Many smart people errantly believe that building significant wealth is only possible if you have a lot of money to begin with. That is a lie. Anyone can build real wealth. You just need to follow some simple steps and tips. Add the right financial mindset to that and you’ll be well on your way. Here are 11 ways you can begin to create wealth from nothing.
Make a Simple Budget
Many people fear budgets because they think they will restrict their freedom and suck all the fun and joy out of life. Or, they think they’re too hard to create.
Both of those ideas are false.
Your budget can be as simple as a list of your income and expenses on a piece of paper. Or you can use one of the many budgeting apps that help track your expenses right on your phone. Either way, a budget will help you see what you’re making and what you’re spending.
Creating wealth begins by spending less than you make.
Take Advantage of Your 401K Match
The Department of Labor reports nearly half of Americans don’t contribute to their 401(k) plans. If that’s you and your employer offers a match, you’re giving up free money.
Saving for retirement can be painful, but starting early is the best gift you can give yourself. Time is an important factor in appreciation. Believe it or not, that extra $50 or $100 out of each paycheck does make a difference in having the kind of retirement you want.
Automate Your Saving
Life is busy and it’s easy to forget saving. Automation is your friend! Most banks let you establish regular transfers to a savings account. Many employers let you do this as well.
Think of it as paying yourself first. You’re your most valuable asset, so why not do it? If you really want to increase your interest though, consider an online institution like CIT Bank. They pay super competitive rates that often handily beat what’s available at your local bank.
Grow Your Skills
For many their day job is the best way to earn an income. Don’t limit yourself. Look for ways to grow your skills.
This can include things like volunteering for new tasks at work, or taking a course on a skill you want to learn. Don’t hide your new found skills either. Communicate them to your boss. If it doesn’t get you a promotion, you look stronger as a candidate in another role.
Regularly Ask For Raises
Don’t be a stranger with your boss. Be persistent about asking for raises at least once a year. Approach it with information to improve your chances.
Your boss knows the cost of living is up. Instead, show them where you’ve improved and how it has benefitted the company. Don’t badger them, but state your argument. If you don’t ask, you’re less likely to receive a raise. Bonus points for saving or investing the raise.
Diversify Your Investing
Investing in the stock market is a fantastic way to build wealth, especially if you like dividend-paying stocks. However, it’s not the only option available.
Crowdfunding has lowered the barrier of entry to invest in real estate, business ownership, investing in art, and much more. Diversifying your investments shields you when times are bad for one investment and gives you one more stream of income.
Create Streams of Passive Income
Studies reveal the average millionaire has at least seven streams of income. You obviously can’t work seven jobs, but there are limitless opportunities to earn mailbox money.
Another term for mailbox money is passive income. These opportunities require minimal effort and create multiple avenues to bring in income. Crowdfunding simplifies this endeavor. For maximum results, reinvest earnings to snowball your efforts.
Increase Your Savings
You should save at least 15 percent of your income to be financially stable. But, you shouldn’t stop there. A wise practice is to increase your savings by one percent every year to amplify your efforts.
What if you can’t afford to do that? Try saving half of your raise instead. Apply the funds to what you need to attack most. This can include anything from growing your emergency fund to increasing your retirement investing. Find what will serve you best and attack it.
Have Measurable Goals
Goals are the roadmap of your life. Studies show millionaires often have concrete goals they want to achieve. That doesn’t guarantee success, but you’re far better off with a goal than without one.
Don’t just set it and forget it either. Regularly revisit your goal to see if it needs altered or if you’re on track to achieve it. Most importantly, personalize it. You care much more about a goal you set than one given to you by someone else.
Avoid Debt at All Costs
High-interest debt is the enemy of wealth creation. It obligates your resources to someone else instead of to your own desires and needs.
Living within your means is the first goal. If you have high-interest debt, look for ways to intensify your payments. You can consolidate the debt to a lower interest rate, with a balance transfer card, or use tools like the debt snowball or avalanche to kill the debt.
Start an Emergency Fund
Debt is the enemy of wealth creation. Having a fully-funded emergency fund is the best way to avoid going into debt.
The savings provide a safety net for when life happens. Whether it’s a pricey car repair, or you need to replace a major appliance, your emergency fund helps you avoid needing to pay for it with a credit card.
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