Best Ways to Build Wealth

While there are plenty of get-rich-quick schemes promising wealth beyond measure, building wealth isn’t something you can do overnight. Unless you happen to win the lottery or inherit a large sum of cash from a wealthy relative, the odds of you striking it rich without putting in the time and work isn’t too good. Just like anything worth doing, building wealth is a process that involves time, dedication, and discipline. If you’re looking to build and grow your wealth, here are a few ways to get started.

Having a solid grasp of financial topics will give you a good foundation to begin building your wealth. Financial education will empower you and give you the knowledge to help you decide which plans, investments, and other bits of advice will work best for you. Throughout your financial journey, you’ll most likely encounter conflicting investment advice or conflicts of interest, and having that knowledge will help you navigate towards the best decision.

Don’t know where to start? Start with doing research online and learn from reputable sources like Hughes Federal Credit Union’s MoneyCoach, an interactive online tool that aims to help users obtain financial independence through financial literacy. From articles focused on important money subjects to fun interactive lessons, MoneyCoach will cover financial concepts that matter most to you.

If you know the basics of budget building, you know that the aim of the game is to balance your income with your expenses. While balancing might work to get you through everyday life, you’ll want to look to increase your income flow if you want to build wealth faster. There are plenty of ways to you can start earning more. 

Perhaps you have a talent or hobby like design or writing you can turn into a side hustle by offering your services online. You could even venture into starting your own small business but keep in mind that this option comes with risks. If creating multiple streams of income is out of the question, consider seeking a better-paying job or asking for a raise by improving your skillset. Much like annuities, your investment in yourself will continue to pay you back in the long run.  

An important building block to growing your wealth is your savings. Thanks to compound interest (interest earned on a loan or deposit from principle and interest earned from previous periods), the earlier you start saving, the better. If you haven’t already, create a budget that will help you eliminate any miscellaneous spending you can do without to help you put more towards your savings account. Make saving a habit by “paying yourself” first every paycheck.

Help ensure that your savings plan doesn’t derail by building an emergency fund. Life can sometimes have unexpected turns like a loss of a job or primary income source and being prepared can make a big difference when bouncing back up. Saving up to six months of basic living expenses will help stay afloat of expenses while getting back on track.

The more you have to put towards savings the more your wealth will grow, so paying down debt should also be an important step in your wealth management plan. 

After you’ve allocated funds to your savings according to your budget, you can begin building wealth faster by investing. The stock market, real estate, 401(k)s, and Roth IRAs are all great options to consider. If you’re not too familiar with the stock market and the risks involved, talk to a financial advisor to help you figure out the best approach for your financial status. A 401(k) is a retirement account provided by some employers. If your employer offers a 401(k), take advantage of the pre-tax contributions you can invest toward your future. Your employer may offer to match contributions, so make it a goal to at the very minimum, contribute to meet the employer match. 

If your employer doesn’t offer a 401(k), consider saving for your retirement by contributing to a Roth IRA. Unlike a traditional IRA where you deposit pre-tax funds, the Roth IRA lets you pay taxes now and withdraw tax-free at retirement. 

No matter where you are on your financial journey, we can help. Explore our wealth management options and get expert advice from CERTIFIED FINANCIAL PLANNER™ professionals on everything from education to retirement. Get started today.