By Aisha Noreen
Wealth building is an essential part of our financial journey to achieve our long-term financial goals. It is more than just job-based income or retirement funds. In simplest terms, wealth building is a process of generating income through multiple means, including savings, investments, and possessing revenue-generating assets.
In 2020, nearly half of the US population felt to be living paycheck to paycheck. Quite shockingly, 53% of this survey population did not have the emergency funds to support their living expenses for three months. Yet interestingly, 91% of participants showed their determination to develop better financial habits, an essential milestone of wealth building.
People take the term “wealth-building” in two different ways. It can be interpreted as accumulating assets by saving some cash, investing in real estate, buying stocks or bonds. On the other hand, it can also be referred to as making a meaningful life – pursuing happiness while strengthening relationships. However, the current pandemic has changed the latter perspective a lot.
To have a meaningful life, you also need sustenance. Even growing old is not easy. You might have to pay more in taxes, and you may not be able to afford expensive medical treatments. Hence, wealth creation can ensure financial security in unforeseen circumstances such as the current pandemic or help you face inevitable realities such as disease and old age.
The power to be wealthy starts with the first dollar. Rich people aren’t just made from inherited wealth or glamorous lifestyles, but rather by working hard and smartly every day.
This process includes savings and investment strategies and income-generating assets or other types of property ownership, which can lead to increased revenue streams in the future. This article will talk about such secrets and strategies of wealth building and guide you on how to become rich.
Invest in Your Skills
Who needs money when you have skills? In business, some invest their money, and then there’s Bill Gates, who invest their skills.
He followed his passion for tech from a young age. His first job was as a computer programmer at TRW during his senior year in high school. He did not seek the trending business to build his wealth; rather, he believed in his skill. By investing in his skills, he earned his position among one of the wealthiest people’s list. In 2021, his net worth is 134.2 billion USD.
His story tells us that if we want to be millionaires too, we should put our expertise into something we love. The great thing about investing your talents is that you can start with less than others might think.
At present, about 36% of the US workers are part of the gig economy. If this trend keeps growing at its current rate, by 2027, more than 50% percent will be a part of this gig economy. Therefore, it is a good time to believe in your skills and invest in them to build your assets.
John F Kennedy once said, “We must use time as a tool, not as a coach.” Life isn’t about waiting until everything aligns just so before making a move forward. Keep in mind that life offers no excuses for not making decisions now. So start where you stand, and work whatever tools you may have at your command, and stop wasting time waiting for the perfect time to start.
Warren Buffett’s business experience is not an exception but the rule. He started working on his billion-dollar empire as a boy. At the age of 13, Buffett started a newspaper delivery business, and when Buffett was 16, he filed his first tax return. As a teen, he started a pinball machine business and graduated college with a $10,000 profit from his business ventures. He had amassed more than $53,000 by the age of 20. In 2021, his net worth is 104.3 billion USD.
Not only Buffet, but many other billionaires also started their ventures at a young age. Bill Gates sold his first piece of software at age 17. Sean Belnik, Mark Zuckerberg, Maddie Bradshaw, and Dominic McVey are among the 100s of entrepreneurs who hit their six figures before the age of 20.
Starting your business venture at an early age is a good idea for several reasons:
- You have more time to discover your entrepreneurial skills
- At a young age, you have fewer family responsibilities
- You can polish your management experience
- Your mind is more open to new ideas
- You have the high energy and spirit to take big risks
Although you may not have a billion dollars when you start your business, you will definitely learn the necessary skills that will help you succeed.
Do not Break the Chain of “Work, Save, & Invest”
Hard work and patience are two crucial tools in wealth building. They can make even a man with no money rich. No matter if you’re just a regular employee at a company, you can efficiently work your way up the ladder of financial success. This is called investing in your career.
It means that you’re taking control of your future by focusing on identifying, quantifying, and prioritizing your goals with an eye for advancement in your company.
Meanwhile, you are striving for a bigger job or raise, hone your savings skills. Brandon Copeland: At age 27, he saves nearly all of his salary. Brandon Copeland, a famous American football linebacker, saves almost 90% of his income. There are many factors involved in saving money successfully, including your expenses, income, lifestyle, etc.
It’s hard to give specific tips that will work for everyone, but try to spend less than you make. You can try using an expense tracker app or paper ledger to start keeping track of where your money is going each day and week.
Analyze your spending in the past six to 12 months. That way, you’ll learn what areas of spending cost you the most money without getting too much value. Once you know where your money is going, it becomes easier to set goals and budget accordingly.
Investing is a great way to create wealth. Smart investing potentially outpaces inflation and increases the value of your invested money. Savvy investors can use the power of compounding for their money to grow on its own without any input from them while still preserving some level of safety through risk-return tradeoffs.
You have multiple options to invest your money, such as stock market, cryptocurrency, investment bonds, mutual funds, physical commodities such as gold, saving accounts, etc. However, the key thing about investment though isn’t just what you invest in but also the timing.
Protect Your Personal Asset by Separating the Business Assets
Running a business is always risky. Turning profits isn’t enough; you must also protect your investments from claims and lawsuits that could result in the loss of both personal assets (like homes, saving accounts, cars) and business credits.
Who would want all the savings to go to waste when the business faces unforeseen circumstances? After all, no one can absolutely avoid professional liability and claims of consumers’ rights against the product or services you provide.
Every successful entrepreneur knows that operating any company comes with pitfalls such as loans that need repayment, debts owed by suppliers, mortgage obligations to third parties like banks, lawsuits, and other business liabilities, etc.
All these worries can lead one down dark alleys where nefarious characters looking only steal whatever money is available. Therefore, do your best to shield your asset by adopting business structures such as a corporation, limited liability company, limited liability partnership, etc., rather than operating as a sole proprietorship.
It is essential to have a solid plan to achieve your long-term financial goals. Part of this includes building wealth with savings and investment strategies, income-generating assets, or other types of property ownership that can lead to increased revenue streams in the future.
Bear in mind that sound planning with your money today will ensure peace of mind tomorrow. I hope this article helped you learn the strategies of wealth building and how to become rich.
About the Author
As an owner of a small business, Aisha Noreen, went through multiple challenges which I overcame by experimenting with new ideas. I love sharing those ideas with others who are looking for solutions to problems concerning business registration, personal asset protection, and business operation in a compliant manner at MoneyAisle.com.