Build Your Wealth
While you may not have ever uttered the words, “I want to be wealthy someday,” you probably have thought so on a few occasions. Maybe you want to be able to afford excellent college educations for your kids and future grandkids. Perhaps you have a goal to do charity work abroad without having to pester friends to donate to the cause. Or, possibly, you dream of wealth so that you can retire without worrying about being a burden on your partner and kids as you age.
Whatever your “why”, here are 50+ simple strategies that you can employ to build wealth.
Ask for a raise.
This one is pretty straight-forward. Getting a raise means extra money going forward.
Arm yourself with data that shows how you do your share to increase the company's revenue, brush up on negotiation techniques and ask your boss for a quick meeting so you can present your case. Prepare ahead of time to give yourself the best chance of success.
Bank your raise.
One of the easiest ways to build wealth is to keep living on your pre-raise salary. Sometimes you need the extra wiggle room that a raise provides, like if you've added to your family or bought a house. But just try putting the difference between your old pay and new payout into your savings and see how fast it adds up.
Change jobs periodically.
Maybe you've been looking for a change, maybe it will come with a raise or a shorter commute that allows you more time to grow your side hustle. Maybe you can secure a larger raise by switching jobs rather than negotiating for a pay rise with your current employer.
Regardless, before making a leap, make sure it's a change for the better. Once you're reasonably sure it's what you are looking for, go for it.
Turn your hobby into a business.
Love taking care of pets, making soap, or baking elaborate cakes? All three of these hobbies, and so many more, can be turned into a lucrative side business that nets you a nice chunk of change on a regular basis.
Save and Invest
Start education savings accounts (ESAs) for your kids.
This does little for your personal wealth, but it will stretch your hard-earned dollars so your offspring can go to college or a tech school. With the Coverdell ESA you're limited to contributing $2,000 per child, per year, but when you put in a good mutual or index fund, you will be amazed at how much it grows over the years.
Note that education savings accounts are also referred to as 529 college savings plans.
Switch to lower cost investments.
Take an hour this week to check to see if you could be investing in a fund with lower fees.
Maybe your total stock market index fund with Company A has a 1.3% fee while Company B offers a similar fund for just 0.89%. As long as the long-term returns are comparable, it's probably worth it to switch to the lower cost fund. Or maybe your mutual fund fee drops when you have a balance of $10,000 and you're currently at $9,600. It might be worth taking some money from your savings account to boost your balance above $10,000 so you can enjoy lower fees going forward.
Looking for a low-fee investment? Do a little research into Vanguard funds and ETFs.
Whether you're investing in stocks or rental properties, don't be tempted to take the profits out and splurge on a vacation. Keep your money working, and growing, for you buy revisiting it where it came from.
In the case of rental properties, just stash the rental income away in a money market account until you have enough to buy your next property.
Hold on to investments long-term.
You are subject to taxes when you sell an investment, and the taxes on short-term gains are higher than those of long-term gains. By keeping an investment for a year or longer, you reduce the amount you'll have to fork over to Uncle Sam.
When investment profit is short-term, it is taxed at the same rate as your ordinary income. If you held the investment for over a year before realizing the gain, then the long-term capital gains tax will either by 15% or 20%, depending on your overall income.
More importantly, when selecting investments and stocks to buy, it's a good idea to think about the long term potential of the company. If the company is set up for long-term success, then the stock will likely grow over time.
Become A Savvier Money Manager
Automate your savings.
It may take awhile to set this up, depending on how complex yours are, but once you do it, you're set. Just log in to your accounts weekly to ensure every thing's running smoothly: your utility bills are being paid from your checking, $200 is being funneled away to a savings account each month, $50 is sent to your kids' college funds.
Track your spending.
Does your pen and paper budget show that you should have money left over at the end of the month but reality says otherwise? It's time to track every penny that comes in and goes out of your bank account. Your credit card statement showing that you visited Starbucks 19 times and spent $152 throughout the month might be an eye opener. Or is your healthy habit of a salad and iced tea putting your finances in an unhealthy state? Switch to homemade substitutes for your daily dose of caffeine and lunch, and watch your savings grow.
Pay off debt.
