An Easy Roadmap to Building Wealth Following These 8 Simple Steps
You want to be wealthy right? Live financially free and feel secure? You can do so by following these steps.
1. Change your Mindset
Yes, I said it. The first step is important because your beliefs about money ultimately become your truth about money. If you think money is hard to come by then it will be hard to come by.
If you believe money is an abundant source, then it will show itself in abundance. It’s ok to love money folks! Say it… “I love money”!
The trick? You have to believe it and exude that belief within your body.
What you put out to the universe, you will attract. You must feel like you have the money already that you dream of. You must feel like you are living an abundant life like the money has already come to you. If you believe that money is plentiful and flows easily, then that is what money will do!
2. Save for a Rainy Day
If you have no savings, then please save some cash!! Did you know 2 in 3 Americans cannot cover a $400 emergency expense in cash? Don’t be a statistic. Save a couple hundred for an emergency.
To get your savings started, save at least a minimum of $500 but I’d recommend $1,000 to $2,500 to start. Emergency car maintenance or getting a tooth fixed can be expensive!
3. Pay off your Debt
If you have credit cards, loans, and/or a mortgage, or any combination, if you want to build wealth, must pay off your debt. Start by paying off your credit cards first because they usually have the highest interest.
If you carry a balance every month, stop charging your cards and start paying them off. You can do so by paying down the card with the highest interest first or the smallest balance first, whatever will build momentum and gratification for you. If you need more inspiration with paying off your credit card debt, check out these 7 steps.
4. Spend Less
This is the not so fun part but it must be done. I’m not talking about creating a budget here. I don’t believe in budgets…Over time you may have accumulated expenses that you’ve forgotten about. It’s best to comb through your bank and credit card statements to see where your money is going to get rid of the expenses you don’t need.
Do you have a gym or Costco membership you don’t use? CANCEL THEM.
Have you signed up for subscriptions you forgot about? CANCEL THEM.
What about all your streaming services? Do you use ALL of them? Probably not, so CANCEL THEM.
Your daily cup of coffee from Starbucks or McDonald’s?? Just kidding…
I’m not telling you to cut spending on things you enjoy but you should review where your income is going every month to see if you are paying for things you’re not using or do not need. Erroneous expenses can easily burn through your income without you realizing it.
5. Earn More
This concept usually isn’t talked about. Most of the time you hear to “cut your expenses and live below your means”. No one wants to do that! And why should you when you could potentially earn more?
Are you due for a raise or promotion? If you are, ask for it.
Can you turn your hobby into a side hustle? Try it out to see if you can generate some extra income.
Do you have the time for a part-time job? Maybe consider it for that extra cash. I did in my early 20s. Every day I was hustling…
Remember that money is abundant and there is plenty of it, so why not earn more from your current job or by adding a side hustle?
6. Increase your Rainy Day Savings
So you’ve got your mindset right, you started paying down your debt, eliminated unnecessary expenses, and possibly increased your income. Dang, you are on a roll now!! What’s next is to build a bigger safety net by saving a minimum of three months to one year’s worth of expenses.
Depending on where you are in life will depend on how much money you should save. You may be younger, single, and rent, meaning you could take on more risk. It may be best to save less. If you are older and have a family and a mortgage, you may want to save more.
We all know what happened during Covid. People got laid off and it’s happening again today! It’s best to save as much money as possible for peace of mind but don’t save too much since you don’t get the best return on your money if it’s sitting in a regular old savings account. My savings is sitting in a money market account earning 4% interest. Yours could too.
7. Start a Retirement Account or Increase your Current Contributions
If you don’t have money saved for retirement, an easy way to start is with a 401K plan from your employer or an Individual Retirement Account (IRA). If you already have a retirement account set up, then you should increase your contributions to the max contribution annually or at least to 10%.
If you are starting off and not sure how much to contribute monthly, start small and work your way up every month. Start with a 3% contribution and every month increase it by 1% until you reach a number you are comfortable with and can afford while following the previous steps.
8. Invest for Passive Income
Real estate, businesses, stocks, or commodities. Even some side hustles can generate passive income! Printables or e-books anyone?
With real estate, you can acquire rental properties but be sure to hire a property manager so it is a passive investment. You could also invest in REITs if you want a truly passive real estate investment.
With businesses, you can purchase an established business with its assets and employees and let the business continue to operate and generate profit for you.
Stocks and commodities are also passive. Just make sure you buy low and check if the stock you purchased issues quarterly or annual dividends.
Your side hustle may provide passive income as well. The initial setup may take time but once you complete it, you can set it and forget it!
As you can see, building wealth can be simple if you follow a systematic approach such as the above. If you are just starting out or are already on your journey to being wealthy and financially free, please leave me a comment letting me know where you’re at on your journey!
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