED FROM YOUR?SALARY EACH MONTH TO COVER YOUR DEBTS, SAVINGS,?AND INVESTMENTS.

If you activate this feature,?there’s no payday that will go by without you?distributing it equally. The more you do this,?the more you’ll get used to it and eventually, you?won’t even notice the money you’ve saved from your?salary. (Pretty genius, don’t you think?) It’s?a perfect example of working smart and not hard.

Number 7: Increase Your Retirement Savings.

Steadily saving money is an amazing way?to compound your wealth into fortunes.?This is often very evident to most?individuals who save up for retirement.?Most of the time, the money is?put into good use through bonds, mutual funds,?stocks, guaranteed investment contracts,?target-date funds, or your employer’s stock. With this plan in play, you can contribute?a percentage of your salary that will be?used as an investment, which is later put into your retirement fund.

Number 8: Stay Diversified.

Ever heard the proverb, “never put?all your eggs in one basket”? You see,?this simple proverb has a much deeper?meaning to it. From a business perspective,?it simply means that you shouldn’t?invest all your money in one place. I know some people may say that you’ll have?more if you invest all your money in one place,?but these types of people haven’t really?thought about your financial security.??

It’s not a surprise that some businesses?fail or that the market falls drastically,?but it’ll be a shock if that happens and you’ve?put all your money on the losing end.?The best?way to stay safe is by putting your money?in different investment sectors so that,?in case of a loss, you’ll still?have something to keep you going.

Number 9: Explore Passive Income Ideas

If you really want to build your wealth, then you?need to think more about how you’ll build it even?further. It’s okay if you’ve got a job that pays?you well, but if you’re being true to yourself,?you should ask yourself, is that all you need??

I already know the answer to that, so do this.?Find yourself a job that will make you some money even as you sleep, something that?doesn’t require your full attention.?There are?plenty of options currently, like blog posting,?marketing, selling digital products, and drop?shipping. The best and most profitable way to?earn a passive income is by investing in real?estate.

Although it sounds like easy money,?passive income jobs also require some serious?attention and some need very large amounts of?capital, especially at the start. If you find?yourself a way to earn some passive income,?I bet you’ll be better off than the?few who depend on their full-time job.

Number 10: Use Robo Adviser

Managing businesses can sometimes be challenging,?especially for those who lack all the knowledge.?Luckily, for everyone’s sake, nobody should?struggle with their bond ETFs or IRAs because now?there are specialists for that. The Robo adviser?simply gathers information for their clients through online surveys and makes the necessary?investments on their behalf.

Despite the fact that many people don’t trust these guys, they?usually make the correct investment decisions. Once you have mastered all these, you can proceed?and consider the channels rich people follow to?grow their wealth. It makes no difference if you?have a nice job that pays well. Aim for more!

With that being said, thank?you so much for reading,?and if you found this guide helpful, be?sure to give it a thumbs up and subscribe?to our channel for more tips on?how to improve your finances.

Until next time, take care!

Coined from https://anthonyex.com/10-strategies-to-build-wealth/