In today’s volatile money market, most of us have at least some level of unease when it comes to engaging with money. Every day, we see millionaires advertising their strategies on how to become wealthy, offering often contradicting approaches.
It seems that becoming wealthy is an elusive dream only accessible to people who have a secret insight into how the financial system works. Despite these difficulties, many people have been able to build wealth without getting a finance degree or spending thousands of dollars on wealth-building seminars. In fact, there are some tried-and-true ways to achieve your financial freedom goals. In this article, we describe ten smart wealth-building approaches that could bring you closer to the financial security you’ve always dreamed of.
What Is Wealth Building?
Unlike what most people believe, building wealth is not as simple as winning a lottery or investing in the hottest stock on the market – it takes time, discipline, and dedication. To achieve financial freedom that can be maintained, one source of income is often not enough for most of us. This means that we would need to adapt money-generating strategies from multiple sources of income, including passive and constant cash flow from smart investments, assets, and side-gigs/businesses.
But wealth-building doesn’t stop there – our lifestyle and mindset about money are crucial components of generating and keeping wealth. For example, if you don’t monitor your spending habits, you could be losing income on frivolous and even unappreciated or negatively-impacting expenditures. If you kept a budget, this money might have been saved or smartly invested in working toward your financial freedom.
How Do I Start Building Wealth from Scratch?
No matter what age you are or your current financial standing, you can still make small smart choices to build your wealth. Some of the most important strategies you can implement to start your journey to wealth don’t even have anything to do with physical money but come down to working on your mindset about money. In this comprehensive article, we highlight our top ten wealth-building strategies that can help you on the road to financial health and longevity.
Build Multiple Sources of Income
Unfortunately, many of us have been mistakenly led to believe that having a good job that pays relatively well is all that is necessary to avoid living paycheck-to-paycheck. Not only is this a very risky strategy to secure lasting wealth, but it is also unrealistic. Most self-made millionaires didn’t achieve wealth by slaving away at a nine-to-five job – they found ways to have income streams coming from many different sources, most of them requiring very little involvement from them.
Yes, your primary job is an excellent way to bring in income and to serve society with your skills and talents, but you can also learn how to save a portion of your monthly income (a.k.a. paying yourself first) as well as smartly invest in assets that bring in passive cash flow.
Another good way to generate additional income is to have side hustles, projects, or businesses that generate money, preferably with little or no effort from you. Let’s say that you are a health coach who works one-on-one with clients. Your passive income can come from an online wellness class that you create once but receive compensation for indefinitely. And if you are a yoga practitioner with a teaching certificate, you can teach classes once or twice a week in addition to another job and bring in extra income that you can invest or save.
One of the easiest but underutilized ways to create wealth is to have a budget and eliminate any unnecessary spending. The recent interest in simplifying how we live by the minimalist movement has shown us that we can live with a lot less than we think. Buying less furniture/clothes or making your own meals instead of eating out every day could help you keep a substantial amount of money in your pocket.
Save a Percentage of Your Income Every Month
In the current state of world affairs, it may seem unreasonable, even impossible, to save money, especially if you are in a substantial amount of debt. However, even saving just 1% of your monthly income can make an important contribution to your wealth. As you increase your income, preferably through multiple income streams coming from passive means, you can save an even higher percentage of your income until you are able to reach 20%.
An important aspect of an effective savings plan is how and where you store your savings. Because we all are tempted to spend our savings, we can set up an automatic money transfer of the desired percentage every month into a hard-to-access savings account. This way, we would think twice before touching this important stream of income. To let your savings work for you even more efficiently, look for a savings account with a high compound interest rate that will help you bring in more money the more you save.
Why is saving like this so beneficial? One of the most important reasons is that you are essentially creating an emergency fund in case something unexpected occurs as you live your life. Another is that you never have to think about this money until it is reasonable to do so. Although we can never truly be safe in this life even if we take all the possible precautions, at least we can have peace of mind knowing we have emergency money so we can focus our energy on other creative endeavors.