Even "good" debt is debt, so pay it off so you can get past that part of your life and get started building wealth. You can argue that you should keep around a 2% car loan rather than dip into your investment that's earning 8%. It's certainly your choice, but there's something to be said for the mental clarity that you get when you have no debt to manage.
Find a better bank.
Interest rates on savings accounts are starting to go up again. Now's the time to shop around to see which banks offer better rates. Look for fee-free checking and savings accounts so that you don't waste any money.
Make Little Things Add Up
Download the Acorns App.
Think of the Acorns app as a virtual piggy bank; it rounds up your everyday purchases so that they appear to be round dollar amounts. Let's say your lunch cost $9.45; the Acorns app will funnel the other 55-cents to your savings account.
Save spare change.
You may not use cash much, but make it a practice to empty the change from your pockets and wallets at the end of the day. Empty the jars and put the money into a jar that you cash in every few months.
Pick up pennies.
And quarters, dimes and nickels. It takes just a couple seconds, so why not? Add them to the aforementioned jar at the end of the day.
Strive for Efficiency
Drive a paid-for used car.
Cars are not an investment and many financial gurus advocate only buying used cars. Dave Ramsey's rule of thumb is that you shouldn't buy a brand new car until you're a millionaire because it loses a significant part of it's value as soon as you drive it off the lot. A nice used car can be had for a fraction of the price and, with proper maintenance, can last you close to a decade.
Declutter your home.
How many times have you grabbed a new small-ticket item like scissors, note cards or a hairbrush because you couldn't find any of the ones you already own? Inexpensive as it may be, it's still a waste of money when you know you have a perfectly decent pair of scissors hiding somewhere in your house. Keeping your home clutter free will cut down on knowingly (and unknowingly) buying duplicates of items, plus the time and expense of storing and maintaining things you no longer need or want.
Repair rather than replace.
We live in a throwaway world. Many people trade in their car every two years, get a new phone every year, and buy totally new accessories every season. But are these really necessary? Probably not. A key takeaway from the book The Millionaire Next Door is that most millionaires keep their vehicles far longer than the fictitious Jones'. Many things that are otherwise perfectly good can be repaired. Those expensive shoes can be fixed by a cobbler, your suit can be taken in and your refrigerator can be repaired. When in doubt, ask local friends, Facebook groups or check Craigslist and Angie's List for people who can help repair the item in question.
Hire out your extra work.
Unless you have more time than money, you probably have a few tasks that you could hire someone else to do. Use this time to do work that nets you more money than you’re paying someone to dust your house, care for your yard or pick up the kids from school.
Go on a financial fast.
Select a period of time and spend as little as possible. Maybe you channel your college days and forego any and all shopping and eating out. Use only what's in your fridge and cupboards. Use the money you typically spend in a week to add to an investment.
Reduce your taxes.
You've probably heard that Warren Buffett's tax bill is less than that of his secretary; he's employed some smart strategies in order to achieve that. Using a good tax preparer can save you more their fee costs you. Plus every dollar that you keep in your pocket is one more you can invest like Buffett. If you get a large refund each year, ask your preparer to help you adjust your withholding so that you don't give Uncle Sam an interest free loan every year.
Buy rental property.
Rental properties are well worth considering once you're free from consumer debt.
Having a rental property allows you to enjoy both the appreciation of the property, and hopefully a tenant that covers the mortgage and then some. Use the extra to save for your next rental. It will create a snowball effect and soon you'll have a nice portfolio of almost-passive-income each and every month.
Rent out extra rooms.
Whether you go the Airbnb route, or just rent out a room to a college student, you can make a few hundred dollars each month by renting out extra bedrooms. This requires minimal work on your part and provides extra income month after month.
Alternatively, if you are planning to go on an extended vacation - consider renting your own room or home on Airbnb while you are away.
Find Hidden Money
Save unexpected money.
Did you get a monetary gift for helping with a school function or did a colleague reimburse you for a meal that you had just planned to treat her to? Add that money to your savings.
Have a garage sale to get rid of unwanted clutter.
This may seem excessive, but have you ever noticed the extra stuff that accumulates over the course of a month? Even more so if you have kids. T-shirts from summer camp, a baseball they won at the ballgame, all those kids meal toys. Price items to sell and get out there bright and early on whichever day is popular for garage sales in your community.
