10 Steps on How To Build Wealth Starting Today
How to build wealth?
Building wealth has always been a topic that attracts all ambitious people, especially young ones, who are looking for the easiest and most simple steps to build wealth starting today.
Indeed, numbers have shown that millennials are the vast majority of pursuers of building wealth, where, according to the Washington Post, by 2019, the average millennial had a net worth of $8,000. Such numbers have triggered the appetite for building wealth as soon as possible, starting today.
Learning how to build wealth from nothing is not a dream nor an illusion, especially if you realize that millionaires didn’t accumulate their wealth within a couple of days by finding a buried treasure.
And, if you think building wealth is impossible or needs 50 years at least to become true, then you haven’t heard the story of Warren Buffet, the third richest man in the world, who started building wealth at age 11!
He purchased his first stock back then and then started his long-term investment, which paid off and made him a rich man.
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Although building wealth is a debatable topic and there are many theories and approaches in this regard, three common rules emerge for accumulating wealth, making money, saving, and investing.
Before you apply these rules, you have to keep in mind that mastering your money and building wealth relies on healthy financial habits. In this article below, we will guide you through the 10 steps for building wealth starting today.
Get a regular income source
Building wealth from nothing doesn’t mean that you can become rich without having a stable and regular income source. Here’s how it goes, to become rich you need to have savings, and to have savings, you need a regular income.
Read and educate yourself
If you paid attention to the rich people's routine, you would have realized that they spend a lot of time reading. They do not limit themselves to traditional and old information, but rather continue to learn and educate themselves.
And remember, if this is what millionaires and billionaires do, then this is what you should go for, too.
Automate your finances.
Automating your finances means sending your money automatically to investment accounts and savings in order to build wealth seamlessly. Thus, investing on auto-pilot prevents you from financial losses and failures.
Hence, automated investments make you execute your payments on time without delay, and you won’t waste your money since it will be moving directly to your savings account. In addition, you will be saving time while focusing on your hobbies, instead of worrying about every single operation.
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Follow the 50-30-20 rule.
This rule, issued and agreed upon by many financial experts, suggests that 50 percent of your income should be spent on needs (payments), 30 percent should be spent on what you want (lifestyle expenses), and the remaining 20 percent should be kept as savings.
If you’re seeking to build wealth starting today, you’re most likely to apply this rule. Even if you’re a millennial, try your best to sustain these percentages so that you get to reach your financial goals faster.
Learn in details about the 50-30-20 rule.
Create an emergency fund
An emergency fund is the amount of your earnings that you must dedicate for emergencies. This amount of money can be cashed out through emergencies like a debilitating illness, loss of a job, an expensive repair of a home or car, or other unexpected circumstances.
In this regard, financial planners suggest that your emergency fund should have enough finances to sustain you for three to six months at least.
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After you guarantee a regular income, and set up a savings plan, then comes the ultimate step: investing. Investing is the transitional phase to building wealth and becoming rich, and fortunately, you don’t need a large budget to start.
In fact, there are advanced investing apps such as Wealthface, that allows you to start by investing at the lowest costs with minimum fees and commissions. The app makes investing simple and accessible and permits automated investing services through robo-advisors, no matter how little money you have.
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Set financial goals
You won’t be responsible with your money unless you have a goal, otherwise you will be spending it on spontaneous purchases. Take advantage of the end of the year and vacation season to clear your mind and set a big goal for yourself.
Include small goals distributed among three-month increments (quarters), so that you can check on your progress as you go along. These smaller goals help you approach the big goal and give you a sense of control over your money.
Must read: Here Are Tips to Help You Meet Your Financial Goals
To do so, you need to write down goals for your annual income and net worth. Most importantly, you need to be realistic, yet without being afraid to take some risks.
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Explore fractional shares
As long as you’re attracted to building wealth, nothing will hold you back, even if you don’t have enough money. Here comes the fractional shares solution that allows you to invest in portions of the priciest stocks and exchange-traded funds (ETFs) starting with as little money as possible, even with $1.
Fractional shares allow you to decide how much money you want to invest in a company, in order to receive profitable gains; thus, allowing you to build wealth over time.
Implement passive investing
Passive investing is an investing approach that focuses on long-term gains, despite the ups or downs in the market on a particular day. The primary example of a passive investment approach is the index fund, which makes it a low-risk, high-return type of investment.
The best passive income investments are those that pay dividends every year. Thus, making a lot of sense in the long term as they contribute to the process of building wealth.
Use a robo-advisor
Living in the digital era means that you no longer need a broker or a financial manager to manage your investments. This is where robo-advisors have made a huge transition in the world of investments by being able to build diversified portfolios of stocks, ETFs, bonds, and REIT, all based on your risk preferences.
The Wealthface robo-advisor helps you create a diversified portfolio with simple, seamless, and quick steps. It allows you to build a customized portfolio that matches your financial goals and risk preferences, in addition to making automatic funding, reinvesting your dividends, and consistently rebalancing your portfolio.
The Bottom Line
Discovering the 10 steps of building wealth requires a clear understanding of your financial vision. Now that you know them, you need to take actionable steps every single day to maximize your chances of fulfilling their long-term goals.
So far, you’ve realized that building wealth over time is a matter of following these 10 steps, and most importantly having the income you need while managing your finances in a way that allows you to be ready to invest successfully.