Learn How to Invest Like a Professional
To many of us, investing seems like an abstract activity that we can never truly wrap our heads around. Where do we begin? Do we know enough to invest? Do we need to hire an advisor to help us with our investments? First, it might be helpful to become familiar with what kind of investments you can make to start earning investment income.
One of the most obvious ways to save is investing for the future with a retirement plan. When you put money in a retirement account through an employer or another institution, it is invested in a select group of stocks specially chosen to encompass a broad spectrum of industries carrying different levels of risk. Some of the most well-known retirement accounts are the 401(k), IRA, Roth 401(k), and Roth IRA.
Chances are that if you are saving for retirement with an employer, you have a version of the 401(k). Each month, you elect to withdraw a certain amount of money out of your paycheck before it is taxed so that you save by having less of your income taxed by the government. This money is invested by firms your employer has chosen into mutual funds consisting of mostly stocks and bonds and other securities. You will usually have a choice from a few portfolios that carry different levels of volatility in the stock market. Once you invest your money in one of the portfolios, you essentially become a shareholder of each asset (stock, bond, real estate, etc.) that is included in the portfolio. Your profit margin depends on the stock market performance of each of the assets. An additional benefit of a 401(k) account is that your employer can match your 401(k) contributions dollar-for-dollar for up to 3% of your annual salary.
But you don’t have to be employed by a company that offers 401(k)s – in fact, you can invest in an individual retirement account or IRA that is not associated with an employer. Many banks, financial companies, credit unions, brokers, and mutual fund providers offer IRAs that give you more freedom to choose how to invest your money.
Because you will have to wait until you are at least 59 ½ years old to withdraw your savings without incurring the 10% penalty fee, you can also look into Roth 401(k)s and Roth RIAs. These savings accounts differ in some key ways, namely that you will be contributing your taxed income so you will not have to pay taxes on your savings once you withdraw them at retirement. However, there is a limit on how much money you can contribute to a Roth account, while the traditional account doesn’t have a limit.
Real Estate Investing
There are many excellent reasons why you should invest in real estate, but the top reason is that people will always need to live, shop, and work somewhere, as well as have a place to store extra things. There will always be demand for real estate, so it is a relatively low-risk investment, but you still have to decide which real estate to invest in if, for example, you would like to have hands-off passive income.
One of the easiest ways to invest in real estate is to buy a residential property, such as a house or apartment, and rent it to other people. This rental income can not only help you pay off your mortgage but also gain extra income. Some people specialize in buying and remodeling homes which they then resell for a much higher price, substantially increasing their wealth. If you don’t currently have enough money to invest in a property, you can always rent out a room or your whole home for a period of time to generate additional income.
If you prefer hands-off real estate investments, a great way to generate a steady stream of income is investing in storage units. These buildings are low-cost and low-maintenance real estate with little management needed since there are no tenants to worry about. Also, the self-storage market is resistant to recession and projected to continue growing due to the increasing need that people have for places to store their things.
Another low-involvement, high-return real estate investment is single tenant net lease properties. These properties are rented to businesses (retail, industrial, or office) with an excellent credit history that want to lease the property for ten or more years. This combination of financial stability over time makes these kinds of investments low-risk, hassle-free, and high return – perfect for building wealth over time.
Silver and Gold
With the current volatile market, investing in tangible things that are high in demand is key, but you don’t have to focus on investing in real estate, for instance. You can start even smaller by investing in precious metals such as gold and silver. These metals will always be valuable, even with some market fluctuations, because they are not only beautiful and essential in a lot of our industries but also rare and extremely hard to synthesize in labs. Before you invest, make sure you are buying from reputable companies and educate yourself about when the best time to buy is.
If you are completely overwhelmed by all the many investment options, you can think about hiring a professional financial advisor that knows all the different ways to invest and understands which investments are more suitable for your budget, lifestyle, and goals in life.
It is important to find a financial planner with an excellent track record that you can trust to give you sound advice. Even if you will be leaning on a financial planner for your investments, make sure you educate yourself about some investing options you have so that you aren’t at the mercy of someone else and are an active participant in your wealth-building.
