When you are serious about building wealth, the most important thing is understanding that you have to play the long-game. There are legitimate ways to make fast money, but real wealth is something you amass over time. Building wealth starts with evaluating how you think about money.
Everyone wants to make fast money, but they often fail to realize that there are few shortcuts. Dedication, financial knowledge, and commitment to your goals are crucial to make money and use that money to continue building wealth. Wealth also has different meanings for different people.
In making a long-term financial plan, you have to craft your own definition of wealth. Do you see wealth as a large house in the best neighborhood, fancy sports cars, and exotic vacations? Or, does wealth mean the financial freedom of not worrying about debt? Your definition of wealth will be the foundation of your wealth-building strategy.
How to build wealth
Once you have determined your definition of wealth, it is time to create a sound financial strategy and stick to it. It is equally important to understand what wealth is not. Wealth is not purchasing things you cannot afford and drowning in debt. Debt is the antithesis of wealth, and the sooner you learn that lesson, the faster you will be able to keep the money you make.
The following are critical steps to building wealth, no matter how lofty or modest your goals.
- Understand the power of compounding interest. The earlier in your life, you develop the practice of saving and investing, the longer compounding interest can work to build your wealth.
- Always take advantage of free money and tax savings. If you work for a company that matches your investment into a 401k, invest at least the maximum percent that will be matched. The company match is free money, and you want to take advantage of every cent available.
- Slash your living expenses wherever possible, and use that savings to reduce debt. That might not sound like glamorous advice for building wealth, but remember, debt destroys wealth. Take a hard look at your budget and determine both large and small ways you can save money. When you tackle debt, always start with high-interest debt first. The faster you can get out of debt, the quicker you can begin to build wealth.
- Invest in education and skills. Though statistics prove that a college degree will pay for itself many times over, throughout a lifetime, your education should never stop with a diploma. Develop the mindset of being a life long learner and continually cultivate new skills. Each new ability makes you more valuable, and even if you can’t see it right now, you never know what door in the future it might open. Remember, learning does not have to be in a formal setting and doesn’t have to costs money. Podcasts, video courses, and books can all be free or inexpensive.
How to make money fast
We have established that wealth-building means holding on to as much of your money as possible by eliminating debt and increasing savings. Whatever your current income, you can start building wealth. However, increasing your income is also vital to building wealth. The following suggestions allow you to start making money the right way.
- No matter what your job, whether you are an executive making six figures or working in retail for close to minimum wage, do your best every day. Many people have amassed fortunes in an industry where they started at the bottom and worked their way up. Even if your job is only a temporary stepping stone, building a good work ethic is crucial to success.
- Become an entrepreneur. Take an inventory of your skills and passions and then find a way to turn those into a money-making opportunity. If you love photography, use the power of social media to launch your own business taking photos for friends and families. Use that money to buy better equipment if you need it, and continue to advertise your work. If you have a flair for writing, check out online platforms that pay writers. What starts as a side gig might open doors that lead to an entirely new career, but even if it remains a side gig, you are adding to your money bin and building wealth.
- You have probably heard this advice ad nauseum, but networking is crucial to making money and building wealth. Establish and maintain relationships with people across various industries and walks of life, because you never know when that relationship might be the key to your next great opportunity.