Wealth building is about planning for retirement, paying for college and upgrading your home and lifestyle and living the life you dream. While your current financial situation may keep you from dreaming of the future, the truth is you can start to build wealth…now. It is about more than just thinking about your future – you must start making smart and wise financial choices. Here are 6 actionable items you can start implementing immediately.
Amount you invest + Growth rate of money + Time it has to grow. Actionable items. Staying the course – adapting as need be due to personal changes, financial changes, changes in goals. Income and assets grow in excess of inflation.
- Start Now! Every day you delay is another day lost. Your financial future should never be delayed. The best way to build wealth is to reign in expenditures while increasing income. There are three major factors that weigh into wealth building strategies.
- The amount you can invest.
- The rate at which your money is forecasted to grow.
- The length of time it has to grow.
Depending on your personal situation, wealth building can take many forms. All three of these considerations must be analyzed and considered to create the best plan for your situation.
- Examine Desired Lifestyle. Answer the following questions to better understand your personal goals.
- When do I want to retire?
- How much money can I budget to save and invest right now?
- Where do I want to live now and during retirement years?
- How often do I want to vacation and travel?
- What sacrifices am I willing to make for future financial stability?
Carefully consider these questions and be sure to relay them to your personal accountant that can help you develop a financial strategy to meet or exceed your personal financial goals.
- Manage Income and Assets. The more money you save and invest today the more money you will have in the future. It is important to control spending. Depending on your desired lifestyle, it may be advisable to downsize now. Downsizing may mean selling your home and moving into a smaller home, it may be postponing a new vehicle purchase or scaling back on a vacation. With careful consideration and paying particular attention to what sacrifices you are willing to make now, you can create a plan that puts your financial stability on the move in the right direction.
- Boost your Financial Intelligence. While you do not have to be a financial and investment guru, it is essential that you have a basic understanding of financial systems, stocks, bonds, real estate and other areas that you are investing in. To make wise choices regarding your financial future, you need to understand your options and be able to intelligently discuss opportunities to grow your wealth with your investment advisor and tax professional.
- Consider Real Estate. Even though many areas of the country are still in recovery mode after the real estate and financial markets collapse in 2007, 2008 and 2009, there are still good real estate investment opportunities. It is vital that you consider properties that cash flow immediately, and that are in an area with strong potential for growth. However, don’t just limit real estate investment properties to office or warehouse properties, if you are downsizing your current living, consider a duplex or triplex, where the renters will pay the property’s expenses. In addition, vacation homes that you utilize part of the year and rent out part of the year can be a good investment as well.
- Tax Deferred Retirement Plans. If your employer offers matching contributions to your 401(k) plan (and many employers do), be sure to maximize your contributions. In addition, traditional IRA plans, and other tax deferred retirement plans can help you to build wealth for your future.
It is never too early or too late to start building wealth. With these 6 actionable items you can start to take control of your financial future.
