According to America, the rich are getting richer and the poor are getting poorer. However, a lot of the population fails to ask the question of why the 1% is getting richer and the middle class is shrinking. The fact of the matter is that there are multiple ways to build wealth nowadays. On the contrary, there are many decisions one can commit that will hinder their ability to build wealth. In this article, I am going to be breaking down a few steps on how to build wealth and how not to build wealth. Let’s get started
1. Increase income
Income is definitely the most important factor when it comes to building wealth. Having a large income allows you to allocate money into investments that will earn you more money. In general, it takes money to make money. On the other hand, not having a large enough income is the greatest obstacle that many people deal with. Nearly 80% percent of Americans are now living the paycheck to paycheck. Because of this, they have no money left over to save and invest, two critical things that make wealth generation possible. Starting off, you should focus 90% of your attention on wealth generation and 10% of your attention on spending. This focus can be used towards starting a new business, creating a side hustle, or even getting an extra job. The more you focus on income, the more likely you are to grow it. The more income your able to leverage for investments, the faster you can build your wealth. Despite, its simplicity, many people like to over complicate it which is one of the reasons why they’re broke.
2. Manage your expenses
Even though only 10% of your attention should be focused on the outflow side of your finances doesn’t mean you should neglect them entirely. Instead, every person reading this should create a budget and be disciplined enough to stick to it. When your income rises and your expenses decrease, you create a larger spread of money that you can save and invest. Make it a goal to create a budget at the beginning of every month that is unique to that month. In the end, a budget is the most powerful tool you can use to create wealth.
By planning and investing now, you can set you and your family up for a brighter and more secure future.