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How to Build Personal Wealth

How to Build Personal Wealth

Wealth is an essential element that brings a comfortable and relaxed life. Here are crucial tips to help you build a strong financial foundation that will give you financial freedom.

Budget Your Money

Before you spend money, create a budget to guide you on what to buy and how much you can save. This should be a continuous process to help you build wealth. It may not be an easy thing, but once you start, it becomes a habit, especially when you make it a long-term strategy. Create a budget for food, house rent, health insurance, and essential daily expenditures to avoid spending money on unnecessary things. After budgeting, ensure you set aside at least 20% to save and invest.

Pay Off Your Debts

Piling up debts can kill your budget. It also has a negative impact both on your credit history and your ability to build wealth. Therefore, ensure you prioritize your pending debts and clear them quickly before you start saving and investing.

Open an Emergency Fund Account

Sometimes, it’s crucial to diversify and look for other avenues to save money for the rainy days. Some people lose jobs, while others get sick, and some lose property due to natural disasters. To stay on the safe side, ensure you build an emergency fund. Lock it away in an investment or savings account so that you do not get easy access to it unless it is a true emergency.

Save More Money

Savings is never an easy task, but it can be fun when you stay dedicated and disciplined. Start saving money in your investment or saving account as you target long-term investments and try as much as possible to identify suitable long-term investments that can help you generate extra income and save more money. You can also decide to save the money for retirement or your children’s college fund.

Minimize Your Daily Expenses

When you fail to plan well, you’ll end up spending money on things that do not matter. In this case, you need to create a list of what to purchase and what you can do without. Staying disciplined with your expenditures can help you save a lot of money in the long run and channel it towards saving and investments.

Live Within Your Means

Some people often adjust to higher living standards after getting a salary raise or higher business profits, but this can be a big mistake that cripples your investment goals.

Live within your means no matter how much you earn. You don’t have to move to a luxury apartment, go on an expensive vacation, or get yourself a new car at the first sign of a raise. Instead of creating additional expenses, work towards reducing them, and live within the life you can afford.

Ask for a Salary Increase

Negotiating your salary is another way you can increase your savings and level of investment. It may not be easy to ask for a salary increment, and it takes a lot of courage; however, it’s worth every attempt made.

Before you approach your line manager, ensure you check salary rates to see what those in your position earn within the same industry. Once done, summarize your achievements and contributions to the company, approach your boss, and ask for a salary raise. Ensure you have strong backing and evidence showing that you deserve more.

Benefits of Hiring a Financial Advisor

Hiring a financial advisor can help you make great strides in your journey to create wealth. However, you need to know how to choose the best advisor. Here are some of the questions to ask the person before hiring. These questions are summarized from an article called “15 Questions to Ask a Financial Advisor,” and it’s from a firm that practices wealth management in San Diego.

  • Are you required (by regulation) to put my interests ahead of those of your firm and its staff?
  • What are your charges? Do you only charge on a percentage basis of assets under management?
  • Are there any additional costs aside from your charge sheet?
  • Do you only work on a fixed fee, or do you also work bonus-based? If so, how can you earn the bonuses?
  • Are there contests within your company to sell investment products?
  • Who is your clientele? Do you have a specific set of clients?

Once you set your investment goals straight, building wealth will be a walk in the park. It’d be best to work with a financial advisor who can take you through the process. Using the questions above, you can identify the most qualified advisor for the job.

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by Harvey Carr // Harvey Carr is a contributor to Businessing Magazine.

Opinions expressed by contributors are their own.