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Building wealth is not easy. If it were, we would all do it, and then everyone would be rich. Although if everyone was rich, doesn’t that mean that no one would be rich? There’s an argument to be made.
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That’s why building wealth usually means having a leg-up on the competition. You achieve that either by doing something others aren’t, or doing things others are, but more effectively.
We’ll cover a little bit of both here — optimizing the wealth-building habits you are already exercising as well as new strategies to consider. In doing so, we’ll take a look at some recent wealth-building stories from GOBankingRates.
Building Wealth From Home
In the past, we’ve been conditioned to think that building wealth from home isn’t possible. If you want to make money, you have to go out and earn it. While that can help, there are also ways to build wealth from home.
For example, if you’ve got some extra time, you can start with items around your home. You may not think they would be worth much, but your old laptop or guitar could be more valuable than you realize. And if you have rare items, you could reel in even more cash.
Investing on a Low Income
You might think of investing as a wealth-building strategy that is reserved for those who are already wealthy. While that was true to some degree in the past (and you can earn more if you’re already wealthy), it doesn’t mean investing with little money isn’t possible.
These days, there are more ways to invest than ever, including fractional shares and investing your spare change. These new investment methods do not require you to have hundreds of thousands of dollars. Whatever you have is enough to get started.
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Building Wealth With a Low Income
Similar to the previous point, it is also possible to build wealth regardless of how much you make. Yes, building wealth with a low income is possible. It just means you will have to be extra smart with your approach.
You will have to start early, live within your means, and make smart choices with your investments. While building wealth with a low income is a little more challenging, that’s not to say it can’t be done.
Increasing Your Take-Home Income
Increasing your take-home income is a common wealth-building recommendation, and it makes sense. After all, you can only cut so much from your budget, but there is (in theory) no limit to how much you can make.
There are many ways to make this happen, and negotiating a raise is far from the only one. In fact, GOBankingRates has a list of 30 ways to increase your take-home income. Other options include increasing your 401(k) contributions, cashing out vacation time, and adding value to your company.
Starting a Side Hustle
If you have worked on increasing your take-home pay but still want to make some extra cash, another option to consider is starting a side hustle. Of course, certain side gigs pay more than others. Some can even make you richer than a full-time job.
And there are many more possible side hustles than you may realize here: everything from lawn care specialist to project manager and fashion consultant are possibilities. In other words, don’t limit yourself to just your day job if you want to build wealth.
Building Wealth in Your City
Remember the point from the introduction: in order to build wealth, you must have a leg-up on the competition. Whether you want to think of your community as your competition or not, it’s true — wealth-building requires making more money than those around you. But that amount can vary a lot depending on where you live.
Indeed, how much you need to be “rich” in major US cities can be a night-and-day difference. By “rich” here, we mean in the top 20% of earners. In Detroit, for example, that amount is just $70,445. But in San Francisco, it’s $250,001. Depending on where you live, you might be richer than you realize.
Avoiding Mistakes That Deplete Your Wealth
Net worth is defined as the sum of all your assets minus liabilities. While we have mostly focused on increasing your assets, you must also ensure that your assets aren’t depleted — and that your liabilities don’t get out of control.
There are many mistakes that deplete your wealth. Whether it’s not adhering to your budget, investing blindly, or ignoring interest rates, your wealth can disappear quickly if you don’t manage your money the right way. Increasing your income can make it easier to avoid depleting your wealth entirely, but even those making six figures can be living paycheck to paycheck.
Thus, if you want to build wealth, you must focus not only on increasing how much money you are bringing in, but also not making these wealth-draining mistakes. If you don’t, all your efforts could be in vain.
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