For many Americans, the dream of becoming wealthy is within reach if they focus on implementing the right strategies for success. By breaking down the process of wealth building into key practices, even those with average incomes can build a substantial bankroll that continues to grow.
Here are seven essential steps to achieving financial success and what to be mindful of along the way.
7 steps to achieving wealth
1. Embrace the mindset of a wealthy individual
When striving to build wealth, it’s crucial to think and act like a wealthy person. Contrary to popular belief, wealthy individuals are often frugal and prioritize value when spending money. They understand that accumulating wealth requires discipline and avoiding unnecessary expenses. By eliminating the desire for material possessions to boost their self-esteem, they can focus on growing their wealth.
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2. Eliminate all “bad” debt
Avoid falling into the trap of accumulating “bad” debt, such as high-interest credit card debt. High-cost debt can quickly spiral out of control, leading to financial strain. By getting rid of this type of debt, you can pave the way for wealth accumulation.
While wealthy individuals may use credit cards, they do so responsibly by choosing rewards cards, paying off balances monthly, and maximizing rewards points. This approach allows them to benefit from cashback rewards without accruing unnecessary debt.
3. Utilize “good” debt
Consider taking on “good” debt for investments in appreciating assets like real estate. Low-cost financing for a long-term asset can be advantageous, as it allows you to lock in fixed payments over an extended period while the asset appreciates in value. Good debt should be used strategically to grow your wealth over time.
4. Prioritize saving
Building wealth requires a commitment to spending less than you earn and saving diligently. Regardless of your income level, saving is essential for wealth accumulation. Your savings act as the foundation of your wealth, especially in the early stages of wealth building.
5. Invest in high-return assets
Wealthy individuals often invest in high-return assets like stocks and stock funds to grow their wealth over time. While these investments can be volatile in the short term, they offer long-term growth potential. It’s important to maintain a long-term perspective and diversify your investments to mitigate risk.
Consulting with a financial advisor can help you identify high-return assets that align with your financial goals.
6. Consistently invest
Regularly adding to your investments through disciplined savings is key to sustained wealth growth. Dollar-cost averaging can help reduce the risk of market timing and ensure steady progress towards your financial goals. By staying committed to your investment strategy, you can continue to build wealth over time.
7. Collaborate with a financial advisor
A financial advisor can provide valuable guidance in growing your wealth and making informed financial decisions. Working with an advisor can help you stay on track with your investment plan, especially during market fluctuations. Additionally, an advisor can assist in estate planning and asset protection for future generations.
Bottom line
Embarking on the journey to wealth building starts with taking action today. Time is a powerful ally in wealth accumulation due to the compounding effect, so initiating your financial strategy as soon as possible is crucial. Remember to conduct thorough research and seek professional advice to make informed investment decisions.
Editorial Disclaimer: It is recommended that all investors conduct independent research on investment strategies before making decisions. Past performance of investment products does not guarantee future price appreciation.