For the majority of us, the wealth building process does not happen overnight! Here are five starting points for the modern wealth builder:
1. Understand where your money goes
What are your fixed monthly expenses? How much wiggle room do you have for discretionary spending? In order to grow your net worth, you must first understand how much money you can afford to put towards your savings and investments on a consistent basis. Even if you’re not sticking to your budget on a monthly basis, being able to review what you actually spent is important for projecting out savings goals.
2. Have a dedicated cash cushion
Responsible wealth builders have a dedicated cash reserve at all times. This is so they are not dependent on their investments to pay for life’s unexpected expenses. Having a cash cushion also allows the modern wealth builder to invest with confidence and stay disciplined to their investment strategy.
3. Take advantage of employer benefits
Modern wealth builders take advantage of employer benefits and don’t leave free money on the table. This includes taking advantage of an employer match through a workplace retirement plan and making the most of other pre-tax benefits.
4. Have a hierarchy for investing accounts
Modern wealth builders have a hierarchy for investing in the different types of tax-deferred retirement accounts. Making sure to utilize tax advantageous accounts first will help improve a wealth builder’s bottom line net worth.
5. Invest based on goals and controllable factors
Modern wealth builders are concerned with investing based on the goals they are trying to accomplish. They focus on the factors that are within their control and tune out the noise of financial media.