Building wealth will be essential to having a secure and better financial future. But it also means more than just having money. Wealth is about your assets, investments, and your savings that apply to your quality of life and things you can do in your life. And wealth-building habits are the financial actions you take and repeat over your lifetime to build wealth. Yet, we can get deeper into it.
1. Pay yourself first
This mindset has been around a while, but I first discovered it in Rich Dad, Poor Dad by Robert Kiyosaki. That said, no matter what income you are generating, you should be paying yourself first. That is, saving a percentage away in a savings account or retirement before anything else. It keeps you focused on saving and investing for your financial goals, before spending it.
And yes, this means before paying any bills. As soon as I’m paid, I’m immediately putting a percentage to my Roth IRA and another percentage into my savings. It gets you in the right financial mindset, you develop good money habits, and starts helping you on a great path to wealth.
2. Surround yourself with successful people
The people you surround yourself with can actually have an impact on your mindset to building wealth. Associating with like-minded people, who are interested in investing, finances, and maybe high-earners can motivate you more than you realize.
This doesn’t mean you need to drop your current friends (unless they are toxic to your life), but network with people you can learn from. Find people that motivate you to have good wealth-building habits and can be a mentor to your decisions.
3. Spend less than you make
A great way to build wealth, even without a big salary, is to spend way less than you make. The challenge is, our society gets wrapped up in instant gratification and consuming things to keep up appearances.
People who are wealthy keep their spending low and never spend more than they make. I’ve been fortunate to catch on to this simple concept pretty early in my mid-twenties, but needless to say there are always temptations to spend
4. Don’t be afraid of investing your money
Building wealth by just saving money from your business or salaried job is great, but it can take quite a long time to build wealth. In order to get to the next level, you need to put that money to work for you while you sleep.
Investing can be in various assets like real estate (rental properties, fix and flip), stock market, businesses, art, etc. If you think of the wealthiest people you know or even well-known names, I’d guarantee a lot of their money was tied up in various investments to get them where they are.
5. Understand and value good debt vs. bad debt
While some financial gurus will tell you all debt is bad, there are some areas where debt can be good for wealth building. Of course, you should be avoiding high-interest debt, like those on most credit cards. But there is also some good debt, that will greatly benefit your ability to skyrocket your wealth.
6. Set goals and create plans to achieve them
One of my favorite essential wealth-building habits is setting financial goals and creating a plan on how to achieve them. These goals are a mix of short-term and long-term, plus new ones will happen from time to time as well.
Obtaining wealth can be challenging without a clear vision of getting there or at least processing what you can do. Review your income, appreciating assets, net worth, and how you can elevate these items. It can be attainable goals and more challenging ones.
But setting goals keeps you honest and focused on your path to building wealth. It doesn’t mean it will be easy as you should be thinking big, but goals and plans will make the path more possible.
7. Consistently read books about finances, wealth, and investing
The key to becoming financially literate was reading books. I had no financial background other than some real basic concepts. But books have made it easier to learn and shift my mindset to build future wealth.
Yet, even if you know a lot about finances or have learned over the years, continue reading throughout your lifetime. A common thread among many millionaires and billionaires is their book collection.