Money Lesson: How to become wealthy.
Now, this is not a get-rich-scheme. There’s no magic trick or investment game that will make your bank account skyrocket over night. Real wealth building takes a lot of time and patience. It will pay off!
Tip #1 – Shift your mindset.
If you are going to be really intentional about building wealth, something has to change in your mind and heart You have to think long term. Think about the legacy you want to leave for future generations – not just what you want in the now. You need to have a WHY behind all of this and a vision for how you will get there. Every major goal you’re going to achieve in your life starts in your mind – building wealth is no different.
Tip #2 Get out of Debt!
Listen friends, you can not build wealth if you have negative dollars in your bank account. Take care of your financial foundation by getting on a budget and getting rid of your debt as quickly as you can. Do whatever you need to do. Sell some stuff! Our closets, attack, and garages are packed with crap we never use. Downsize your car. Start a side hustle or an extra job. Do whatever it takes to be intense about crushing your debt. You will be so glad you did!
Tip #3 Live below your means.
It’s all about having self-discipline and being willing to forgo some expenses now so that you can save more in the long run.
An example of living below your means would be choosing to live in an apartment where the rent is 15% of your income, even if you could afford to live in one that costs 25% of your income. You don’t have to be a total cheapskate, but it just makes sense to save and cut back wherever you can.
Tip #4 Become an entrepreneur.
When I say entrepreneur, I don’t mean you have to own a full-blown brick-and mortar business. Having an entrepreneurial spirit means looking for creative ways to bring in extra money. It could mean starting an Etsy shop, driving for Uber, donating plasma, or walking dogs in you spare time. Because your income is your number one wealth building tool, it’s a good idea to have more than one source of income just in case, you never know what will happen in the job market.
Tip #5 Invest early and often.
Once you are debt-free and have a fully funded emergency fund with three to six months of living expenses, it is time to start investing 15% of your income into growth stock mutual funds for retirement. You can do this with a 401(k) or even better open up a Roth IRA instead of the tradition kind because that means your money is taxed ahead of time and can grow tax-free. You’ll get more bang for your buck in the long term.