There are many reasons why someone might want to become wealthy. Some clearly want to live in the lap of luxury, while others just want to travel around the world without worrying about running out of money. Many would like to ensure a secure retirement, so they can live out their years doing the things they enjoy. Whatever your reasons might be, there’s no reason to think it’s out of reach or impossible.
Note that I wrote this article with people from all walks of life in mind. Although this site is primarily geared toward entrepreneurs, there are many aspiring entrepreneurs who are also still employees. Wealth generation is one of the primary drivers of entrepreneurship, but it’s also worth mentioning that some would rather grow their wealth by trading stocks or real estate. With that in mind, here are seven essential tips for generating wealth.
1. Write Down Your Goals
Successful people know they have to write down their goals in order to get them accomplished. Anyone can get sidetracked and unless you have constant reminders of what you’re setting out to do, distractions will carry you in different directions. You must be clear about your goals as well, particularly if they involve generating a specific income. If you want to make $100,000 this year, write that exact figure down and put it someplace where you can see it, so you’ll have something specific to shoot for and your mind will remain focused on the prize.
2. Contribute the Maximum Amount to Your 401(K) Plan
Chances are, your salary will have less to do with the amount of wealth you accumulate than how much of it you invest over the long term. For example, if you manage to achieve that $100,000 salary, you’d be a millionaire in 10 years if you didn’t spend a dime of it; but that’s not going to happen. If you’re living a six-figure lifestyle to match your six-figure income, you might as well be living paycheck-to-paycheck like others making half as much. How much can you really live on? If you contribute the maximum to your retirement account and your employer is matching it, you’ll generate significant wealth much sooner. Your goal should be to become more of an investor and less of a consumer.
3. Pay Off Your Credit Card Balances
Large amounts of debt can ruin any chance of becoming wealthy. If you’re living within your means, you wouldn’t be using credit cards to purchase anything you can afford to pay for in cash. If you charge $5,000 on a credit card with a 15-percent annual percentage rate (APR) and pay only the minimum monthly payment of $115, it’ll take you a whopping 64 months to pay it off. Along the way, you will have paid $2,258.89 in interest, which is almost half the original balance. If you’re going to carry a balance at all, make sure it’s one you can pay off quickly. Don’t allow all that interest to add up while continuing to make additional purchases.
4. Work Smarter AND Harder
Generating wealth requires working both harder and smarter than everyone else. This could mean working more hours, finding a second job or opening a business of your own on the side (if you’re not already self-employed). Working smarter will give you an edge over others. If you can find a way to either automate some of your workload or delegate it to someone else, you’ll free yourself up to chase down other opportunities.
5. Create Multiple Sources of Income
One of the best things you can do to generate wealth is to open up multiple streams of income. Whether you’re an employee or a business owner, instability can throw a monkey wrench into your plans and slow down your progress. Certain situations could potentially bring it to a grinding halt. Examples of additional streams of income include online stores, network marketing and real estate ventures that provide passive income. If you have a hobby that can be monetized in some way (such as photography, writing or music), that money can be invested for further growth.
6. Spend Time Around Wealthy People
To put it bluntly, you’re not going to learn the habits of the rich by hanging out with people who blow most of their money in an attempt to appear wealthy. Those individuals will probably never accumulate significant wealth in their lifetimes, and many of the fancy status symbols they hide behind are purchased on credit. If they were to lose their jobs, they might not be able to sustain themselves for long without filing for bankruptcy. Wealthy people just have different habits and views regarding money. If you know some wealthy people or can find some on your favorite social media sites, you’ll begin to notice these things, and they’re bound to rub off on you.
7. Track Your Progress and Be Patient
No empire was ever built in a day and yours probably won’t be, either. If you’re writing down your goals and looking at them frequently, you should be able to see how much progress you’re making and whether any changes need to be made. Did you make more this year than last year? If not, why not? How are your investments doing? Does your goal of generating wealth feel any closer or is there something you’ve been neglecting to do that might make a difference? As long as you’re doing everything in your power to make your goal a reality, there’s no need to be impatient with the process. It will come in due time.
Everyone needs money, whether they choose to admit it or not. The best way to deal with it is to accumulate enough wealth to live comfortably in your later years. Although there’s no guarantee the tips above will lead you directly to prosperity, it’s safe to say that if you don’t employ these methods, the resulting lack of money will always control you.