Create a Doable Budget
Creating a budget seems so obvious, but we are resistant to this idea because we feel that we are being deprived of enjoying our hard-earned money. Sticking to a budget, however, has nothing to do with restriction – it is about making sure that we aren’t spending money on things that we can easily live without or that we can consciously choose to let go of without feeling we are compromising. The first step is to write down the expenses for every purchase we make. From there, we can determine which costs are either an absolute necessity or pure enjoyment and which expenses we can lower or even completely eliminate.
If you have been spending money on clothes every week that you never wear, you can eliminate these purchases and only go shopping when you really need a new wardrobe. Do you consistently buy too much food that spoils in your fridge before you can eat it? Here you can easily see how you could save money by not purchasing food you don’t even eat. Do you have that Netflix subscription you are too busy to use? Here you can also eliminate a monthly cost that is absolutely not necessary nor enjoyable for you. Once you become conscious of how you spend your money, you can take back your wealth-building power.
Invest in Your Education and Continue Learning
Some of the best money you’ll ever spend is by investing in your interests, hobbies, and continuing education. The more you learn by following your curiosity, the more you will be able to create value in your own life and spread it out there in the world. For example, you can start taking dance classes, which can help you be more present and relaxed at your job, helping you maintain an ideal work/life balance. The same dance class can inspire you to create a side-gig by becoming a dance teacher, helping many people experience the joy of dance. Through this side hustle, you will be bringing additional income home.
Another way to increase your earning potential is to read books by millionaire wealth-builders and other individuals who decided to write about what worked for them on their journey to wealth. In truth, if you can read any book on a subject that interests you and gives you tools for investing in your future, you will be in a better position to find as many wealth-building assets as possible.
If you are a business owner, keeping up with the newest knowledge and technology and continuing to read up on matters in your field can help you stay relevant and competitive. Taking training courses and going to seminars where you can improve your business skills is an investment that will pay off manyfold in the long run, securing you a stream of income you can count on for the long haul. Being business savvy and knowing how to navigate shifts in demand for certain goods and services can help you restructure your business so you can continue earning money.
Minimize or Eliminate Debt
Even if we have great earning potential and are already taking control over our finances, debt can be a big expenditure and roadblock to our financial freedom. The money we give up to eliminate debt is money that we can’t invest, and the longer we put off paying it back, the more money we will have to pay back due to interest.
Having debt is also counterproductive for us psychologically because we are living in the past, in a time when we lacked money, and not in the present, looking into the future. It is important to find a balance between investing money that we could be using to pay off debt and reducing debt. Eventually, the goal is to eliminate debt and focus on the abundance of money rather than lack. To minimize debt, try paying a larger chunk of what you owe each month, rather than paying just the minimum amount. This way, you can incur less interest and come closer to being debt-free.
Create a Positive Relationship with Money
Some of us can have great financial knowledge, an excellent work ethic, many degrees and qualifications, and wonderful people skills but still lack the ability to create and maintain wealth. How is this possible? After all, we are taught in school and by our society that if we study hard and go through higher education, we will get a good work position and will be free from money problems for the rest of our lives.
For many of us, the problem lies in the relationship we have with money. If we believe that money is hard to come by and can only come with strain and hard work, we are likely to have negative associations with it because we see money as a symbol of pain and sacrifice.
If money becomes connected to hardship, we will begin to cling to it and develop a fear of spending or losing it. In essence, money is energy which humans have assigned to use as a way to exchange commodities, and if we are holding on to money without investing it or donating a portion of it, or even spending it on things that give us joy, we are suppressing the flow of energy. No abundance of money can come in and out of our life.
The best way to start thinking about money the right way is to cultivate positive feelings when thinking and talking about money. One strategy is to invest a percentage of your earnings in a venture that is riskier so that you are not holding onto money with fear. In addition, you can give away a portion of your earnings so that energy of money can start to flow from you into the world, and inevitably back to you.
Give Away Some of Your Money or Time to Others
One of the best ways we can cultivate a positive relationship with money is to give it away to people, businesses, and causes that mean a lot to us. Donating money can also give us a feeling of being able to support and help others through our creative energy, seeing that our life has a higher purpose than just working and earning money. Once we are able to let go of money without fear, resentment, and regret, we can set ourselves up psychologically to have greater earning potential. With higher confidence we get by helping to create a better world, we may have a greater sense of personal power and take on more interesting and lucrative projects or create businesses with very high earning potential. In this way, we can earn more money by giving away more money.