Take unwanted possessions to a consignment shop or sell on eBay.
For higher ticket items or if you don't have time to devote to a garage sale, consider consigning your things or put them up on eBay. You might be surprised at the prices some items will fetch!
Have quarterly eat-from-the-pantry weeks.
You can take this quite literally and only eat what's already in your home for a week or until the food runs out. But there’s no need to take this 100% literally, you can supplement your canned, dried and frozen goods stash with some fresh milk, produce and bread throughout the week. Just aim to be creative and see how little you can spend for the week by eating food that you already have.
Find Everyday Savings
Give up small daily purchases.
A candy bar here. Chips there. A latte every morning. A magazine for the airplane ride. All these little expenses add up and many can be avoided by careful planning. Keep snacks in your car, set up your coffee maker to brew a pot before you wake up, take your own reading material.
Cancel unused memberships and subscriptions.
Whether it's for a magazine, a club you no longer have time for or a monthly order of vitamins from Amazon Subscribe and Save, get in the habit of canceling things you no longer need or want as soon as you decide it's no longer for you. Better yet, go through your credit card or bank statement to see if there are some services like gym and website memberships that you already forgot about.
Pack your own lunch.
Not only is brown bagging it usually healthier, it will save you time and money as well. Eat at your desk while looking over your budget, then sneak in a quick walk before it’s time to get back on the clock.
Become a coupon queen or king.
You don't have to go all out and become reality-TV-show-worthy at this, but get in the habit of saving coupons for products you use. Wait until a product goes on sale and you can get it for very little or absolutely nothing at all.
Learn to negotiate.
It's a long lost art in America, but one worth taking time to learn about. You won't be able to do it at Target, but the next time you buy something off of Craigslist or at a garage sale, ask for a lower price.
Barter goods and services.
It might sound a bit old-fashioned but there's something to be said about bartering. You don't have to use your hard-earned cash when you barter. Let's say your elderly neighbor needs help setting up her new computer and getting it connected to the internet so she can Skype with family and friends. You're more than capable of doing this and it takes you less than an hour. In exchange for your time, she sends you home with two grocery sacks of produce from her garden. As long as you have the skills and time to do tasks for others, this allows you to be compensated with something useful to you (food, in this case) while letting your money continues to grow in your investment accounts.
Surround Yourself With Great People
Restructure your social group.
Are your closest pals good or bad with money? Jim Rohn says that "You're the average of the five people you spend the most of your time with." If your best friends are constantly broke and stuck in the paycheck-to-paycheck cycle and not actively trying to break free from it, you should limit your time around them. Don't dump them cold turkey, but start curating friendships with those whom you aspire to be more like.
Learn from wealthy friends.
You don't have to go out and screen them before sitting down with them for lunches, but look for people who you believe are wealthy. Take them to lunch or for coffee and ask them questions about their life, business and how you can help them. You'll find out a lot about how they got where they are today by listening carefully.
Get on the same page with your partner.
For those who are in a relationship, it's essential that you and your partner understand each other's view of money and wealth. It will be awful hard to build wealth if he or she is spending wildly on eating out, tools, books or handbags. When you work together as a team, you'll get far more traction than if one of you is working towards financial freedom and the other is happily oblivious to all things money.
Develop a Growth Mindset
Create and follow a budget.
Many people mistake budgeting as a tool for people who are poor or irresponsible with their money. That couldn’t be further from the truth. Having a budget helps you plan where your money needs to go. Once that’s done you don’t have to think twice about purchases; just check your budget to see if you can afford eating out yet again this week.
Say affirmations (yes, out loud).
This may sound a bit far fetched, but people become what they hear they are. Write some money affirmations on colorful papers and stick them around the house where you'll see them. Say them aloud at least once a day.
You can learn more from books than some college courses. The most successful people tend to read two to four non-fiction books a month. Start with some personal finance and investing ones and expand into other areas that will help your career.
Allow yourself to take some risks.
Too many people get stuck within the confines of their comfort zone and lose out on opportunities. Step outside of your comfort zone and try investing in stocks, moving to a new city for a great job or turning your house into a rental once you move into your dream home.
