- 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 to develop a proactive savings plan.
- You need to invest it prudently.
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The long-term approach to wealth building: If you’re younger and your income limits allow, open up a Roth IRA. Invest in mutual funds and ETFs while making sure you have enough cash in your emergency fund. For a faster approach more aggressive measures are necessary, like saving and investing on education, a business or real estate.
Save on vehicles . Before buying a car, investigate vehicle reliability, pricing and financing. Rent . Most rentals offer more flexibility in case you need to move. Also, not having the mortgage payment allows you to start saving earlier. Don’t be a consumerist, buy only the things you really need. Save a percentage of your income so you have more money to invest. Work hard on your current work regardless of your feelings for it. It’s easier than finding a new great opportunity and may lead you into a promotion. Educate yourself even if it doesn’t bring any immediate benefit, being educated opens new opportunities on the long run. Invest in yourself and your marketing to open up new opportunities. Being an entrepreneur is the best way to maximize your earnings, short of being an investor. Try it, even if it fails the learning from it will be invaluable in your next attempt. Real estate won’t make you rich overnight, but it’s a solid strategy to increasing your network.
Don’t Be a Consumerist: keep your expenses as low as possible without sacrificing the quality of life. Spend money on things that yield lasting benefits. Have An Emergency Fund: this gives you freedom and peace of mind to deal with issues without having to upset your long-term investments. Invest Defensively: investing in individual stocks is a dangerous business and it can take your peace of mind. Index funds let you invest in a whole group of companies, bonds, etc. without the time and risk involved in individual stocks. Diversify Income: relying on a single source of income is a dangerous strategy. Multiple sources will make you more financially resilient and give you the resources to acquire assets and invest.
Create a plan for your money so you know where it's going every month. A popular and effective way to budget is with the 50/30/20 rule, where 50% of your income goes towards necessities (bills, food, housing, etc.), 20% of your income goes towards savings and 30% you can use freely.