Written by: Crystal Harrell, Executive Contributor
Executive Contributors at Brainz Magazine are handpicked and invited to contribute because of their knowledge and valuable insight within their area of expertise.
Learning how to build wealth is a journey that starts with a simple yet powerful principle: making your money work for you. The idea is to put your money to work in investments like a retirement savings account or an emergency fund that will generate income and grow your net worth over time.
But how do you build wealth and make your money work for you? The key is to understand the power of compounding, the magic of time, and the impact of consistency in investing. By starting early, you'll have more time for your money to grow, and the power of compounding will work in your favor.
What Are The Key Tips To Help You Build Wealth Fast?
1. Understand Your Finances
Understanding where your money is going has more to do with awareness than anything else. If you want to know how to build wealth, you first have to recognize the spending habits running your financial life.
Here are a few tools to help you get started:
Best overall free app: Mint.
Best app for beginners: Goodbudget.
Best app for serious budgeters: You Need a Budget (YNAB)
Best app for small business owners: QuickBooks Online.
Best app for business expenses: Expensify.
2. Start Investing Early
When you invest money early into a 401 K, dividend-paying stocks, a retirement savings account, or any retirement fund, you capitalize on the power of compound interest.
Investing wisely takes time and experience, so the earlier you start, the more you have to save for retirement.
Investing into a 401 K, retirement account, or index fund is not a get-rich-quick scheme. However, they will produce some of your greatest assets. Let's face it, have you ever met someone who was a lasting millionaire after pursuing get-rich-quick schemes?
3. Automate Your Savings
Automatically transferring money into a savings account can help ensure that you save money each month, even if you don't make the conscious decision to do so. This can be especially beneficial for people who tend to spend all their disposable income.
Automating your savings is an easy wealth-building practice to set up and requires little maintenance. This can make it a good option for people who are busy or have difficulty remembering to manually transfer money into their savings account.
4. Seek Professional Advice
When looking for a financial advisor, be sure to check their credentials. A professional with the Certified Financial Planner (CFP) designation, for example, has met certain education and experience requirements and has passed a rigorous exam. Similarly, a personal finance advisor who holds the Chartered Financial Analyst (CFA) credential has demonstrated a high level of expertise in investment analysis and portfolio management.
Some financial advisors are paid on commission, which can create a conflict of interest if the advisor is incentivized to sell you certain products. Instead, consider working with a fee-only financial advisor, who is compensated solely by their clients and doesn't receive commissions from the sale of financial products.
Also, find out if the advisor is a fiduciary, which means that they are legally bound to act in their client’s best interests.
5. Create Multiple Streams of Income
The internet has created numerous ways for beginners to make money online. With platforms like Side Hustle Stack and the rise of blogging, it has become easier to create multiple streams of income.
The average millionaire has around 7 streams of income. However, most of them did not start that way. They invested in one of two income streams and built on those over time.
Some examples of potential income streams include rental properties, online businesses, and freelancing.
6. Continuously educate yourself
The more you build your financial literacy, the easier it is to make more money and build more wealth. Additionally, financial literacy can help you become debt free over time. Having a good credit card balance is a great way to eliminate most debt.
Not all debt is good. High-interest debt refers to debt that carries a relatively high-interest rate when you borrow money, such as credit card debt or personal loans. This form of debt is considered more costly than other forms of debt, such as mortgages or student loans, because the interest rates are typically much higher, leading to larger interest payments over time
7. Have a long-term mindset
Having a long-term mindset when learning how to build wealth is important because it allows you to focus on the big picture and make decisions that will benefit you in the long run. It also enables you to weather short-term market fluctuations and economic downturns, which are inevitable.
Also, if you decide to have your own business to help you make extra money and create a diversified portfolio, then long-term goals will help you stay on track when things become difficult.
With a long-term mindset, you can make consistent, deliberate choices that will help you create accumulated wealth over time and achieve your financial goals. This mindset allows you to have patience and perseverance even during hard times.
Additionally, by thinking long-term, you can plan for retirement and other future expenses, so you'll be prepared when they arise.
Conclusion
Saving money and investing in assets such as the stock market, retirement accounts, real estate, and mutual funds can give your money the potential to grow significantly over time. With a bit of patience and discipline, you'll be on your way to financial freedom.
It's important to remember that building wealth is not just about having a lot of money, but about having the ability to live life on your terms, pay cash for what you want, and plan for retirement age without worrying about money. So, start building your wealth today by developing a financial plan and letting your money work for you!
Also, note that financial advice varies based on personal situations and goals. It is important to seek professional advice before making any investment decisions and check their credentials.
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Crystal Harrell, Executive Contributor Brainz Magazine
Crystal Harrell, MS, MPH is a Yale Ph.D. student, certified Academic Success Coach, motivational speaker, and bestselling author of Crystal Clear: A Journey of Self-Discovery (From Public Housing to Ivy League). As a high school senior, Crystal secured over $670,000 in scholarship awards, including the Bill & Melinda Gates Millennium Scholarship. She has dedicated her work to helping others achieve their academic goals. Through her books and education blog, Crystal’s story has impacted thousands of individuals worldwide and created a push for personal growth in academia. Crystal’s ultimate goal is to raise awareness of our human potential and show that it is possible to rise against all odds and live out your wildest dreams. Learn more about Crystal and her work at www.crystaltharrell.com
