Many people have the wrong idea about what it takes to become wealthy. Some believe wealth only occurs if you are lucky enough to get in on the ground floor of an Apple or Microsoft company. Others believe that you can only become wealthy through high paying careers. However, there are a significant number of people, like Stephen Wynn, who did not start out wealthy, but built their wealth over time by using a few key strategies.
Create a Budget
This is always the first thing any financial advisor will say if they are asked how to build wealth. However, the average person either ignores budgeting completely or tries to track to closely Although tracking every expense is a good habit and can help you stick to a budget, it can also be tedious and time consuming, causing many people to simply give up after a few months. One way to track what you spend each month is to create a spreadsheet and enter the total withdrawals shown on your bank statement each month in order to get an average of what you spend each month. Your income needs to be more than your expenses, and if you notice you are dipping into savings, begin looking at your bank statement to see what expenses can be reduced or eliminated.
Start Saving Now
You do not need to wait until you have hundreds of dollars available to begin saving. Open a savings account in a bank that does not have a branch near where you live or work. If you can, deposit $25 from each paycheck into that savings account automatically. Most companies will allow you to split automatic deposits into different accounts. If you cannot automatically transfer it from your paycheck, arrange an automatic withdrawal from your checking account each pay period.
Debt is one area that can prevent you from gaining wealth. Therefore, eliminating expensive debt is one of the keys to building wealth. There are many different options for paying down debt, all of which will work to eliminate credit cards with high interest rates that could be preventing you from achieving financial goals. It may require you to cut back significantly on expenses, but the cut backs may be temporary if you can build a nice savings account and get your budget on track. As part of the debt elimination, you should also continue to build an emergency fund that will keep you from slipping back into debt when a crisis occurs, such as a major car or home repair.
Set Financial Goals
Write down your financial goals. You should create short- and long-term goals along with the steps you plan to take to reach them. Your first short-term goal may be to get out of credit card debt, which means you will have to decide what process you will use to achieve that goal and put those plans in place. A long-term goal may be to pay for a child to attend college without the need for student loans or you may hope to purchase a home with a higher down payment to keep your payments low. Regardless of what your goals are, writing them down will make them concrete and help guide you toward achieving them.
Anyone who has become wealthy will tell you that building wealth requires hard work and dedication. Many of them will tell you that they had to sacrifice significantly to build that emergency fund, pay down debt and meet the financial goals they set for themselves. By following these simple steps, you may also achieve the wealth you have always dreamed of having.