Five Simple Ways to Create Wealth

An article from Money Central gives us five simple ways to create wealth (add to your net worth). The article starts by saying:

There is no one road to wealth. But you can put the odds of creating wealth on your side by following a few simple precepts.

Here are their recommended five steps:

1. Spend less than you earn. This is often the most overlooked scenario, because many people believe it's a matter of cutting back on your current standard of living -- a strategy that's almost impossible for most people.

Stop looking at your budget as a fixed pie that must be cut up into different size pieces to cover your regular bills for housing, telephone, electricity, car expenses and insurance. Instead, concentrate on thinking about how you could expand the size of the pie.

Take a look at how you're spending your time, as well as your money. Perhaps instead of dining out this weekend, you could earn an extra $100 by becoming a waiter or bartender. Instead of shopping at the mall, you could be a salesclerk earning some extra cash. Instead of paying for a baby sitter, you could take care of a few other children on Saturday or Sunday, freeing working parents to do their errands. Then, instead of spending the extra money you earn, you should invest it so the money can work for you.

2. Make your money work as hard as you do. The real secret of financial success lies in making your money do the work, so you can relax. But that requires accumulating enough investment dollars so that the growth and earnings can free you from the need to punch a time clock. Many people argue that they'll never get to the point where they won't have to return to work because they can't afford to set money aside today. But don't overlook the power of compound interest.

3. Make sure your money is working for you, instead of against you. Just as your money can work very powerfully for you if you make the right decisions and stick to a plan of regular investing, wrong money decisions put potholes on the road to success. The classic example is credit-card debt.

4. Remember: If you don't see it, you won't spend it! If you take a close look at your paycheck, you'll notice a lot of deductions before you get to the amount you can cash or put in the bank. Money set aside for wealth building should be treated in the same way.

If your company offers a 401(k) retirement plan, make sure you sign up for the maximum possible contribution. It will be taken out of your paycheck automatically. (And if your company matches all or part of your contribution, failing to sign up is like walking away from free money!)

If you don't have a chance for automatic deductions to a company savings plan, then you'll have to create your own automatic savings plan. See if your company will deposit your paycheck directly into your bank account -- or promise yourself to do it the day you receive the check. Then sign up for an automatic monthly deduction plan with a mutual fund company to create regular deposits into an IRA.

5. Create savings and investment goals. Set your own goals. But never set a goal you can't control. Your targets can't depend on your boss giving you a raise; they must be reachable by your own efforts. You might need to invest in yourself by acquiring more education so you can qualify for a job that pays more. You might need to take more risk in your investments, or in your lifestyle by taking on a job that pays commissions instead of a fixed salary.

Yes, these are certainly simple. But in the world of money management, simple steps are often the most effective.

Update: Submitting this to the Carnival of the Trackbacks.

Update 2: Linking to the Beltway Traffic Jam.

Comments

[Fuzzie]

Real wealth: Great Fishing!
The fishing results: no fish.
If you think that is the whole story, stop reading right now....

The secret is simple: It’s not about catching fish, it’s about spending time with dad.

[henok]

it is good

[samuel olorunsogo]

how can I get more information

[joe]

send me more potential ways on how touse time and make wealth

[Adam @ Mindsofwealth.com]

i Think this is a solid article. Goals are one of the most overlooked areas in life period. nice writing!

[The Create Wealth From Home Guy]

That is a good article. I was looking for something more on the side of increasing the
revenue side of the equation, but I am sure that astute spending implies the that.

In today's economy however, isn't this still a huge uphill struggle?

Anthony

[Dome]

Good article. Send me more articles that can make us rich .

[yusufu apagu mussa]

what if the person that want to rich have nothing to start and is not a salary and having no sursess of income but having business and is a biginner in life.

[walter enang]

Money is not wealth.Money comes from wealth and wealth is what people need or want.If you want to be rich,create or supply what people want and money will follow as a result.Simple but not very easy to follow if you have not had the basic required mindset.Wealth is what we want,and not money. But if wealth is the important thing, why does everyone talk about making money?

[Jake]

I liked the article. Its very true that the simple truths are just these. Its not a complicated concept, just sometimes circumstances make it difficult. We need to stop trying to live like everyone else and live according to your means.