If you ask most people about what they worry about the most, chances are very high that the vast majority will note that their finances and the economy, in general, are one of their top, if the highest, priorities in their lives. After all, everyone wants to live comfortably and have enough money to send down the generations to their children and children's children. However, for most folks, this drama can often seem like a fantasy, mainly if they only earn a modest income to begin with. However, what if we said there are a plethora of ways in which anyone with at least some form of income can grow their wealth over time? In this post, we're not discussing any kind of get-rich-quick schemes that are typically destined to fail, but rather to inform you how to build your wealth over the long term using the power of compounding and consistency.
Invest In Stocks
Make no mistake, investing in stocks and shares can be a risky game, especially if you aren't entirely au fait with the process. However, if there is one thing that many rich people have in common, it's that a substantial portion of their wealth is invested in an array of shares that have a propensity to rise exponentially over time. OK, so you may be thinking that those rich folks can hire a fund manager to invest their money into things that are a sure thing and give them a leg up over the average Joe. Well, you are correct to some degree, but the act is that you needn't spend too much time digging deeply into the markets and world events to see a small, consistent investment grow over a period of time. For most, all you need to do is set aside a certain amount of your income each month and invest it into what is known as an Exchange Traded Fund (ETF). For most people, any ETF that tracks the S&P 500 is more than enough to see significant gains over twenty or more years. As long as you're consistent with the amount and time you invest, you stand to gain almost 9-15% on your investment per year, which is pretty substantial.
Pay Off Your Debts
Paying down your debts will give you a sense of freedom like nothing else. Although this won't increase your wealth directly, it will mean you have more money to invest in options, as described in the first point.
Leverage Employer-Sponsored Retirement Accounts
If you work in a job where your employer matches any contributions you pay into a 401K, you can take advantage of it to max it out as much as possible to essentially receive free money. Just make sure you understand what your 401K is invested in and what your contributions ought to be each month to meet the employer-matched amount.
Budget To Invest
As with the point about reducing debt, this won't get you rich but will contribute to success if you use the money saved wisely. You should take a few hours out of a day off and look through your expenses to see what you need to keep and what you can get rid of. If you are really serious about building wealth, you need to make some difficult decisions based on your luxuries. This could mean cutting out take-out food deliveries, reducing your Amazon spending, and even eliminating streaming subscriptions that can amount to hundreds of dollars each month if you have many. You can use these savings to invest in wealth-building activities that you can reap after you have built up a decent buffer.
Building wealth isn't as challenging as many people believe, but it takes time, consistency, and the will to make hard choices. Even with a modest salary, you can build generational wealth over the long term.
