Is it good when you have huge deposits in the bank or plenty of valuable possessions? An individual is said to be wealthy when you see the mansions, cars, jewelry, or clothing. In other words, we assess wealth by material possessions.
Only a few are born wealthy. Most people need to work hard and sacrifice a lot of things in order live luxuriously. Wealth begets wealth, if you know how to manage it. So, the more money you have, the more you will become wealthy.
Wealth also elevates your social standing. At the very least, it provides superficial happiness. You can buy anything you desire, go anywhere you want, or own anything that's for sale.
However, too much wealth also has drawbacks. It can be a source distrust, abuse, or conflict. You've probably read about it in history books or newspapers - suicide, murder, drug addiction, lawsuits, family dispute. Perhaps the saying that money is the root of all evil is true.
On the contrary, lack of wealth can affect our daily lives. It can destroy friendships and diminish happiness.
Wealth Building Strategies
Building wealth is as simple as saving a little bit here and there. You need not have great riches in order to accumulate wealth, but you need to have the drive, determination, and discipline to successfully increase your wealth. Here are 6 wealth building strategies you can put to use:
Pay Yourself First
If you do not set aside money before you start paying your bills, chances are you will never save any. If your employer has a 401(k) or 403(b) plan, enroll in it and set up a reasonable percentage to invest. The money will be deducted before you see your paycheck, and you won't even feel the impact. Maximize your contribution if possible, especially if your employer matches your contribution.
Save Now
The earlier you start saving, the more you will have later in life. If you aren’t able to save much at an early age, you can step up your savings until you retire. The returns won't be as hefty as the early birds, but you'll still have a decent nest egg.
Get Rid of Debt
Even before you build up your savings, getting rid of your debt before starting a wealth building plan is a must. If your credit card rate is 14%, you will find it difficult to pay your debt while setting aside some amount for savings. It would be better to pay down your debt first, and then save for an investment afterwards.
Pick The Right Mortgage
If you plan on holding onto your home for a short period of time, select an adjustable rate mortgage. This will set your your rate to be be lower than a fixed rate mortgage. Use the amount saved to pay down the mortgage more quickly. Refinance your home if rates begin to climb.
Build An Emergency Fund
Nothing wrecks the best laid plan more than an emergency, particularly one that costs you money. Set aside up to six months of your income to live on in case catastrophe hits. Without an emergency fund, you will be tempted to take on debt, cash in your retirement accounts, and sell valuable investments.
Protect Your Assets
You can have a healthy portfolio and see it disappear quickly if you are not properly insured. Make sure that have adequate insurance coverage on life, health, and disability. All it takes is one legal judgment against you to wipe out your assets.
Wealth may seem like it is not something that you will ever be able to achieve. However, by remembering these very simple yet powerful tips, you will be able to make your dream come true. Before you know it, you will be taking the vacation of your dreams, or getting the house that you've always wanted. It can be done if you are willing to make it happen.
