Building wealth will be essential to having a secure and better financial future. But it also means more than just having money.
Wealth is about your assets, investments, and your savings that apply to your quality of life and things you can do in your life.
And wealth-building habits are the financial actions you take and repeat over your lifetime to build wealth. Yet, we can get deeper into it.
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Secrets to Wealth Building
I actually dislike when articles include the clickbait word of “secrets” in their headlines, especially with finances.
Because to be honest, there are no secrets to this stuff!
People and publications may disguise them as secrets, but when you read them these things are more logical than anything. And I get it, that word reels people in and everyone is looking for a fast and secret solution.
With wealth building there isn’t any huge secret. Before we get into the wealth building habits below, I will say the real secrets are these simple traits:
- Patience
- Commitment
- Not Afraid of Risk
And lastly, you do have to sprinkle in a bit of luck. Because those above things with hard work, are not always a guarantee of wealth building. It will greatly improve your odds, but nothing is of certainty.
Now besides practicing those “secret” traits above, apply these habits below and your odds of wealth will be in your favor.
Wealth-Building Habits
I don’t consider myself financially wealthy yet, but I’m on my way. Some may think I am now because I’m on a path to 100k saved and others see that as still a ways to go. We all view wealth a bit differently and I don’t think there is an exact number either.
Below are wealth-building habits or tips I’ve learned and am currently practicing that are helping me get to financial independence.
Pay yourself first
I’ve mentioned this before and in previous posts, but it’s so essential to wealth building.
The mindset has been around a while, but I first discovered it in Rich Dad, Poor Dad by Robert Kiyosaki. If you have not read that book, highly recommend you do. Simple, short, and a great read.
That said, no matter what income you are generating, you should be paying yourself first. That is, saving a percentage away in a savings account or retirement before anything else. It keeps you focused on saving and investing for your financial goals, before spending it.
And yes, this means before paying any bills. As soon as I’m paid, I’m immediately putting a percentage to my Roth IRA and another percentage into my savings. It gets you in the right financial mindset, you develop good money habits, and starts helping you on a great path to wealth.
Surround yourself with successful people
The people you surround yourself with can actually have an impact on your mindset to building wealth. Associating with like-minded people, who are interested in investing, finances, and maybe high-earners can motivate you more than you realize.
This doesn’t mean you need to drop your current friends (unless they are toxic to your life), but network with people you can learn from. Find people that motivate you to have good wealth-building habits and can be a mentor to your decisions. More on this in a Forbes article here.
I was lucky to have a few friends who in their 20s were already working towards some amazing financial goals. Seeing what could be done motivated me, but we could also talk about investing, business, and money. I have no doubt this has been beneficial to pushing me where I am today and will continue to.
Spend less than you make
Something that probably should be a no brainer, but it’s so easy to fall into this trap.
A great way to build wealth, even without a big salary, is to spend way less than you make. The challenge is, our society gets wrapped up in instant gratification and consuming things to keep up appearances.
People who are wealthy keep their spending low and never spend more than they make. I’ve been fortunate to catch on to this simple concept pretty early in my mid-twenties, but needless to say there are always temptations to spend.
But if you are on your own path to wealth, you always need to spend less than you make. Easy concept, but not always easy to practice.
Don’t be afraid of investing your money
Building wealth by just saving money from your business or salaried job is great, but it can take quite a long time to build wealth. In order to get to the next level, you need to put that money to work for you while you sleep.
This means you can’t be afraid to invest your money.
Financial downturns happen and yes the financial crisis in 2008 was scary times. But, if you approach investing methodically, have a plan, and assess your risk tolerance, you’ll be on your way to wealth.
Investing can be in various assets like real estate (rental properties, fix and flip), stock market, businesses, art, etc. If you think of the wealthiest people you know or even well-known names, I’d guarantee a lot of their money was tied up in various investments to get them where they are.
And growing or maintaining their wealth is compounded over time by their continued investing mindset.
You shouldn’t go “all-in” with your money, but learn to invest and put it to work to exponential grow your wealth.
Understand and value good debt vs. bad debt
While some financial gurus will tell you all debt is bad, there are some areas where debt can be good for wealth building.
Of course, you should be avoiding high-interest debt, like those on most credit cards. But there is also some good debt, that will greatly benefit your ability to skyrocket your wealth.
I won’t get too much in detail here, but this is a great article that covers the difference further. Instead, I’ll give you a simple breakdown.
- Good debt is borrowing money to pay for education or an asset that you believe will return more money in the future than it cost you to finance at this moment (an investment like rental properties).
- Bad debt is borrowing money to pay for something that depreciates in value, or has no purpose (i.e. consumption).
Set goals and create plans to achieve them
One of my favorite essential wealth-building habits is setting financial goals and creating a plan on how to achieve them. These goals are a mix of short-term and long-term, plus new ones will happen from time to time as well.
Obtaining wealth can be challenging without a clear vision of getting there or at least processing what you can do. Review your income, appreciating assets, net worth, and how you can elevate these items. It can be attainable goals and more challenging ones.
But setting goals keeps you honest and focused on your path to building wealth. It doesn’t mean it will be easy as you should be thinking big, but goals and plans will make the path more possible.
Consistently read books about finances, wealth, and investing
The key to becoming financially literate was reading books. I had no financial background other than some real basic concepts. But books have made it easier to learn and shift my mindset to build future wealth.
Yet, even if you know a lot about finances or have learned over the years, continue reading throughout your lifetime. A common thread among many millionaires and billionaires is their book collection. Coincidence? Maybe.
But I think knowledge keeps your brain active and thinking in ways that help you build wealth. While I have a pretty extensive knowledge now on money and investing, I have a lot to learn. I also still read beginner books too. I think it real helps instill the right money concepts.
Try to spend an hour or two each week dedicated to reading a book related to money.
Final Thoughts
I’m sure everyone has some extra wealth-building habits or tips they might want to include, but these stood out to me the most. They’ve been incredibly important as I’ve tackled debt, increase my savings rate, and investing.
I have a long ways to go, but the above habits got me going on a great path. Hopefully, I continue to learn more too in the near future and can periodically update this post.
Do the above wealth-building habits resonate with you? What are some habits you think are important to obtaining financial wealth?