How to Build Wealth

There is no such thing as “get rich quick” for most of us. Unless you’re Mark Zuckerberg or one of those people who strike it rich and become ridiculously wealthy in a short amount of time. But even then, Facebook wasn’t an overnight success. It took years of careful planning and developing and then became a billion dollar idea — but it happened over time.

The good news is that building wealth is entirely under your own control. All it takes is smart decisions and breaking bad habits.

Americans have some wasteful spending habits. Top among them are eating out, alcohol, cigarettes, credit card interest, electricity, clothing, and many others. 

Here are some personal spending habits that are worth getting rid of:

1. Using out-of-network ATMS

2. Buying overpriced coffee every day

3. Using retirement money for extra cash

4. Not tracking your spending

5. Only paying your credit card minimums

If you were to break those habits and combine that with a smart approach to actually building wealth, you’d be well on your way to seeing a paradigm shift in your financial life.

The term “wealth mentality” isn’t about standing in the mirror and meditating or visualizing large bundles of cash, although there is something to be said for nurturing a positive outlook in general. But here are some practical ways to turn those imaginary bundles of cash into real ones:

1. Savings

Can you guess how many Americans have absolutely no savings at all? According to a new report by Bankrate, 66 million Americans have zero dollars saved for an emergency expense — zero — and 28% have only six months’ worth of savings. 

Whether you take 10% of any income and put it straight into a savings account, or whether you have another method of saving, the point is that you are saving. Not everyone does this, and then they’re surprised when they can’t afford some unforeseen financial situation. There’s an old saying, “save a penny, and the dollars save themselves.” Savings add up over time, and the more you contribute to your “wealth vault,” the more your mentality will shift in that direction.

2. Smart Spending

Buying things that you need, vs. things that you want. This will go a long way toward creating a proactive attitude when it comes to money. Frivolous or extravagant spending gets people into debt, which has disastrous long-term effects. Living within your means and also within your needs is the way to go.

3. Reach for a realistic goal

You want to wake up in the morning and be a millionaire – just like that?! Well, you may as well wish for waking up with leprosy. You have about as much chance of that happening as well. The point is that you should reach for a realistic goal. For example – “I want to become debt-free this year” or “I want to have $10,000 in a savings account by the end of this year.”

Great. That gives us some practical and realistic goals that we can plan and strategize toward. If you take the smaller steps, the larger ones will take care of themselves in a way. Before you know it, you may have reached your goal of “being a millionaire.”

4. Always look on the bright side of life

Here’s where “positive thinking” comes in. Along the way to reaching your wealth goals, you will undoubtedly run across some setbacks or barriers in that road. If you let yourself get defeated by those setbacks, you’ll never reach the goal. So keep your head up, persist always. And do it with an upbeat disposition, knowing that you will reach that goal, and no other option is considered.

5. Investing

This is something that will take your fundamental wealth mentality and kick it over the edge into the realm of building wealth. Working with a trusted financial professional and exponentially growing your assets will, over time, should start to take those little savings, and turn them into a lot.

 

IMPORTANT DISCLOSURES

Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC,