The bottom 50% of households in America have a combined tally of only 2.3% of the U.S. household wealth? Meanwhile, the top 1% of households in America have north of one-third of the U.S. household wealth?
Wealth inequality isn’t a myth. But that doesn’t mean you can’t build wealth. In fact, there are some things you can do to build a strong financial foundation.
Do you want to learn about building wealth? Here are 5 strategies for financial success.
1. Don’t Overspend on Vehicles
Did you know that the average cost to finance a new car is $636 per month? If you wind up signing a five-year or six-year financing deal, that monthly cost will add up. The problem with this is that a car is a depreciating asset.
It’s hard to build wealth if you’re investing heavily in a depreciating asset. Imagine if you were able to invest $636 per month in your IRA or in an ETF. If you were to do this consistently over years and decades, you’ll build wealth.
When buying a car, it’s best to find something you can afford to pay for in cash. if you can’t, find a vehicle that’s cheap enough that you won’t be locked into a long-term financial commitment. You’re better off investing that money.
2. Invest Consistently
One of the simpler wealth-building strategies is to invest consistently. It might not seem like much to invest $100 or $200 per month in stocks or in an IRA. But you’ll benefit from compound interest, and your money will grow over time.
In addition to starting to save early on in life, you should commit to doing so regularly. It’s a good idea to save a percentage of your salary.
Many banks will allow you to set up automatic deposit schedules. That way, you can automatically save some money weekly, bi-weekly, or monthly.
3. Watch Your Spending
You’ve probably already heard the saying that many people buy stuff they can’t afford to impress people they don’t like. This saying is, unfortunately, all too true. But you don’t have to fall into this wealth-draining trap.
Before you make a major purchase, ask yourself whether you really need it or if you can afford it. Be mindful, as well, of lower-cost expenditures that can slowly drain your financial resources.
No matter how good you are at making money, you won’t get ahead if your spending is out of whack.
4. Save on Taxes
One of the ways to build wealth is to reduce what you have to pay back in taxes.
Check out WealthAbility, a podcast hosted by a certified public accountant. You’ll learn how to reduce your taxes and how to obtain the assets to build wealth.
It also pays to consult with an accountant and with a financial planner to get tax-saving tips.
5. Invest in Real Estate
There’s money to be made in real estate investing both over the short term and over the long term. If you buy investment properties and get tenants, you can look forward to monthly income even as the properties grow in value.
Do you want to invest in real estate without having to worry about tenants and repairs? Consider real estate crowdfunding and real estate investment trusts.
Whatever route you choose to grow your wealth, real estate investing is one of the important wealth building cornerstones.
Building Wealth…One Step at a Time
Building wealth isn’t something that happens overnight. Financial success is within your reach as long as you’re ready to roll up your sleeves and get to work.
Keep the 5 tips above in mind to create a strong financial foundation for you and yours.
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