Wealth building is a product. People are selling courses, videos, stocks, etc. But building wealth isn’t something that happens overnight, instead, it is something that can be done by everyone with some discipline. Let’s take a look at five simple methods that will help everyone with their future wealth – no tricks needed.
1. Stop racking up those credit card bills.
There’s not a lot out there that will hurt your financial freedom more than credit card bills. Many people get started with credit cards for good reasons: build credit, make an emergency purchase, make a big asset purchase, etc. While those situations are understandable, continued excessive spending is a killer. Credit card rates are among the highest out there, and making minimum credit card payments can mean you’ll never catch up. First, stop spending on your credit cards, and then, start make large payments towards your balance. Once these payments are gone, you’ll have the flexibility you need with your budget (and even have chances to invest those funds).
2. Hold off on that new car purchase.
Everyone loves a new shiny car. It’s one of the ways that many people in the middle class show off their wealth. However, constantly buying new cars will only keep you in the middle (or lower) class. While continuing to drive that old hoopty isn’t flattering, it can save you money in the long run. If you need a car as soon as possible, take some time to research the best price, and consider a used car. Again, you can reallocate the funds you’re saving to better investments.
3. Take advantage of 401(k).
401(k)s are a vital part of saving for your future. There are multiple benefits of investing in a 401(k) including employer match (if offered by your employer), and tax benefits. Most financial professionals recommend that your minimum contribution to 401(k)s should be to hit that employer match. If your employer matches up to 5% of your contributions, make sure that you’re investing at least 5% to get free money. Your end-of-year contributions to your 401(k) are all tax deductible, and with an employee match, your $5,000 contribution in one year could look more like $12,500 (and that’s not even considering natural market growth).
4. Take advantage of ESPP, HSA accounts, and other employer benefits.
ESPPs (employee stock purchase plans) are an amazing way to build wealth. Almost half of S&P 500 companies offer ESPP and nearly 5,000 companies offer other employee stock ownership plans. These plans allow you to own a portion of the company through stock holdings at a discounted rate. Investing here is another option for building wealth and getting free money. If your company doesn’t offer ESPP accounts, do some research into more benefits offered by your company. HSA accounts are a great way to save for medical bills and also offer tax deductions.
5. Invest wisely – avoid timing the market and meme stocks.
Interested in that Gamestop stock? Does AMC seem like a good buy? Well, unless you get lucky in a short period, you’re likely to lose hundreds or thousands. There’s always a new meme stock that you can find on X or from your favorite influencer, but those quickly die off. Instead of throwing money away at the latest and greatest stock, take the time to research, and invest wisely. Most first-time investors in the stock market lose money. If your friend comes to you with a great stock that is about to blow up, it’s probably already too late. Timing the market is a difficult thing to do, and many stock market brokers spend tens of thousands each year on analytics to get ahead of the market, and sometimes still lose millions. Be patient, do your research, and invest wisely.
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