When it comes to wealth, everyone has a different idea. If you look at it from a financial viewpoint, it is the overall value of assets after subtracting all the debts. Building wealth is a tricky process, but it is possible. If you want to build wealth and become financially fit, we have just the solution. Here are 3 tips for building your wealth.
Increase Your Income Sources
The first step towards building wealth is increasing the number of income sources. Sure, working a job is great, but it doesn’t provide you with the wealth you are looking for. The best thing you can do here is to establish your own business. This is good for two reasons. First of all, it brings more income, and secondly, it offers higher returns on the wealth you accumulate.
You can also get into a side hustle if you don’t want to rely completely on your salary. Nowadays, there are more options than there were 10 years ago. Freelance digital marketing is a great place to start. You can write ad copies, run social media pages, and design websites. Platforms such as Google and Hubspot provide free-of-cost training that adds to your knowledge and skillset. Apart from that, you can also provide online courses on subjects you are good at. With the help of Zoom and other video calling platforms, you don’t even need to step outside to find work.
Save More Than You Spend
This is the oldest tip in the book, and though it seems a little trite, it is very effective. You can start by preparing a budget. Maintaining a budget helps you save, and it helps you avoid the panic that arises when you are low on cash and your salary is two weeks away.
When you make a budget, you can break down your expenditures as follows:
50% of your income should go to essentials
30% should be for non-essentials a going to a fancy restaurant or buying a new gadget
The remaining 20% must go into your savings.
Another thing you must do is to create an emergency fund. Life is unpredictable. You never know when you’ll be out of a job. In unfortunate circumstances, people either go for loans or sell their investments. Neither of these options is particularly great. Loans can accumulate interest over time, while selling your investments can translate into a loss of equity. This is why it is important to save and establish an emergency fund. Moreover, learn to live below your means. If your standards are too high, it will be difficult to keep up when things get tough.
Last but not least, you must invest. The stock market is a great place for this. So is real estate. You can invest in ETFs (Exchange Traded Funds) if you are new to equity investments. These carry a wide array of stocks and other assets and allow you to diversify your investment portfolio. This makes them less risky. Furthermore, stocks provide a higher ROI compared to other asset types.
As far as real estate is concerned, if you are not ready to buy an investment property yet, you can invest in REITs (Real Estate Investment Trusts). These are companies that invest in real estate across numerous property sectors to earn income. You can use them to invest in the real estate market without having to deal with the hassles of actually buying and selling an investment property.
The Final Word
Building wealth is challenging, but it isn’t impossible. All one needs to do is be disciplined, focused, and patient. Rome wasn’t built in one day, which applies to your wealth. Stay committed, and you will get the desired results. Make sure you equip yourself with financial knowledge, as well or work with a financial advisor. Reach out to us today if you need help!