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Over the years, I’ve learned that building solid wealth-building habits is actually pretty simple.
That’s not to say things are always easy though.
And I mean yeah certain parts can seem overwhelming at first. Especially when you’re just trying to find simple solutions for your money problems.
Not to mention there are just so many voices in the personal finance space that even I get a little flustered trying to sort through it all sometimes.
But I’ve noticed something: a lot of the good personal finance advice out there is just pretty dang clear and simple once you strip it down.
Sure there are different ways to present the info and everybody has their own voice, but at the end of the day, there really are 4 key wealth-building habits that just keeping popping up over and over again.
Now there are many different ways to execute the habits I’m gonna give you here in a bit and I’ll even share some of my recommended ways.
But at the end of the day, if you find ways that work for you implementing these 4 wealth-building habits, you’ll have more money that just about everybody you know. No joke!
So just what are these super simple wealth-building habits?
1. Focus On Your Why
The first wealth-building habit is to stay focused on your why.
Why do you want to pay off your debt?
Why are you looking to save more money this year?
You can even ask yourself why you want to start investing?
Is it just because you’re supposed to? Because if so that’s a pretty terrible reason that may not motivate you long enough to reach your goals.
I mean let’s think about it: we all know we should exercise and eat healthy right? But how many of us actually do it consistently? Not very many!
Why? Because more often than not, we don’t have anything we’re working towards when we do things just because we’re supposed to.
See most of us don’t have a problem saving money. We do it all the time when we need a new car or we’re getting ready to buy a house…because there’s something we’re working towards.
So the question now becomes do you want to pay off your debt so you can have the cashflow to start your own business?
Do you want to save money to have peace of mind when emergencies happen?
Are you looking to learn how to invest so that you can build wealth and quit that job you hate and work in something you actually care about?
Focusing on your why is definitely an important wealth-building habit because it carries you through the tough days.and boring stretches.
Because let’s face it: paying off debt is hard and investing consistently is definitely more boring than using the money to buy your dream car.
Your why keeps you on track.
I created an exercise that will help you start thinking in this way versus just saving money because you have to. You can download it below.
All you have to do is answer the questions as honestly as possible then work on building daily habits that will move you towards those goals.
If you’re married, it’s definitely a good idea to have your spouse do a separate one and then compare and discuss together.
This will give you a greater understanding of why they make certain financial decisions and could lead to less money fights in your relationship as well.
2. Spend Less Than You Earn
From my years of financial coaching, I know most people don’t do a good job tracking their spending.
This is a key wealth-building habit because if you never tell your money where to go, you’ll always be stuck wondering where it went instead of using it to build for the future.
It’s mathematically impossible to grow your net worth operating at a deficit every month. Your expenses have to stay wayyy lower than your income.
Why? Because the bigger the gap between your income and expenses, the quicker you can start stacking a lot of cash.
Listen, I don’t care about your freaking lattes either.
Does having starbucks regularly matter? Obviously. Every dollar counts.
But your focus really needs to be on the big stuff more than anything here.
Like what? Well, I’m glad you asked.
Keep your rent/mortgage below 25% of your take home pay. The lower the better.
This might mean having a roommate like I did for years.
Or choosing a place that actually fits your needs. I mean are you really gonna use that extra bedroom and formal dining space?!?
Or it might mean being patient enough to save more money to put down on a house.
You have to do whatever it is you have to do if you’re serious about reaching your financial goals.
Also, get rid of all consumer debt and quit borrowing money for things that go down in value fast like cars.
Especially new cars that will be worth half of what you paid for it within 3 years.
And don’t get me started on food spending. Most american households spend 3x more than what they should on food every month.
Housing, cars, and food are major budget killers if you aren’t proactive in protecting your money with a solid plan.
3. Invest The Difference
We all know the effects of inflation.
The cost of common items like milk, bread, and gas aren’t close to what they were even 10 years ago let alone 20-30 years.
$3000 per month today just won’t buy you what it did 10 years ago.
What this means is that by not investing “the gap” you found in the last section, your money is losing buying power over time and that’s why investing is such a crucial wealth-building habit to develop.
Let’s say you’re able to save $300 per month by lowering some expenses.
You then put that $300 per month in a savings account every month for 10 years or 120 months.
At the end of 10 years, you would have saved $36,000 which is really impressive!
However, keep in mind the cost of everyday items will rise over the next 10 years. Which means $36,000 in 10 years could be worth way less than what it’s worth today
Now, had you invested that same $300 per month in index funds like we teach in the Winning To Wealth course, you would have over $53,200 assuming a 7% rate of return.
By not investing, you not only gave up buying power, but you missed out on over $17,000 in interest!
Let’s keep going.
Investing that $300 per month from age 27 to 65 assuming a 7% rate of return, would net you a cool $664,000 while saving it would only get you $136,800.
That’s a massive difference!!
If you’re curious about investing but just don’t know where to start, I have an entire section dedicated to teaching you everything you need to know in my course. Check it out by tapping here!
4. Make More Money
It’s pretty obvious that making more money would be a key wealth-building habit.
The thing is, though, a lot of us don’t actually NEED more money which is why this is last on the list.
With that said, make sure you have a good handle on the other wealth-building habits just as much as this one or else you’ll find yourself making more money but not making any traction.
But here are some ideas and ways to make more money.
You can look into some legit side hustles. There’s no shortage in this gig economy.
You can start a social media marketing business. Or even start a blog.
However, one that is often overlooked is simply doing a good job at your day job.
This can lead to raises and promotions that further increase the gap we’ve talked about already.
Wealth-Building Habits Recap
So we have defining (and living by) your why, spend less than you earn, invest the difference, and make more money as the 4 key wealth-building habits.
Just mastering these 4 things alone will ensure that you’re not struggling to make ends meet anymore. And even more so could lead to massive generational wealth for your family.
Do you have any key wealth-building habits you would like to add?
Let me know what they are in the comments.