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Steps To Building Wealth

Many people dream of becoming wealthy. They think of the freedom of not having to worry about where their next meal comes from. They do not have to work again if they do not want to. They think of all the places they can travel to. They get to contribute to all the charities they care about. They can buy multiple cars or their dream car. Some people dream of changing the lives of their families. Their loved ones do not have to worry about rent. They would take their children to the best schools in the world? But what are the steps to building wealth?

 

  • Face your reality. The first step in your journey to building wealth is facing the truth of where you are currently financially. You can do this by writing down all your assets and liabilities. Simple tools like spending trackers and budgeting apps can help you know how you handle money. Many struggle with this step, yet it is crucial for wealth-building. Take your time. Correctly define what is a liability and what is an asset. Anything you owe in any form is a liability. Assets are things you do not owe on. Stuff on loans are assets up to the percentage you have paid off.

 

  • Chart A Path: Decide which path is best to reach your goals. Be clear on what you define as wealth. Is it a financial number? Is it not having to work if you don't want to? The plainer the goal, the more likely you will push towards it. Do not fall for generally accepted myths. We believe that a debt-free path is the shortest way towards your goal of building wealth. Though unconventional, thousands of millionaires and some billionaires are debt-free. They chose the debt-free path even when society felt different.

 

  • Be Consistent: Building wealth is generally a monotonous process. Many people have slowed down their wealth-building process by falling for get-rich-quick schemes. If it's too good to be true, it probably is. Whoever hastens to grow rich will not go unpunished. Embrace the basic tenets of wealth-building. Budget. Zero-based budgeting. The process helps you tell your hard-earned money what to do on your behalf. Create structured steps toward your goal. What is your first step? What follows next? What framework will you use to make decisions? We encourage working on a mini-emergency fund first. Then, pay off all your debt except your mortgage, if applicable.

 

Other steps include increasing your mini-emergency fund to a fully funded fund covering your expenses for 3 to 6 months. Then, start investing for retirement. At this point, you are debt-free except for your mortgage, if applicable. Now, invest 15% of your income towards your retirement. If possible, and if you have school-going children, start putting money aside for their school fees up to whatever level you want to educate them to. Then, finish paying for your home and continue investing. Remember to have fun and give all through your journey to building wealth. All the best. You can do this!

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