Building wealth is a goal most people have and it’s the reason many people go to work, even though you’re not supposed to tell employers that. However, building wealth has become increasingly difficult, especially with the economic climate being a complete mess. Interest rates are constantly hiking, the cost of living is rising rapidly, and many people don’t get paid a proper living wage in the US. Even with all of these barriers to building wealth, the following strategies can lead you to success.
Set Financial Goals
Before you start building wealth, you need to set financial goals to keep you on track. We recommend making your goals SMART (Specific, Measurable, Achievable, Realistic, and Time-bound).
You will likely have more than one goal, so split them up into long, medium, or short-term. This will help determine what strategies to take on and how much risk you can cope with. Long-term goals will include retirement plans. Medium-term will cover endeavors like securing a deposit for a house. Small-term plans might be paying for a holiday or buying a car.
As time passes, it’s important to return to your goals and evaluate them. Life will throw hurdles your way and it may change your needs. For example, if you have a child, your financial obligations will U-turn from being about you to revolving around your family.
Most people go into debt at some point in their lives. Having debt can even be positive because it boosts credit scores. However, when the debt becomes unmanageable, it can be crippling to the point that people become stressed, depressed, and full of anxiety.
Before you start saving money or investing in profitable ventures, make sure your debts are paid off. Set up regular standing orders to ensure the payments leave your bank before you’ve even noticed the money is there.
When your debts are in line and you’ve got available capital, put it to work by investing. There are many ways to invest, and the avenue you choose will depend on the amount of risk and time frame you have available.
To be successful with short term loans, money has to be available instantly and you can’t afford to risk anything. Therefore, putting money into a high-yield savings account is the safest route. Wealth-building may be slow, but your money is available whenever you need it.
Medium-term goals mean you can throw in a little risk because you’ve got time to reclaim any lost capital. A great path to follow is investing in the stock market, which involves buying small shares in companies and profiting when they increase in value. When you make consistent investments, you can use an interest compounding calculator for stocks to find out how much wealth you can grow.
Long-term investments mean you can up the risk factor even higher. Alongside investing money into a pension fund, you can explore more volatile markets like cryptocurrencies like Bitcoin and Ethereum. You may lose everything you invest, but back the right currency at the right time and you could be sitting on an enormous profit.
Nobody likes asking family for help building wealth but there isn’t always an alternative. If your parents or a sibling are in a financially secure position, they may be willing to help you reach one of your short-term financial goals including paying off debts. Even though you will be expected to pay back this borrowed money, it comes without the added pressure of interest and threats of legal action.
Family and wealth building can be viewed from the other side of the coin as well. If you’re generous and tend to lend money or pick up the bill, even though you can’t really afford it, then stop. If your family members have no money to go out for meals, explore cheaper options like having a family gathering at home.
Real estate has always been a central part of building wealth, but rocketing prices have made it more difficult to access. However, if you have your own home, you can still bring in additional income. Companies like Airbnb allow homeowners to rent rooms out for short stays, even as a live-in host. Alternatively, buying additional property and becoming a landlord can bring in a steady annual return.
Start a Business
If you have an entrepreneurial mindset, you can focus your money on opening a business. This could be anything from selling digital prints to providing copyrighting services. However, conducting plenty of market research and writing a solid business plan will be critical parts of success. After all, the majority of small businesses fail within the first five years, but this is a risk you must be willing to take.
Selling Unused Belongings
The likes of eBay, Facebook Marketplace, and other online platforms make it possible to easy to sell unused belongings. Depending on what you’re selling, you can bring in a fair bit of revenue. For example, retro game consoles and games sell for a considerable amount of money.
Depending on the marketplace, you’ll have to be careful when arranging the transfer of goods for cash. For example, Facebook Marketplace involves arranging directly with the buyer, often meeting in person for the exchange. While this mostly goes off without any issues, it can open the door to theft or being ripped off.
Explore a Side Hustle
Instead of starting a fully-fledged business, put some of your time and money into a side hustle. For example, with very little upfront costs, you can start a blog and eventually monetize it. Depending on the quality of your content and the size of your audience, a simple blog can turn into a full-time source of income. Other popular options include:
- Online tutoring
- Digital design
- Pet sitting
- Making deliveries
- Posting YouTube videos
- Offering photography services
Building wealth starts with setting SMART goals and eliminating debt. Then, available capital can be used to bring in more money, whether that’s through traditional investing, opening a business, or simply selling unwanted belongings. Remember, regularly re-evaluate goals to make sure your priorities are still the same.