Building Your Wealth in 2022
Let me just start out by saying that anyone can do this, but it does take a lot of planning and dedication to make it happen. You don’t have to be born into a wealthy family or inherit lots of money to have a fortune. You do have to be willing to work hard and stick to your plans in order for your wealth to accumulate and grow.
Some people may have a head start in life in the sense that if you’re born into a family with a lot or some wealth, then you’re more likely to be educated and being able to find a good job once you graduate from college or higher level educations. But it does not mean all hope is lost if your family has no money and no one has ever graduated from higher educations in the clan, it just simply means you will have to work all that much harder to make it.
So don’t despair if you are just starting now try to work harder than everyone else.
1. Control Your Expenses
Unless you have untold millions just sitting around and / or you’re just making so much money that you don’t know how to spend it, you most likely will have to have a good grasp of how much money you’re spending and how much you can minimize at least some spending on the unnecessary things. You can get some suggestions from how to lower your expenses by checking my other article on this topic here.
Did you know that based on recent survey that 36% of households that earn over $200,000 are living paycheck to paycheck? And almost identical figure for households making over $100,000. How could that be? The answer is that these people have not done a good job planning out their expenses and their budget. Which leads to the next point.
2. Build a Budget and Stick With It
Wealth building is definitely a long term thing. Unless you’ve won the lottery, you won’t get rich in a day or two. It really takes decades of good planning and savings to build sustainable wealth that can weather storms and last well into your retirement ages. People are living longer and longer now, so it’s important that when you’re ready to hang it up, your nest egg is large enough for you to live the lifestyle you want and outlast your life.
So many Americans are still working well into their 60s and 70s due to bad debt and retirement planning in their younger days. According to one study, about 13% of Americans over 60 have no retirement savings. One study from 2021 shows that 57% of Americans worries about running out of money in their retirement, that is, if they have actually saved up for retirement.
2019 data shows that median US households net worth is about $121,000, but it’s more than double that for age 65-74 at $266,000. Even at $266,000, it’s not a lot of assets to live off of.
Budgeting is important because it lets you see how much you spend each month and how much you can afford to set aside to invest and better your financial situations. You should consider auto payments and auto deductions for investing your 401k or other type of investments. This way, you wont be as tempted to use those money since they’re automatically deducted when you receive your paychecks.
3. Find Good Sources of Income
If you want to be able to build some good wealth in the long run, you will need some good sources of income. Whether that means you and / or your spouse / boyfriend / girlfriend gets a good paying job or you have multiple sources of income, you will need to have some money in order to turn the money into good appreciable and income generating assets.
There are many ways to generate income outside of working a full time job. Most of them just happen to not be as stable in the sense that you know exactly how much money is coming in. But that’s the risk / reward of side hustle and owning your own business. For example, if you create a website with interesting content in it, you can generate income through advertising and or affiliate marketing.
Now, there are ways to use debts to fund investments, but that is topic for another day. Once you have good cash flow with your investments and they have matured to a certain degree, you may be able to quit your job and just live off of them, like in retirement. If your goal is to retire early, then you will want to set aside money generating assets on top of your retirement account(s).
4. Max Out Your Retirement Contributions
Most organizations now offer retirement matching benefits for their full time workers. Instead of giving unsustainable benefits like life time pensions, companies and organizations instead match your contributions up to a certain level. Typical matching is 50% of the employees contributions up to 6%. Some will give even more, but you should definitely take advantage of the free money and max it out at at least 6%.
If you’re over the age of 50, you’re eligible for catch-up contributions, which is $6,500 higher than the standard of maximum $20,500 a year (2022).
5. Consult With a Financial Advisor
Working with a licensed financial advisor if you’re not sure about how much money you can invest and or how to reach your goal. Many financial firms offer comprehensive service to help you understand and help you improve your financial situations.
For example, if you tell the advisor that you’d like to retire at age 50 with 2 million dollars and you’re 30 years old right now with $100,000 in assets, they can tell you how much you need to tuck away to get to that goal in 20 years (based on market history).
In Conclusion
It is very much possible to build wealth even if you didn’t come from a family with lots of family. With good planning and hard work, you can certainly achieve financial freedom in retirement, if not sooner. There are many paths to building wealth, what’s been discussed here is only a small fraction of what you can do to build wealth. Check out other upcoming articles on wealth building strategies and ideas.
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Let me just start out…