Money isn’t everything in life — but it’s always something that’s nice to have a little more of.
Your years of hard work and career-building are important in their own right, but they’re also a means to an end. You want to build your wealth and reach the point where you can enjoy a comfortable retirement, basking in the accomplishments and wealth that you’ve created over the course of a long and successful career.
Unfortunately, far too many Americans are way behind the eight ball when it comes to saving money and building real wealth for retirement. In fact, one in three of us has less than $5,000 saved. It doesn’t have to be this way, but building real wealth requires more than just hard work. Here are five keys to generating significant wealth that you can retire on.
Build your career
Without an income, you won’t get very far in your quest to generate wealth. Budgeting and investing are important, but you’ll need money to use those kinds of strategies.
That’s where your career comes in. You’re going to have to be dedicated and hard-working if you’re going to prosper in the way that you want to. And don’t forget that your immediate income is not all that matters here: You want to build your career, not just hold down a job. Sometimes, it makes sense to forgo short-term opportunities in order to build toward a more lucrative career path.
Create a budget
No matter how much money you make, you won’t generate wealth if you spend every penny you take in. That’s why it’s so important for Americans from all walks of life to learn how to set a personal or household budget.
Creating a budget isn’t too tough. You just have to look at how much cash you’re bringing in, set aside some change for essential expenses, and then limit your discretionary spending so that you still have some money left over to save and invest. Creating a budget can be a chore, but it’s an essential step toward building wealth.
Know good debt from bad
Saving money is important, but there will still be big expenses in your future that you won’t be able to cover with the cash you have on hand. You may need to take out debt.
And that’s okay — as long as you understand and recognize the differences between good and bad debt. A home loan is a great example of good debt, according to experts in mortgage services. It gives you a valuable (and appreciating) asset, it generally has a low interest rate, and it helps you build wealth by avoiding wasteful rent payments.
On the other side of the coin are dangerous short-term forms of debt, like credit card debt and payday loans. Such debt grows fast because of its high interest rates, and should be avoided at all costs.
Invest
Once your budget has helped you put aside some cash, what should you do with your extra money? If you’re smart, you’ll invest it.
Over time, your cash will lose value due to inflation. You can counter this by earning interest on the stock market, where you can choose between various stock trading strategies that allow you to balance risk and your goals. Whether you become an agressive day trader or a passive investor, trust us on this: if you’re going to retire, you need to invest in stocks.
Don’t get ahead of yourself
There are a lot of powerful strategies for building wealth, but nothing will torpedo your goals faster than acting as if you’ve already accomplished them. Rich people may live lavish lifestyles with their wealth, but such lifestyles will not help you become rich.
Build your wealth slowly, be frugal, and be careful. With patience and restraint, you’ll meet your long-term goals.