What Is Wealth Building (Plus 5 Tips for Beginners)

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70% of Americans have less than $1,000 saved for emergencies. For many people, climbing out of debt, making their mortgage payments, or paying off medical bills are top of mind. 

Living paycheck to paycheck is the reality for many people. If you’re having trouble paying your rent, how can you focus on wealth building?

We’ve assembled a guide to wealth building because it can help you obtain financial freedom. Becoming debt-free is just the tip of the iceberg. Let’s get started!

What Is Wealth Building?

Wealth building is the process of generating income in the long term. It’s more than getting a raise at work or saving a few more dollars each month. 

Instead, it’s a combination of:

  • The income you make with your job 
  • Savings
  • Investments 
  • Assets 
  • Real estate
  • And more

Wealth building is a multi-faceted process that takes time, energy, and a lot of hard work. However, if you take it slow, there are ways to slowly build wealth and obtain financial goals.

1. Make Money 

Most people are working hard just to meet their basic needs. It’s time to look around and see where your current path will take you. 

It can seem difficult to plan for the future, but it’s important to play out the future. If you continue in your current job, will you be able to save money? Or will you be living paycheck to paycheck for the next forty years?

For some people, a small side gig might work. Or, they need to seek a job that’s willing to promote them and pay them fairly.

Of course, many people struggle with wealth building because it’s such a long process. It takes a lot of foresight! Before you start saving money, you may need to switch career paths, go back to school, obtain certifications, and so forth. 

This is earned income. There is earned and passive income—one comes from your job(s), while the other comes from investments.

2. Saving Money 

These wealth building strategies all center around one thing: saving money. It’s the second step on the path to investing and generating passive income. 

Start by tracking how much you spend each month. Review your credit card statements, bank statements, and receipts. Then, section out your spending into necessities and wants. 

Of course, a sustainable saving strategy is crucial. If you never spend any money on anything that isn’t strictly necessary, you’ll fall off the wagon. 

Keep adjusting and tweaking your budget until you find something that works for you. The initial goal is to save six months’ worth of living expenses. 

That way, your savings goals aren’t derailed during a life crisis. Another way to contribute to your savings is to take advantage of your retirement options with an employer.

3. Invest Your Money

Building a stable foundation for your financial goals is one of the best feelings in the world. Stress erodes your health over time. Knowing that a flat tire or a missed day of work won’t make you homeless relieves a lot of stress. 

Once you’ve reached immediate financial goals, it’s time to start investing money. Of course, you’ll need to come to terms with the risk involved. 

Most experts suggest waiting till you’re financially comfortable to invest. If you could lose everything if you got fired from work, hold off. 

Investment requires that you risk some of your hard-earned money. We recommend getting a financial advisor when it’s time to invest some of your money. 

This can help you clarify your goals, timeframe, and the risk you are willing to undertake. This will help you build the right portfolio.

4. Invest In Real Estate 

These days, the cost of housing is skyrocketing. Sellers are able to market their homes at a great profit. Buyers are paying through the nose to access housing.

The housing market will always rise and fall. It’s difficult to predict the next few years, but housing will always be a solid investment. 

If the housing market is good, you can always sell at a profit. If it’s bad, then you can live in the home, rent it out, or use it as a vacation rental. 

When you invest in real estate, you have a solid foundation, which is the best way to build wealth.

5. Plan for Retirement 

For many people, wealth building is a vehicle for financial freedom. But what happens when you are no longer generating earned income?

No one can work forever. That’s why it’s important to plan ahead and ensure that you will be able to retire when the time is right.

Start by investigating the options that your employer offers. Whether they offer a 401k or a Roth IRA, there’s something for everyone. Once you max out these contributions, you can start saving on your own. 

One of the biggest issues with retirement is that many people keep putting it off. After all, it’s ten, twenty, or thirty years in the future. 

If you don’t master your future, circumstances and unforeseen emergencies will run the show. That’s why wealth building is so important. It’s a chance to take control of your life and obtain financial freedom.

Start Wealth Building 

When you start wealth building, it’s crucial to avoid feeling overwhelmed. You won’t start investing in stocks or real estate overnight. 

If you are wondering how to build wealth, it starts with foresight and patience. Not many people have the patience to stick with a plan for decades.

That’s why more people don’t talk about wealth building: because it takes extraordinary amounts of patience and diligence. However, it doesn’t take herculean amounts of work or genius in order to achieve financial freedom.

Instead, it takes dedication, savvy, and a willingness to plan ahead. When you are fortunate enough to partner with employers that are willing to pay you fairly and invest in you, it gets even easier.

If you enjoyed this article, check out the rest of our posts here.

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