Creating wealth is not easy. If it did, we would all do it, and then everyone would be rich. Although if everyone was rich, doesn’t that mean that no one would be rich? There is an argument to be made.
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That’s why building wealth usually means staying ahead of the competition. You achieve this either by doing something that others don’t, or by doing things that others do, but more efficiently.
We’ll cover a bit of both here – optimizing the wealth-building habits you’re already practicing as well as new strategies to consider. In doing so, we will look at some recent wealth building stories from GOBankingRates.
Create wealth from home
In the past, we have been conditioned to think that it is not possible to create wealth from home. If you want to make money, you have to go out and make it. While this can help, there are also ways to build wealth from home.
For example, if you have extra time, you can start with items around your house. You might think they’re not worth much, but your old laptop or old guitar might be worth more than you think. And if you have rare items, you could win even more money.
Investing on a low income
You might think of investing as a wealth-building strategy only for those who are already wealthy. Although this has been true to some extent in the past (and you box earn more if you are already rich), this does not mean that investing with little money is not possible.
These days, there are more ways to invest than ever, including fractional shares and investing your spare change. These new investment methods do not require you to have hundreds of thousands of dollars. All you have is enough to get started.
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Building wealth on a low income
Similar to the previous point, it is also possible to build wealth, regardless of your income. Yes, building wealth on a low income is possible. It just means you’ll have to be very smart with your approach.
You will need to start early, live within your means, and make wise choices with your investments. While it’s a bit harder to build wealth on a low income, that doesn’t mean it can’t be done.
Increase your net income
Increasing your net income is a common recommendation when it comes to building wealth, and it makes sense. After all, you can’t cut your budget that much, but there’s (in theory) no limit to what you can earn.
There are many ways to do this, and negotiating a raise is far from the only one. In fact, GOBankingRates has a list of 30 ways to increase your net income. Other options include increasing your 401(k) contributions, cashing out vacations, and adding value to your business.
Start a side hustle
If you’ve been working on increasing your take home pay but still want to earn some extra cash, another option to consider is to start a side hustle. Of course, some side gigs pay more than others. Some can even make you richer than a full-time job.
And there’s a lot more possible hustles than you might think here: everything from lawn care specialist to project manager and fashion consultant is possible. In other words, don’t limit yourself to your day job if you want to build wealth.
Create wealth in your city
Remember the point from the introduction: to create wealth, you need to be ahead of the competition. Whether you want to view your community as your competition or not, it’s true – building wealth requires making more money than those around you. But this amount can vary a lot depending on where you live.
Indeed, how “rich” you need to be in major US cities can be a difference day and night. By “rich” we mean here the top 20%. In Detroit, for example, that amount is only $70,445. But in San Francisco, it’s $250,001. Depending on where you live, you might be richer than you think.
Avoid mistakes that deplete your wealth
Net worth is defined as the sum of all your assets minus liabilities. Although we’ve focused primarily on increasing your assets, you also need to ensure that your assets don’t run out and your liabilities don’t spiral out of control.
There are many mistakes that deplete your wealth. Whether it’s missing your budget, investing blindly, or ignoring interest rates, your wealth can quickly disappear if you don’t manage your money the right way. Increasing your income can help you avoid completely depleting your wealth, but even those earning six figures can live from paycheck to paycheck.
So, if you want to build wealth, you need to focus not only on increasing the amount of money you make, but also on not making those mistakes that drain wealth. If you don’t, all your efforts could be in vain.
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