When you think of this title, did the thought of “ well, another retirement plan, 401K discussions here again” go through your mind?
Those steps of having savings into your retirement plan, start your Roth IRA early etc. are like textbook from financial adviser as a must have recipe to your wealth. To have a saving habit, putting money away instead of spending it all and be able to contribute to your long term wealth strategy are great in building your future wealth and can provide a great sense of security especially if you are at a young age. The most frequently discussed theory is how compounding effect will take place magically when you do so for the next 30 or even 40 years. That is right, the goal of it is to make you have financial comfort in the next decades, not meant to give you a financial freedom and build your wealth fast.
In another word, if you really want to be reach financial freedom as fast as you can, putting 5-10% of your pay away will not get you there.
To build wealth fast, we need to smartly balance what we spend and what we make. I don’t recommend you to know how you spend every single dollar because it just sounds stressful and consuming. However, you need to know your goal in terms of both finance and life. If you know the path you want to be on and do whatever it takes to stay on it, you will get there.
Here are 3 things, simple, but must do, to start your journey.
First, know your numbers. Know where you are spending money..
If you are in debt, more than likely your money is spewing out of income to somewhere you don’t even understand. Make a good list of the things you spent on for the month, check your credit cards and then compare to what you budgeted. You will be surprised by spontaneous things you spent on and how much they cost you.
If you are debt, this is the only circumstance I would ask you to scrub your numbers specifically because nothing, at this stage of life, is more important to make you debt free. Getting rid of your debt should be your foremost goal, whatever it takes.
Understanding where you are at helps to know the gap to reach debt free. Scrub your numbers can uncover opportunities to be leveraged and direct spend to right direction. Be debt free is an essential foundation to wealth building.
Read my post on “How To Make an Easy Budget That Works For Your Lifestyle” coupled with “Budget Calculator” on this website.
Second, cut out low priority spends crazily. This is especially the case if you owe debt.
Now you know where you have been spending money to, start taking control over your money by creating a budget and direct your spend to life priorities.
Managing finances is not about managing specific numbers. It is managing your life perspectives. Where you want your life to be determines and motivates what you can accomplish financially. Therefore, don’t be stressed of every dollar you can save, rather focus on the steps you need to take to get to financial freedom.
Here are a few categories you should particularly look into in cutting down spend:
Car is a consumption, not equity or investment. Car loan is the most ridiculous debt to carry. The high interest rate does not justify, at the end of the day, that vehicle is only for transportation.
The place you live is not an investment, it is an expense. Before you get to the point of having real estate investment, live under your means. Choose the place that meets your minimal needs and minimize your mortgage.
Read “How to Look At Mortgage, a Good Loan or Bad Debt?” to help you understand what good way of looking at mortgage.
Spontaneous spend on stuff you don’t need
Whenever there is an urge of spontaneous spend, think of the alternative you can do with your money, especially to your debt. Just remember, if you are in debt, every dollar you spend has a price tag to make that spend much more expensive.
Always ask yourself before you make purchase, Do you really “need” it?
There is no excuse for any luxury vacations or spontaneous spend if you are in debt, period.
Last but not least, invest in yourself.
Being debt free and start savings is the first step goal. Along the way, keep investing in yourself.
Invest in well being
Set life goal, be genuine and kind, look at big picture and think outside the box. When we see things bigger than individual perspective, we are more at peace and see clear path before us. Every step and every obstacle are taken into a perspective with a purpose. It keeps us onto the right track and from getting lost along the way.
Invest in knowledge and skill development
Be curious and open minded. It does not have to mean to earn a degree or go to expensive training. Learn something each day can go a long way. Explore your creativity and build your knowledge upon it. Passion is a bit overrated in my opinion. I did not have passion to investment until I learned more about it. Find out what you are good at and develop a skill to get even better. You will find your passion along the way. The more you learn, the smarter you get. Read a wide range of books can be easiest way to open your mind and interest.
Nice thing about learning is that it belongs to you. Once you acquired knowledge, it will stay and benefit you forever. There are many ways you can learn without big spend. Read articles, observe the market, read books, listen to free analysis etc.
You can also join me in this learning journey as it is my goal to breakdown complex investment discussions into simple steps to take. Just because something sounded complicated, it does not mean it is a good investment. In fact, simple and understandable investment strategy is what you need to aim at.
Invest in your health.
There is a Chinese old saying, “If you have the mountain, you can always grow the forest”. Finance goal is important, but it should not be a higher priority than your health. Be healthy and enjoy your life, then put your investment to the best use.
Final thoughts on wealth Building
These 3 must dos are pre-requisite for any other actions to take. Once you invest yourself and control your spend, you will learn how to maximize your income and make more money.
Building wealth fast is beyond what 401K can do. We need to get into building passive income, building business through your creativity.
Remember that wealth is unlimited and options are many. How to reach them is up to how you lead your life there.
You might think it is too hard to even think about knowing all those entrepreneurship skills. Don’t do everything. Start with simple steps, but be specifically implementing them.
We will have more discussions soon to them, but for now, start with these 3 steps to build a foundation of financial freedom.
Simple Wealth For Women is a blogging website focusing on financial discussions. I help women to crush debt, learn how to invest and make more money. I show you simple approach and provide you with specific ideas to help you get to financial freedom and build an amazing life.
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