build wealth It is a hotly debated topic. Some promote schemes and methods to become a millionaire overnight; And they sound so attractive that many fall into the trap and waste time and money.
From multi-level businesses to the now famous cryptocurrencies, no one can say for sure that they will work for you. What we do know is that whatever you do will work as long as you invest the necessary time in studying, learning and perfecting what you are doing.
Maybe the title of this article: 3 simple but effective steps, doesn’t sound very accurate; but it certainly is. These 3 steps are definitely effective and extremely easy to understand. However they are not easy to follow.
And the reason is very simple: are long-term steps nobody likes the long term anymore. Everyone wants results “now”. Unfortunately build wealth it is a process that takes time.
What are these 3 steps to building wealth?
It is not the first time that we mention these 3 steps in EntrepreneurMode, but since the best way to learn is repetition, we hope that these guides and tips are engraved in your brain.
The bases of wealth are structured in the accumulation of money through time. And the only way to achieve this goal is as follows:
1. You need to generate money: You need to have one or various sources of income that they generate enough money for you to be able to save a percentage after covering your needs. We recommend having multiple sources of income.
2. You need to save money: When you have the sources of income that provide you with enough money, you must create a savings plan.
3. You need to invest what you save: Once you put your monthly savings plan into action and manage to accumulate cash, it’s time to start investing wisely.
Income – Expenses = Savings
Savings = Investment Capital
Let’s look at the 3 steps to building wealth in a little more detail.
Step 1: Create enough money.
If you read our article “What is compound interest and why can it make me a millionaire?”, you will know that compound interest is one of the most powerful financial concepts.
Over time it can help you accumulate a lot of money. However, there is a condition for it to work: are you making enough money to save?
If not, you should look for ways to reduce your expenses. If you have already reduced your expenses to the maximum, you need to find other sources of income.
First find what you are good at and really enjoy. Then he tries to make money doing it.
Step 2: Save enough money.
If you’re making enough money, but you’re not saving enough; it is because you are living above your needs. (It is important that you learn how to budget)
To avoid overspending, follow these tips:
- Track all your expenses monthly: You can use an app, an excel sheet, or even do it by hand. However, be sure to create spending categories. Knowing what and how much you spend will give you tremendous control of your money.
//If you want to learn how to use Excel, click here// - Cut unnecessary expenses: Buying the new iPhone Xs is not going to make you a better person. Maybe you will arouse the envy of others, but that does not help you build wealth.Going out every weekend has become a habit, so much so that it is like a fixed expense in your budget. Do it less frequently and you will see the results when your savings grow.
- Create an emergency fund: Today you are fine, but you don’t know what might happen tomorrow. You better be prepared. It is important that you learn how to create an emergency fund.
The important thing when saving is to differentiate between what you really need and what you want.
Step 3: Invest appropriately.
Assuming that you are making enough money and also that you are saving a good percentage of your income; It’s time to start investing.
But the idea is not that you leave your money in the savings account waiting for the annual interest to make you rich. That will never happen.
You must start taking risks and building an investment portfolio. This means that you should start investing in stocks. If you want to know more about the subject you can read the article “What is the stock market and how to start investing in shares”
You can invest in properties, bonds, currencies, startups, anyway; there are many possibilities. It is important that you determine how much you are willing to risk. This will depend on your income level and your age.
The younger you are, the greater the risk you can take. The sooner you start investing, the more time your money will have to grow.
Conclusion.
The 3 steps to build wealth They are not a mystical formula that will make you rain money from one day to the next. You must be extremely dedicated and patient if you really want to see results.
We hope that they give you a clearer vision of things and that you put them into practice 🙂
And finally remember, if you are really interested in creating your own business, you can purchase our book “How to create a company while working: Discover how to manage your time, manage your money and motivate yourself while creating a company and working for another” , where you will find all the information you need to found your own company, without having to leave your job.
