12 Wealth Building Habits You Need To Start Now
If you’re ready to change the trajectory of your financial future, then take a look at the ultimate 12 wealth building habits below.
I don’t consider myself financially wealthy yet, but I’m on my way. Some may think I am now because I’m on a path to 500k saved?and others see that as still a ways to go. We all view wealth a bit differently and I don’t think there is an exact number either.
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Below are wealth-building habits or tips I’ve learned and am currently practicing that are helping me get to financial independence.
1. Surround Yourself With Successful People
The people you surround yourself with can actually have an impact on your mindset to building wealth.
Associating with like-minded people, who are interested in:
This doesn’t mean you need to drop your current friends (unless they are toxic to your life). But network with people you can learn from.
Find people that motivate you to have good wealth-building habits and can be a mentor to your decisions.
More on this in a Forbes article here.
I was lucky to have a few friends who in their 20s were already working towards some amazing financial goals.
Seeing what could be done motivated me. But we could also talk about:
I have no doubt this has been beneficial to pushing me where I am today and will continue to.
2. Create a Budget - Sure Wealth Building Habits
Think about the last time you (or someone close to you) took a long road trip.
Chances are, you probably needed a map or some sort of guide to help you get from Point A to Point B in a reasonable amount of time.
And that’s exactly the function of a budget: A road map.
Budgeting is one – if not the – most important wealth building habit that you can start implementing in your life today.
Not only does budgeting help you better understand your current financial position, but budgeting also helps you gain a better view of your expenses and income.
In fact, a budget gives you the chance to understand where you are spending your money and can help you identify areas where you can potentially cut out unnecessary living costs (like eating out five times a week).
Typically speaking, you’ll want to review your budget and track your expenses daily – if not weekly (at a minimum).
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3. Spend Less Than You Make Every Month
Something that probably should be a no brainer, but it’s so easy to fall into this trap.
A great way to build wealth, even without a big salary, is to spend way less than you make.
The challenge is, our society gets wrapped up in instant gratification and consuming things to keep up appearances.
People who are wealthy keep their spending low and never spend more than they make.
I’ve been fortunate to catch on to this simple concept pretty early in my mid-twenties, but needless to say there are always temptations to spend.
But if you are on your own path to wealth, you always need to spend less than you make. Easy concept, but not always easy to practice.
4. Pay Yourself First - Train Wealth Building Habits
Paying yourself first does not mean going to the mall or to the car dealership the second you receive your paycheck to spend it on yourself.
It means quite the contrary.
Paying yourself first, in fact, refers to building wealth for your future self.
Here’s an example: When you receive your paycheck,?before you pay your bills, make new purchases for the month, etc. – first deposit a small amount of your paycheck into your investment account (for example).
Once you’ve deposited a portion of your paycheck into your investment account, you can use the remaining money for your daily living expenses.
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Why is paying yourself first so important?
You take care of yourself first.
Instead of spending your paycheck first and investing whatever amount is leftover at the end of the month (which typically is not much), you flip the script. You spend the money that’s leftover after?investing?it into your future self.
While most rules of thumb suggest for you to save about 10% of your gross annual salary each year, if you’re really looking to make a dent in your financial future, you may want to increase your savings rate to at minimum 30% of your gross annual income per year.
5. Don’t Be Afraid Of Investing Your Money
Building?wealth by just saving money from your business or salaried job is great, but it can take quite a long time to build wealth.
In order to get to the next level, you need to put that money to work for you while you sleep.
This means you can’t be afraid to invest your money.
Financial downturns happen and yes the financial crisis in 2008 was scary times. But, if you approach investing methodically, have a plan, and assess your risk tolerance, you’ll be on your way to wealth.
Investing can be in various assets like real estate (rental properties, fix and flip), stock market, businesses, art, etc.