Lost as to where to start with your Wealth Creation?
Wealth creation involves time learning how to build wealth. This requires you to make an investment plan and adopt a long-term mindset.
Follow these eight simple steps to get started building sustainable wealth.
1. Start by Making a Plan
Building wealth starts with making a financial plan. That means taking the time to identify your goals and plan how you can accomplish them.
Hiring a financial advisor is a great way to begin making your plan for building wealth. It’s a more expensive option, particularly for those who are just starting out, but choosing an advisor who’s a certified financial planner means you’re paying for planning experience.
2. Make a Budget and Stick to It
Budgeting is a key plank in your wealth-building strategy. Building a budget and sticking to it helps increase your chances of carrying out your plan and achieving your financial goals.
Budgets also help you understand where your money goes each month and prevent behaviour that can endanger your goals, like overspending.
3. Build Your Emergency Fund
By building an emergency fund, you can protect your credit as well as reap the benefits of earning interest on an online savings account, all the while enjoying the peace of mind of knowing you have money in the bank to cover life’s surprises.
4. Automate Your Financial Life
By automating saving, investing and bill payments, you all but eliminate the chance you forget to set aside money for your goals or make progress towards paying off your debts.
This is especially valuable when it comes to saving and investing. By automating your payments and savings, you resist the temptation to spend rather than invest. You won’t miss the money that is being automatically deducted and your contributions will be made on a regular basis.
5. Manage Your Debt
Not all debt is created equal—and some, like mortgages, may even be considered “good” debt, thanks to their general low-interest rates and wealth-building potential. Your mortgage is a type of forced savings account because you’ll likely see at least a portion of your monthly payment back when you sell. However, if you have a lot of bad debt, like high-interest credit card bills, every month, you may jeopardise your financial goals.
It’s possible (and often even advisable) to save money and pay down debt at the same time.
As your balances fall, you’ll have even more money to put toward your emergency savings and investments.
6. Stay Diversified
Having a diversified portfolio with different types of investments can both protect the wealth you’ve accumulated and position you to reap rewards even in market downturns.
A diversified portfolio includes a mix of assets that do not necessarily move in the same direction and in the same magnitude at all times and is designed to help reduce volatility over time.
7. Up your Earnings
If you receive an increase in income, this is the perfect opportunity to begin the path to building wealth, the fact that you’ve been living on a lower salary up that point means that you can afford to contribute more to your wealth creation, whether that means contributing more toward your retirement savings, paying down debt, making new investments or bumping up your emergency fund savings.
It’s recommended that you save at least half of every raise you get to position yourself for a secure retirement. This allows you to improve your quality of life gradually, while also ensuring you don’t fall victim to standards of living that will be impossible for you to maintain in retirement. If you don’t think you’re in a position to receive a raise in your current role, you may also consider picking up a side hustle or trying a passive income idea.
Wealth Creation starts with action and then a goal. Book now for a Goal and Wealth Creation Strategy Session to help you identify what your goals are and get started.
Need More Information?
If you are looking to build your wealth but are not sure where to begin, don’t hesitate to get in touch with any questions.