Did you know more people search “How to get rich” than “How to build wealth” or “How to get wealthy” combined? Maybe building wealth or getting wealthy sounds like it requires work. Whereas getting rich might mean having some money magically appear in your bank account.
When you want to build wealth, only two rules must be followed:
1. Make more than you spend and invest the difference wisely.
2. Develop simple daily habits that result in wealth accumulation.
After listing these two truths, Todd Tresidder at Financial Mentor writes, “You wanted something new, different, and clever — the missing ingredient that has held you back and will produce breaking results.
Instead, I give you something dangerously close to what Grandma would have said. And it’s not just me singing this song. These same truths were taught by Benjamin Franklin hundreds of years earlier and reiterated by numerous authorities ever since, including J. Paul Getty.”
Spend Less, Earn More
Tresidder takes the first rule and breaks it down into three separate, yet connected ideas: Spend less. Earn more. Invest wisely.
By closing the gap between how much you earn and how much you spend, you then use the difference for investment growth and additional income. Sounds easy enough, right?
Well, they require different mindsets. Says Tresidder, “Frugality is about living on less and requires self-discipline. For most people, there is a feeling of sacrifice when following this path, thus making it difficult to succeed.”
With a goal in mind, you’ll find a routine for your success.
Covering this same topic, Lyn Alden wrote, “To invest money for high rates of return, you usually either need to take on increased risk, increased volatility, or decreased liquidity.”
She then breaks down several asset classes and the percentage amount you can expect each to produce annually. They vary from zero to over 15% each year.
One of the tips she gives to help you invest and build your wealth faster is to invest money as soon as you get it. She explains, “For each paycheck (or each month if you don’t have regular paychecks), the first priority should be putting a lot of that money into investments before it becomes spendable. This is called paying yourself first.”
This can become one of your habits.
Wealth Is Determined By Your Habits
Tresidder continues by reminding that the formula for building wealth is simple and fully proven.
“The reason so few people build wealth is because they don’t adopt habits that lead to wealth. The only thing remaining is to take action with enough consistency to achieve the goal… and that’s where the problems occur.”
He gives a simple formula that might help you have good habits:
[(Small, Smart Choices) * (Consistency) * (Time)] = Wealth
And then adds, “The distinguishing characteristic of people who achieve wealth is they manage their money well. They have good money habits. They don’t earn the most. They aren’t the smartest. They don’t have any special training. They just have good money habits.
Small changes done over long periods of time can create massive results. It’s an easy path to financial independence, and it’s the not-so-secret “secret” to how to build wealth”
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