Some people believe that getting rich quick is nothing but a myth and that real wealth can take all your life to build up. However, you can build your wealth up in only a few short years if you make savvy financial decisions and keep your funds in check.
In this article, we will go through the top 10 ways that you can build up personal wealth fast and all of these are things that anyone can do. We will talk about how to control spending, what to avoid, and how investing can help you out.
1) Limit Personal Spending
This is one the easiest ways you can help yourself build personal wealth because all you have to do for it is nothing. Seriously, for this tip you simply have to sit back and not spend your money on unnecessary things.
Unfortunately, you would be surprised at how difficult this is for most people because everyone enjoys a little retail therapy from time to time. Of course, I’m not saying you can only spend your money on food, bills, and transportation to work but limiting pleasure purchases can make a huge difference.
Especially now with the internet constantly throwing personalized ads at you to buy their product, it can be hard to fight the urge to buy that new jacket or pair of sneakers. However, a little self-discipline is all you need to start increasing your wealth fast.
2) Invest in Tax-Advantaged Accounts
Putting some money into a 401k or a Roth IRA is a perfect way to build wealth by minimizing the amount of taxes you pay while simultaneously saving for your future. While this may give you less money for the present it will pay off in a big way not too far down the road.
For most 401k’s for every dollar you contribute to it, your federal income taxes will go down by 20-30 cents. These cents add up after a while and, come tax season, that money will be right in your pocket.
A Roth IRA works a little differently in that the money you put into this account is money you already paid taxes on. This means that the money you take out of this account once you retire will be tax-free and you will not have to give the government any of it at the time of retirement.
You may be thinking, “how does putting money that I made into an account that I can’t touch increase my wealth?” Again, the money you have in your checking account is only part of your total wealth. If we’re talking purely in terms of wealth, money in a 401k or Roth IRA counts towards it because it is still your money, just set aside for the future.
3) Work, Work, Work
If you are young and have the ability to work those extra hours, do not hesitate, just get out there and start working. The more income you bring in, the quicker your wealth will increase.
For those that already have a full-time job, look into ways you can move upward and increase your income. Many full-time workers are stuck in the current budget they have because their salary is simply their salary and they won’t be getting any more or any less.
Finding a second job can be difficult and time consuming but, even if you only do it for a year, it can increase your wealth tremendously and help you save for your future. Not to mention, if you are working you’ll be less likely to make those unnecessary purchases.
4) Consider Buying Rental Properties or Invest in Stocks
If you have the extra income and are thinking about how you can supplement it, two ways of doing this are investing in rental properties or heading into the stock market.
The less risky of these two is certainly rental properties, as many people are always looking to rent an apartment and the return on investment for these is almost guaranteed assuming they are kept in decent condition and your tenants pay their rent in a timely manner.
Of course, there is always the stock market as well, which requires some research and a bit of risk but can cause dramatic increases in wealth. Stock market investing is much more accessible these days and nearly anyone can join in on an investing app and invest however much they want.
If your investments do begin to make money, it is also a great idea to look at that money as not for spending but for reinvesting. One great part about investments is that the more money you put into them, the more money you can get back out of them.
5) Hold Onto Your Investments
Let’s say you do end up investing in a rental property or a few stocks, eventually, you will want to sell those for personal gain. However, assuming you bought your rental property for $200k and sell it at $400k you will have to pay capital gains taxes on the $200k profit you made.
Now, these taxes are not the same forever and holding onto your investment will diminish the amount of capital gains taxes you will have to pay in the end. This is how the government encourages people to hold onto their investments and not sell them as soon as they begin making a profit.
Again, the money that these investments are making count towards your wealth even if you haven’t sold them yet. Sitting on these investments for a couple years while they build up money is one of the most powerful ways you can increase your wealth substantially.
6) Stay Away From High-Interest Loans
Many people fall into these traps and be stuck with high interest loans for years that only get more difficult to pay off. Anything over 4% annual interest should bring up a red flag and is not a loan you want to take out if you wish to grow your wealth.
Sometimes, loans are necessary and even the most wealthy and successful business people in the world have taken a few out in their lives. What’s most important about these loans is how quickly you can pay them back though.
Loans actively count against your wealth and no matter how much money you have, the more in-debt you are, the less wealth you have altogether. Stay away from payday loans for cars or anything else because these are just short-term fixes that will cause long-term problems in the future.
7) Ask Your Employer About Matching Contributions
Many employers that offer 401k packages or things similar to this will offer contributions to encourage these smart financial decisions. This is because your employer wants to give you that extra incentive to stay with the company.
This is basically them offering you free money, it is just money that shouldn’t be used until retirement. Needless to say, you should take any free money you can get and invest it well.
Matching contributions usually means that your employer will match whatever you contribute to that account and this is something that you should certainly take advantage of. If you aren’t sure whether your workplace offers this, ask someone in HR or your employer themselves!
8) Never Sell Your Investments
This may sound strange at first but there are ways that your investments can generate passive income for you and give you no reason to sell them unless you really need the boost in cash.
Many people become financially independent simply based off of the passive income they get from investment in stocks or renting out a property they own. Of course, if they never sell these, they will never have to pay taxes on them and they will never have to worry about their value going down at the wrong time.
Most of the risk from buying stocks comes with when the right time to sell them is but if you buy a stock and never plan to sell it, all you have to do is hope it succeeds so it can bring in more passive income for your portfolio to reinvest.
9) Use Windfalls Wisely
Windfalls are events where some money simply finds its way right onto your lap. Sometimes, a close relative passes away and leaves you some of their savings, you win a cash prize, or you find Santa’s sack full of $100 bills lying on the ground.
In any case, spending this money just because you weren’t expecting it won’t really help grow your wealth at all. Save this money or put it into your investment accounts if you really want to grow your wealth.
10) Master New Skills
Another way to build your wealth is to invest in yourself and master some new skills that can help grow your finances such as degrees, certifications, or various life skills.
This is especially useful if you wish to work in a better paying job or, for some jobs, getting that extra certification could mean a pay raise. Not to mention, it is always a great idea to challenge yourself and learn new skills because it will make you that much more marketable to future employers down the line.