How much money should you give away? The amount is completely up to you, but many wealthy people suggest donating 10 percent of your yearly earnings to causes you believe in. However, any amount you can give without resentment is just the right amount.
Write Down Your Goals and Dreams so You Can Accomplish Them
Living busy lives, we can sometimes forget the bigger picture of why we want to build wealth. Why have money when we have nothing meaningful to spend it on? To get into a wealth-building mindset, it is important to imagine and write down what you would like to experience and create in your life. If you have always dreamed of being able to live on a tropical island and create your own schedule while working remotely helping people live their best lives, you can take concrete steps toward creating this reality that will motivate you to save, invest, and work smartly to achieve your goal.
Writing down your dreams and wishes gives them an energetic push into the 3D reality, especially if you have a daily or even a weekly practice of imagining and writing down what you want to manifest. For instance, you can start a journal in which you can write your wishes for each day the first thing in the morning. If you are not much into journaling, you can create a list of what you would like to accomplish each day. Some people find it useful to write down their wishes and dreams on sticky notes and place them around their home. Whichever method you choose, you will be doing something positive to propel you toward financial freedom.
Never Truly Retire
When most of us think of our career and work life, we cannot wait to retire and leave the rat race. Even young people today think of the day when they never have to work again, even before their first job out of college. But what if we thought of our career as an ever-changing and expanding growth process that we are in charge of? The more joy we can bring into our work life and feel that we are positively contributing to the world, the less likely it is that we will stop working/earning income early in life.
We need to keep ourselves engaged with life and not think about our work as simply a means to make money and survive to our old age. If we think of the work we do to earn money as a flexible and exciting growth process that we can engage with until the very end of our life, our health and our financial stability will follow suit. We will also keep our brain active so that we can enjoy the wealth we have achieved, having the ability to support others and contribute to a better world.
It doesn’t mean that we have to continue working a job we don’t like or that is too exhausting for us at an older age. We can work toward developing a career that we can enjoy when we get older. Remember that it is never too late to change your career path. As your finances improve with time, you could use your savings to pave a career path that brings you joy and doesn’t feel like work. If you always wanted to be an artist, this is your opportunity to start learning how to paint and even create a money-making art business in the process.
At an older age, when you have accumulated lots of wisdom in your field, you can help the new generation gain experience, knowledge, and confidence to have a positive impact in the world and, at the same time, create a bright financial future for themselves and their families.
As you have seen, wealth-building is a holistic process that involves financial education, practical investment experience, and positive mental, psychological, and physical alignment with money. Approaching building your wealth as an improvement in lifestyle, health, and your outlook on life will clear the way for physical and energetic blocks to financial abundance.
Even though we may need to have multiple sources of income through savings, side-gigs, and other investment opportunities, this doesn’t mean that we have to break our backs to earn money. Many of these income sources and investments can be largely automated (such as in the case of retirement accounts, savings plans, storage unit investments, and hands-off businesses such as online courses that can be purchased at any time by students) and can bring you a steady stream of income and free time to focus on creating a wonderful life and a better state of the world.
Remember that you are not alone on this wealth building journey. Many individuals have been in your place, going through the process of first desiring financial freedom to finally achieving it. These wealth-builders are a great source of wisdom on how to work with money through investments and other strategies. Don’t be afraid to reach out to them and ask them questions, watch their inspirational videos, sign up for their seminars, or even get ahold of books they have written. Take notes and start making a wealth-building strategy that works for your innate skills, talents, needs, and your current financial situation.
With all these investment options, it may be overwhelming to choose which investments to focus on, especially if you are busy with a full-time career. One of the wonderful aspects of storage-unit investing in particular is that it is largely a hands-off investment option with a steady stream of passive income that constitutes the ideal wealth building infrastructure.
If you would like to learn more about storage unit investing and how to generate a passive income, you can access for a limited time our Investor Portal with courses and resources that will teach you how to succeed in building wealth.