Building wealth is not an easy task. It is something that often takes years to build. There is a difference between being wealthy and being rich. I think I remember Chris Rock putting it best.
I remember laughing when I first heard that joke. Then I started to think about the difference. Rich is generating active income. I know several people who I thought were rich, but once the recession hit and they lost their ability to generate income, they quickly became not so rich. Someone who is wealthy generates passive income. Their income is not dependent on business cycles or a booming economy. They earn from compounding interest, intellectual property, businesses and leverage.
How to Gain Wealth
I started learning how to gain wealth so that I could leave my children the freedom of choice. I want them to be free to go to whatever college they want and not be restricted by the costs. I learned that there are four major avenues to building wealth.
Ways to Save Money
The first method to building wealth is saving money. I don’t mean save a little here and there, I mean really putting away at least ten percent of your income. Then don’t just stick it under your mattress or in a barely earning interest CD. The best way to save money is to make it automatic. Set up an automatic transfer from your checking account each month or biweekly then get ready to spend. Save by sharing one car, for example. Little bits add up quickly.
Learn to Invest Money
I like to look at investing as spending because it makes it more fun for me. I like to buy pieces of companies each month. Start with basic investing and keep it simple. Read the information that you’ll find at reputable news sources and stay up to date with what is going on in the investing world.
Learn to Budget Your Money
It has often been said that it’s not how much you make, it’s how much you keep. Budgeting is the difference that sets apart the winners and the losers. I’ve had the benefit of speaking with a wealthy business owner who put everything in perspective for me. I often saw him buying nice things and he even has a beautiful home in Beverly Hills. When I asked him his opinion about extravagant spending, he mentioned percentages. Here’s a simple example of what he told me. If you make 1000 dollars, then spending 500 dollars on shoes is ridiculous. However, if you make 1 million dollars, spending 500 dollars on shoes is not so bad. It’s the difference in percentage that counts.
Make More Money
So what if you are having a hard time getting started? You know what to do, but you just don’t have the cash to do it? There are a few ways that you can make more money. If you don’t have much to start, you can start a blog for free. If you don’t have much to start, you can start a blog for free. Start writing about something people want to read about and soon you will be able to make money online with advertisements and such. You can also learn how to write a business plan and start your own company. You can find investors that are willing to benefit from your idea and labor and invest cash to get you started. You can also maximize your career by getting a more profitable degree and generating cash so that you can save, budget and invest.
As a young adult, you have the benefit of time on your side. Get a head start by saving money now and learning to invest what you have. With time, you will begin to build a sturdy foundation for wealth that can be passed down from generation to generation.