It’s not impossible to build wealth. It takes effort and stamina, but with a little creativity you can become rich. Unfortunately, many people believe it’s impossible. Worse yet, they see cutting back as the only way to grow wealth. That’s only half of the equation. Earning more is the other part that helps you become wealthy, and most everyone can do that. Here are 12 simple money rules to follow to grow real wealth.
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Have Multiple Streams of Income
Far too many people rely on a singular stream of income. That creates risk. A financially savvy person sees the problems caused by one stream of income and seeks to be different.
Think beyond your day job. Additional streams of income can include a side hustle, or a passive stream of income. If you can do both, even better.
Pick the Right Partner
We are often the sum of those around us. Surrounding yourself with people share similar goals is essential to achieving success. This increases our drive, and challenges us to reach our goals.
This also includes choosing a partner who has similar values as you. You don’t have to agree on everything, but a partner that has like-minded goals and drive is an overlooked component of wealth creation.
Save Until it Hurts
You should save at least 15 percent of your income for retirement and other long-term needs. A person driving to become a millionaire looks for ways to save, not excuses not to.
There is no set percentage of how much you should save. But, you should save until you truly feel it. While it is easier, per se, to save more if you earn more, don’t use that as an excuse. There are loads of people who are self-made millionaires that come from a modest career.
Optimize Your Spending
No one becomes truly wealthy by pinching pennies. Saving does help, but optimizing your spending is beyond that.
Even if you like luxury items, a wealthy-minded person looks for ways to get a great deal. And, if they like luxury, they often cut back in other areas. Wise money management involves looking at finances holistically.
Know What Your Money is Doing
Budgeting is a great way to stay on top of your money. However, it only shows you how you’re spending.
A person trying to build wealth looks at everything, from fees they’re paying on their investments to monthly obligations. This ensures they’re being as streamlined as possible and without waste.
Protect Your Assets
Building wealth is more than just saving and creation. It also includes protecting yourself. Life insurance is the obvious first tool.
However, protection goes beyond that. It includes health coverage, disability insurance, and the proper protection on your home and belongings. You are your most important asset, and it pays to spend to protect it.
Avoid Debt at all Costs
Debt is the enemy of wealth, especially consumer debt like credit cards. Cheapskates and frugal people alike avoid credit card debt as they know it erodes wealth.
Furthermore, they avoid extended car loans, if they get a car loan at all. Cars are typically depreciating assets and do little to help you increase your net worth.
Plan For the Worst
Life throws the unexpected at us. A major emergency or medical event can be ruinous to your wealth creation. A fully stocked emergency fund is a fantastic way to protect against the former. Online banks like CIT Bank are great choices as they pay super competitive rates.
Tools like a tax-advantaged health savings account (HSA) can help provide in the latter. If you don’t use your HSA funds, you can carry them to retirement and use them then.
Take Advantage of Your 401k Match
Saving for retirement is an essential part of any wealth creation strategy. If you’re not doing so already, taking advantage of the 401(k) match at your job is the easiest way to save for retirement.
This is free money, and all you need to do is save enough to receive the full match. Even if you feel like you can’t afford it, save enough to get the match. It lowers your current taxable income and puts money away for retirement. That’s a win-win.
Watch Your Health
Health is a widely overlooked factor of building wealth. The government reports that 70 percent of people over 65 will need some form of long-term care. Nearly 20 percent of those will need it for at least five years.
Protecting your health now is the best way to protect against this. Look for ways to stay active. Regularly visit your doctor. Eat healthy. Doing these won’t guarantee you’ll be healthy in your retirement, but they can go a long way to help you get there.
Learn From Your Mistakes
No one is perfect, and we all make mistakes. People working to become millionaires take mistakes in stride and learn from them.
The reason is simple. It helps them avoid worst mistakes in the future. This applies from investing to career opportunities.
Misfortune and obstacles are an unavoidable part of building wealth. Don’t let them stop you, but embrace them.
These impediments provide great learning lessons, and they spur you on to continue. Again, no one is perfect. Perseverance helps you take failure in stride and helps you reach the next rung.
How to Multiply Your Money
Get-rich-schemes are typically scams. However, there are ways to truly grow your wealth. While not flashy, they can help you build real wealth.
How to Become Rich Quickly
Everyone wants to become rich quickly. While not always possible, there are legitimate ways to become wealthy. Follow these methods and you’ll be on the road to riches.
21 Awesome Passive Income Ideas
Passive income is an excellent way to build wealth. Thankfully, many ideas only require a little money to start. Pursue these options to grow real wealth.
35 Proven Ways to Save Money Every Month
Many people believe it’s impossible to save money. Or, they think saving $20 or $50 a month won’t amount to much. Both are incorrect. There are many simple money-saving tips that can add up to big savings. You just have to start one, then another, to increase your savings.
How to Start Investing With $500 or Less
You don’t need a lot of money to start investing. It’s possible to start with several hundred dollars, or less. Take advantage of time and start growing your money as soon as possible.
I’m John Schmoll, a former stockbroker, MBA-grad, published finance writer, and founder of Frugal Rules.
As a veteran of the financial services industry, I’ve worked as a mutual fund administrator, banker, and stockbroker and was Series 7 and 63-licensed, but I left all that behind in 2012 to help people learn how to manage their money.
My goal is to help you gain the knowledge you need to become financially independent with personally-tested financial tools and money-saving solutions.