Invest in your financial education.
Do you feel that you've got the basics of budgeting, savvy spending and investing down? Then spending some money on books, courses or professionals who can help take your wealth building to the next level are in order.
Keep investing even when the market is down.
Many people are struggling as a result of cashing out their investment accounts in 2008 when the market went down. Those who left their money alone saw their investment values return to the previous high, and then some, in the years following. But it was those who kept investing money, even at the bottom, who came out the best. Essentially the stock market was on sale and they were getting amazing bargains. The next time the market goes down for a correction, don't stop investing. You only lose money when you take it out of your account.
Create Your Own Safety Net
Have an emergency fund.
It's hard to build wealth when you go from one financial emergency to the next. This is why you need an emergency fund. When your fridge dies or a ski trip turns into an ER trip, your crisis becomes an inconvenience if you already have funds set aside for this purpose. Aim to keep three to six months worth of expenses in a savings account so you never have to touch your investments again.
Buy enough insurance.
Yes, you read that right, you need to buy some solid insurance policies that protect your savings when it comes to healthcare, auto, home and live insurance coverage. Medical expenses are a top reason for people to declare bankruptcy and it just takes one uninsured hospital visit to knock your savings off track for a long, long time.
Plan for Retirement
Invest in your employer sponsored retirement plan to get the match.
This is most lucrative if your employer offers a match (even a small percentage can go a long way). You should at least put in enough to get the maximum match, if any. You may not have a great choice of funds to select from, but it's worth putting money in to keep Uncle Sam's hands off the taxes.
If you are getting an employer match, keep in mind that those dollars start with a HUGE initial return on investment. Hard to go wrong.
Open a Roth IRA.
A Roth IRA is a special retirement account that you can fund with post-tax income. This is another great way to keep more of your own money, by putting $5,500 a year in a Roth. Do this each year until you reach the income limits that are placed on Roth IRA's.
Take advantage of 'catch up' contributions.
For readers over the age of 50, you are allowed to add an extra $1,000 to your Roth IRA contribution each year as a way to add more money to your retirement investments. Take advantage!
Wait to withdraw your social security.
For each additional year that you wait to withdraw your Social Security benefits, you are eligible for a larger monthly sum. It's not going to make a huge difference, but every cent does add up in the long run. For instance, if you wait until age 66 to take Social Security instead of taking it early at age 62, you'll come out ahead as long as you live to 78.
Note that your 'full retirement age' differs depending on when you were born. Check this retirement age chart for specifics.
Prioritize Your Health
Get in shape.
People who are healthier tend to spend less on health care. Insurance costs can decrease, too, if you lose weight or improve key medical markers that they use when they calculate your premiums. Use the savings to fund your health savings account.
Use a health savings account.
Health savings accounts are great for people who are either very healthy or those who frequent their family practitioner often. With a HSA you get to set aside pretax dollars which you can use for medical expenses. Any leftover money rolls over to the next ye
Remember the Big Picture
Have a plan.
Trying to get wealthy without a plan is like trying to drive from Chicago to New York City without your GPS. You can follow road signs, but you may make some detours that set you back a few hours. Know your desired outcome, your risk tolerance, what investments you want to use and create a plan that will help you achieve your goals.
Be generous with your time and money.
Many religions follow the practice of tithing, where they give away ten percent of their earnings. This practice is followed by secular people as well. Setting a standard to give away a percent of your money will help you focus on your priorities. At the very least, you’re helping others, but, as often is the case, the money may return to you in other ways. If you’re not at a point to give away money, donate your time to worthy causes.
Building wealth isn't done in a few years or even a decade for most people. It's the classic tale of the tortoise and the hare. The hare always wins. Live below your means, invest your extra cash and you'll soon start to see your account balances rising.
Congratulations! You've just learned 50+ ways to build your wealth. Keep in mind, your knowledge will only be useful once you put it into practice. Choose one thing you can do today for an "easy win" and do it. Right now! Continue doing another each day. The hard part is taking regular consistent action. Do this with your partner or a close friend, for accountability, and don’t be surprised if your bank account is already looking much better by the end of the year.