How to Create Wealth and Support Wellbeing
Many people define wealth in a variety of ways. Have you met people who make more than you but still feel they do not have enough? Do you know anyone who can’t save money? Find yourself unable to pay off debt? Can you hear yourself making excuses for why you can’t invest?
No matter what criteria you choose to define wealth, it always starts with your mindset. Everyone has the opportunity to live wealthy but many lack the ability to create wealth in their lives.
Your money and mindset
If you’ve searched online for ways to create wealth, the search results are littered with get-rich-quick schemes or “experts” touting their riches and asking you to buy their course so you can learn to be rich too. Believing that money can easily be made is a good starting point because it can be. However, quick money or shortcuts offered by people and companies are not the paths to wealth.
You cannot make real wealth through gimmicks.
Understand that wealth is a result of your mindset and actions. It requires knowledge, planning, and execution.
To create wealth requires resources. Money is a resource. And so is time.
Challenge the belief that it only takes money to make money. From what I’ve learned and through my experiences, it takes resources and resourcefulness to make money.
You can create wealth with money you make from your day job, money from side hustles, and from credit to finance a business or a rental property. You can also create wealth with time by offering services or your skills in exchange for money that would be used towards future money-making investments.
Learn more: How to Improve Your YOLO Money Mindset
Wealth is based on assets not mere possessions
It doesn’t matter that you own two cars that are depreciating in value. Instead, owning one car and using the money (that would have been spent on a second car) on income-producing assets is having a wealthy mindset. Become as excited about the size of your investments as much as you’re excited about the size of your SUV.
Shift your mindset to spend on income-producing assets, not possessions. Calculate your net worth.
Wealth Creation Resource Guide
Do you want to be wealthy? How do you define wealth? And are you creating wealth? These are important questions to ponder and answer to truly build long-lasting wealth. We’ll explore the wealth in detail in our Ultimate Wealth Creation Resource Guide.
Wealth has many definitions. Many people consider wealth to be both tangible such as monetary riches or intangible like a wealth of relationships and spirit. I’d like to focus this resource guide on acquiring financial wealth.
Before you can build wealth, you want to know where you financially stand today. Budgeting is an important process to determine the in-flow and outflow of cash, your income, expenses, spending, debt repayment obligations.
Grow your net-worth
Your net worth is by far the most powerful number that determines your overall financial wellbeing. It’s a number that’s often overlooked in favor of higher credit scores.
Calculate your net worth by:
Net Worth = Assets (what you own of value) – Liabilities (what you owe)
Positive net worth means you have enough assets to cover your liabilities and have wealth. Negative net worth means you don’t have enough assets to cover your liabilities–you lack wealth.
Monitor and strengthen your credit score
Your credit score is important because it will determine how much leverage you can use to create wealth. Leverage is using a credit or borrowed money to build equity by investing it at a higher rate of return. For example, a mortgage, business loan, call options or margin debt is known as using leverage to create wealth.
Have multiple income sources
Income sources can come from multiple sources such as your job, an investment, a business, and government assistance. To build wealth, you must have multiple income sources. You cannot rely on one source of income.
- Know the Difference Between Making Money and Earning Money
- The Difference Between Active Income and Passive Income
- Why You Need Multiple Income Sources
Take advantage of your employer benefits
You can create wealth while working your corporate job. Many employers offer additional benefits aside from your salary. These benefits may include a 401(k) plan, employee stock purchase program, stock options, health savings accounts, wellness programs, tuition reimbursements, and student loan repayment programs. Determine what benefits are offered and take advantage of them to grow your wealth.
Learn more: Get a pay raise at work
Invest money in the stock market
Make money with money by investing your money in stocks, mutual funds, and other funds. First, maximize your contribution to your 401(k) or other similar employer contribution plans. Second, invest in an Individual Retirement Account (IRA) with a brokerage firm. Finally, you can open a discount online brokerage account and start investing in stocks, mutual funds, index funds, or exchange-traded funds (ETFs).
Work with a fee-only financial planner
You don’t need to do this alone. In fact, you’ll need an accountability partner and this can be your CFP®, accountant, or financial advisor. There are some things worth the expense and paying a fee-only CFP® is one of those expenses.