Everyone knows that becoming wealthy â€” especially for those who did not come from money â€” is no easy feat. Now more than ever, it is challenging to build a fortune considering the growing gap between rich and poor. Moreover, it is even more difficult to build wealth if you are a person of color because of the racial wealth gap.
Who wouldnâ€™t want to be wealthy? If you are one of those determined to build wealth from the ground up, here are a few ways to build and sustain it.
Increasing your income
Building wealth entails setting up more than one income stream. And it is common knowledge that most millionaires are business owners and founders, not employees.
Get a high-paying job
It doesnâ€™t mean that you quit your job right now and venture into business. If you are comfortable having a day job, you can look for high-paying jobs. Search your regionâ€™s occupation database to see which professions get higher than average wages. Growing your skill set may be a great way to secure a high-paying job. This may mean getting an MBA or a special designation.
Venture into business
This is something you can do on the side or full-time. Come up with an idea and get started. You can begin with something that you are good at. The emergence of the internet and numerous platforms make it possible to create an entirely online business. The important thing is to set realistic business goals.
Take side hustles
With almost everything done online nowadays, hustle culture is very much alive. Relying on your income alone may not be enough if you want to build wealth. If you have a skill or a hobby that youâ€™d like to monetize, you can start looking for lucrative side jobs that you can do during your free time. Examples are copywriting, video editing, coding, web design, and online coaching, to name a few. You can also try part-time non-internet side jobs such as teaching at local schools, tutoring, or being a ride-sharing service driver.
Building wealth also means living within your means and saving even small amounts regularly. These small amounts of money compound to significant wealth over time.
Take your budget seriously
Budgeting is an essential part of wealth building. Your financial plan balances your income and projected expenses and ensures you have enough to save. It is advisable to create a budget every month, and one of the most popular ways to budget is the 50-30-20 rule. This method suggests that half of your income must go to your essentials such as food, rent, and healthcare. Thirty percent goes to non-essential expenses like shopping and travel, saving 20%. One-fifth of your income might seem to be a small amount of savings, but it will definitely compound at the end of the year.
Set aside an emergency fund
Losing your job or experiencing a global pandemic are just some unexpected events youâ€™d rather be prepared for. Building an emergency fund is one way to create padding on your finances. This is different from your savings. An emergency fund keeps you from incurring debts when the unexpected happens.
Live below your means as much as possible. This means cutting down on online shopping, eating out, and traveling. It may seem boring to live a frugal lifestyle, but if you are serious about building wealth, this will be rewarding in the long run.
Once youâ€™ve regularly set aside monthly savings, itâ€™s time to make them grow. Investing your money is a great way to amass wealth over time. There are many avenues when it comes to investing.
Aside from buying a property and then renting it out or reselling it, you can also invest in real estate investment trusts or REITs. These are basically shares in real estate companies that buy and sell properties. So, when the value of the company you invested in increases, you also get your gains.
One of the most straightforward ways to build wealth is to buy company shares. If you purchase shares from exchange-traded companies, you are assured of transparent and risk-free investment. However, ensure that you also seek the help of experts and financial advisors to make well-informed investing decisions.
The tips above are some of the simplest ways to build a fortune for yourself. However, building sustainable wealth also requires a shift in mindset. Often, what keeps us from pushing ourselves are limiting beliefs. Letting go of these limiting beliefs starts with recognizing your own biases regarding money â€” did you grow up in a household that lives paycheck to paycheck? Were your parents stuck in debt? Then, identify what impacts your financial mindset and slowly address them.