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7 Foolproof Steps For Building Wealth

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https://www.forbes.com/sites/ryanguina/2019/08/06/7-foolproof-steps-for-building-wealth/

forbes.com

7 Foolproof Steps For Building Wealth
Most of us want to build wealth in a way that allows us to live comfortably in the future. However, it can feel like a daunting task. The good news is that there are simple steps you can take to start building wealth. Be warned, though.

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Create a Spending Plan

The wealthy see money as a resource and a tool to help them build wealth over time.

Know your income, your expenses, how much is earmarked for additional expenses and how much for other f...

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Spend Wisely

Learn how to spend on the things that matter to you. 

Consider your values and priorities when you draw up your spending plan. If going on vacation or giving to a charity is important...

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Pay Off High-Interest Debt

Pay down your high-interest debt as quickly as possible. 

While some types of low-interest or tax-deductible debt can help you along the way, high-interest debt rarely has a good purpose...

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Create an Emergency Fund

Create an emergency fund to avoid the need to turn to debt.

Think about what makes sense for your financial situation.

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Earn More Money

Building wealth is about cutting costs as well as looking for ways to earn more money.

  • If you work for a company, make yourself valuable so you’re eligible for raises and promotions.

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Invest

Compounding returns that come with investing are necessary to build substantial wealth over time.

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Protect Your Assets with Insurance

The right insurance coverage can reduce your financial risk that might go toward replacing losses. For instance, homeowners insurance, health insurance, disability insurance, car insurance.

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SIMILAR ARTICLES & IDEAS:

To accumulate wealth...

  • You need to make it. You need a long-term source of income that's enough to cover your basics.
  • You need to save it. You need t...

Making Enough Earned Money

Earned income comes from what you "do for a living."

  • Consider what you enjoy as you will be more likely to succeed financially.
  • Consider what you're good at and see how you can use those talents to earn a living.
  • Consider what will meet your financial expectations.
  • Consider how to get there. Determine the education requirements, etc.

Evaluate your income situation annually.

Saving Enough of It

To ensure that you save enough money, your wants should not exceed your budget.

  • Track your spending for at least a month.
  • Trim the fat. Break down your wants and needs.
  • Adjust according to your changing needs.
  • Build your cushion. Aim to save around three to six months' worth of living expenses.
  • Contribute to a retirement fund and try to get the maximum your employer is matching.

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Increase Your Income

Formal education, practical experience in your field and doing a good job is important to earn a high income.

Most professionals see their incomes increase over time. If you can gain high ear...

Save and Invest

You’ll only build wealth if you save a reasonable percentage of those earnings.

  • If your employer offers a 401(k) plan, increase your contribution.
  • Automatically send a portion of your money to your savings or investment accounts before you can spend it.
  • Purchase a home instead of renting. You'll get your house payments back in the form of equity.
  • Pay off anything you owe to avoid paying interest.
  • Maximize the interest earned on your savings.

Cut Wasteful Spending

Periodically evaluate your spending and look for sources of savings.

  • Invest in more sustainable technology for your home. For instance, if you watch cable, buy only the channels you are watching.
  • Improve the insulation of your home to reduce the amount you are spending on electricity and gas.
  • Consider buying in bulk.

The Golden Rules of Personal Finance

  • Spend less money than you earn
  • Always plan for the future: you should always look forward beyond the current month
  • Make your mon...