Wealth. The golden ticket, the pot at the end of the rainbow, the prize behind door three. Many people will confuse wealth with some magical formula or lucky roll of the die. The truth is, generating wealth comes down to just 3 simple things. Master these early in life, and you will be on your way down the yellow brick road.
1. Live Below Your Means
This is the easiest and most obvious step to generating wealth. Don't spend more than you make! Yet, this is the step that most people cant get past. Many American households find themselves in debt and chasing their credit card and mortgage payments the rest of their life.
If you make $1000 a week, don't spend $1200. Set a budget and a goal to spend $900, $800, or even less.
Make a budget. It's easy. Write down every expense you have in a given month. Now cut out anything you don't need, or can live without. Add up all of your remaining expenses. Is this number more than your monthly income? If so, you need to find a way to increase your income (see number 2).
2. Increase Your Income
Most people try and save money when they need extra cash. Instead of trying to save a few bucks, work towards earning more. The ceiling is higher on earning than the amount you can save by eliminating.
Want to know a secret about these wealthy people? They have multiple sources of income. Maybe they have a side business or investments that pay dividends or a hobby that pays money and offsets taxes. Maybe they even just find ways to gain bonuses or raises by learning and training. The point is that multiple incomes and/or growing your current income is how to generate more money. With more money you can start on step 3.
3. Invest Early and Often
Investing your money is ultimate life hack. Investing your money (into stocks, real estate, business), allows your money to go to work and make more money while you are busy doing other things.
The earlier you start investing your money the longer you allow it to compound. Compound interest is the 8th wonder of the world. Your money makes more money - and then that money makes even more money. The earlier you let it get to work, the bigger the pile will be later in life (goal: financial independence).
Adding to your investments on a regular basis is like throwing more fuel on the fire. Setup a weekly or bi-weekly automated system that adds to your investments each week. Have your paycheck automatically deposit into your brokerage account. Visit your account each week and buy more shares of your favorite stock.
Wealth is not some magical tap of the wand for the chosen ones or lucky roll of the die for the lucky ones. Wealth is something we can all achieve with a little hard work and smart investments with our money.