How To Build Wealth Slowly
There are many great stories that show a rapid race to high net worth, debt payoff, or savings. There’s absolutely nothing wrong with those stories (the legal ones anyway). However, for most of us, those stories are not relatable because of our circumstances. We can’t all have a $1 million net worth at age 32, we can’t all retire at 35 or save $100,000 in 2 minutes (slight exaggeration but you get what I mean). But what if I told you that you can build wealth slow and steady? The slow and steady path to wealth certainly is my journey and I invite you to join me on this journey. Here are five things to do to build and grow wealth over time.
1. Fix Your Money Mindset
There’s so much to say about money mindset, but you need to have a wealthy, positive, and abundance mindset to build and grow wealth. If your mindset is not in the right place, then everything else will feel like trying to build a mansion on sand without a solid foundation. Wondering what your money mindset is and how to work towards an abundance mindset? Listen to the very first foundational episode of The Rich Immigrant podcast here.
2. Build Good Financial Habits
You can’t build wealth without good financial habits and financial discipline. This means having a budget, staying on budget, tracking expenses and your overall financial progress, paying down debt (and keeping it at 0), and making savings and investing a lifestyle. You can do this by automating savings and investments, and by using a budgeting app (or whatever budgeting method works best for you).
3. Invest Consistently For The Long Haul
Savings are great, but in the long term, you can’t save your way into wealth with cash alone. On the other hand, get rich quick schemes don’t work either and you want to avoid pyramid schemes by any means necessary. Those schemes (yes, even the Sou Sou blessing loom arrangements) usually end up in disappointment, especially for those unfortunate enough to join the scheme last.
It’s one thing to save; it is another thing entirely to invest those savings. Investing long term through individual stocks, funds, real estate, REIT, startups is the way to truly build wealth. Your investment vehicles should be diversified and selected based on your risk appetite and research.
Don’t just invest once and then stop, invest consistently over time and you will build wealth, month by month, year by year.
4. Start As Early As You Can
The best time to start building wealth was yesterday, but the second-best time is right now! With investing and wealth-building, time plays a huge role because building wealth takes time. The earlier you start, the better. Starting in your 20s with little will potentially have you miles and miles ahead (or really, millions) than if you start out in your thirties or forties.
Chris Hogan’s interview of everyday millionaires indicates that the average household that achieves a $1 million net worth does so at the average age of 49 years.
Now, if you’re reading this in your thirties and you’re starting to feel like you’re behind. STOP IT! That’s not the goal here! Will you start today, and then continue consistently (aka monthly)?
5. Avoid Lifestyle Creep
Lifestyle creep, also known as lifestyle inflation, is the increase in your spending as your earnings increase. New promotion or raise, and you get a new car, or a more expensive apartment.
Now, I’m not saying you should stay in the same apartment for ten years. On the flip side, lifestyle creep can happen gradually such that you don’t even realize what’s going on. Following a budget is the antidote to lifestyle creep. When you get raises, allocate the bulk of your increased pay to automated savings and investments. That way, you don’t even see the money as discretionary. A good rule of thumb is to save/invest 75% of any raises you receive, and then you can do as you please with the other 25% of your raise.
Following these five tips over time and you’ll be well on your way to building wealth gradually. Which of these five tips is top of mind for you?