4 Ways To Help You Grow Your Wealth With A Budget
Mark Zuckerberg or Jeff Sutton, What is your first thought? They are successful in their field of expertise and very wealthy. Though you might not be able to become as rich as them, you can accumulate a small decent fortune of your own over time. Just realize that having a personal fortune isn’t about driving a Lamborghini or hanging out on a yacht all day (although that would be nice). It’s about having a secure financial future that can provide for you when you stop working. I’ll going to share with you four simple yet effective strategies to help you build your wealth, grow rich and possibly enjoy the lifestyle that you desired.
How to Grow Your Wealth on a Budget
Myth: You need to work as many jobs as you can or start a huge company with thousands of employees to start building your fortune.
It is not entirely true.. Most people often misunderstand about growing wealth and the “key to building wealth”.. Yes I am going to share with you the golden key. Quick, get a pen and be ready.
Here’s an example: Let’s say you have a car worth $30,000, a bank account with $20,000, and a few household possessions that really aren’t worth much. That means your total assets are worth approximately $50,000. Hey, don’t be happy. Now, this is not your net worth. How about your debts? I have a house loan balance that I need to service, its about $30,000 and a car note with a $10,000 balance, then your net worth is simply $10,000. (your assets $50,000 minus your debt, $40,000 )
The logical way of tracking your wealth is to have a wealth tracking app or if you prefer the old school way – get a notebook. But seriously, I would go with an app. Some has nice decent graphs, charts and diagrams that will give a picture of your wealth journey. Do it on a regular basis with the one and only objective
- To Increase Your Assets—like bank accounts, retirement accounts, real estate, precious metals, businesses, bonds, stocks holdings and intellectual property
- To reduce your debts.
Are you ready for the tips?
Grow Rich Strategy #1: Budget. Don’t Spend Willfully.
The first strategy to grow rich is to spend your discretionary income wisely. Many people have great jobs bringing decent income but strangely, have zero net worth. It is fantastic to always have a sizable good cash flow. However, Let me ask you a question. Does it helps you to increase your wealth? Will you be always tempted to spend it carelessly on the spur moments? Worst, on things that don’t appreciate in value like clothes, vacations, and nights out on the town. Stars like Toni Braxton and Michael Jackson come to mind as extreme examples of people who earned tons of money but didn’t end up with anything to show for it and went bankrupt. Jackson was well-known for his amusement park, his shopping sprees, including a $6 million trip recorded for the documentary “Living With Michael Jackson.” and Toni just couldn’t make ends meet on $47,000 a month!
The point is, to turn your income into a fortune you have to use some of it to increase your net worth by increasing your assets, reducing your liabilities, or by doing both.
Takeaway Tip: Set aside a separate account for discretionary spending and an account for growing rich.
Grow Rich Strategy #2: Invest. Start Investing Earlier Rather Than Later
There is a very meaningful proverb, the early bird always gets the worm. This is applicable to building a fortune by having time on your side. You can expedite the growth of your wealth due to one of the greatest gifts math has ever given us—compounding interest.
Here’s an example: Let’s say your goal is to retire at 65 with a cool one million dollars. If you begin early, like when you’re 25 years old, you’d only need to save a little over $400 per month, assuming an average annual return of 7%. Paying $400 per month over 40 years comes to a total investment of $192,000 ($400 x 12 payments x 40 years).
Protect your fortune by having enough of the right kinds of insurance, such as health, life, disability, long term care and an umbrella policy.
But if you wait until you’re 35 to start investing, you’ll need to cough up almost $900 per month, also assuming a 7% average annual return. You’d have to invest a total of $324,000 ($900 x 12 payments x 30 years) to accumulate a million dollars in 30 years. And if you’re a financial late-bloomer and don’t get started until you’re 45, you’ll have to shell out over $2,000 per month, assuming the same 7% return. My friends, procrastination is expensive! You’ll end up investing $480,000 ($2,000 x 12 payments x 20 years) to become a millionaire in 20 years.
Comparing these scenarios makes it clear, right? I don’t know anyone who’d rather invest $480,000 instead of $192,000 to reach their retirement goal. There’s simply no better way to accumulate a healthy nest egg than to start early. Even if you put aside $200 per month for 30 years at an average 7% return, you’d amass over a quarter of a million dollars.
Takeaway Tip: Time is a critical factor that affects your ability to build wealth. So stop using excuses like, I don’t have enough to invest. Remember that waiting to invest is hazardous to your fortune and future financial security.
Grow Rich Strategy #3: Protection. Protect Your Fortune
Once you begin to accumulate wealth, you need to keep it safe. Protect your fortune by having enough of the right kinds of insurance, such as health, life, disability, long term care, and an umbrella policy. Review your insurance needs once a year with an experienced insurance agent.
Takeaway Tip: Have adequate protection and not over-protection. Always seek a second opinion.
Grow Rich Strategy #4: Education. Get Good Financial Advice
Read up more on money management books or ask Mr. Google. If you’re not sure what your financial goals should be or if you’re unsure how to manage your money properly, spend some time with a financial adviser. They’ll help you make long-term plans for building wealth. I seek the advice of a trusted investment adviser who helps me strategize and manage my portfolio. I listen to him carefully and we make financial decisions together.
Takeaway Tip: Unless you win the lottery or inherit a fortune, growing rich, build wealth takes time and happens slowly. Start early and places all the odds with you. Plan now and start taking action to get started. Your future self will be thankful for making the decision today.