Building the wealth you need to meet life’s challenges requires imagination, focus, discipline, and time. The process is more complex than ever before because the economy has become so volatile. The task can look daunting, but your odds of success are better if you follow these ten steps:
- Develop a plan.
What are the results you want to achieve? Identify your values, priorities, and dreams. Then work backward so that you have a plan with the ultimate goal firmly in focus. Make sure your goals are realistic and attainable, and that you’ve identified the potential challenges, consequences, and risks.
- Execute YOUR plan.
Creating a plan is one thing, executing the plan is something else. Your investments should be customized to your needs, so don’t compare your portfolio to those of your friends. Wanting what other people have will never get you what you ultimately need.
- Pay yourself first.
Yes, it’s a cliché, but it is also true. If you have the opportunity to participate in a workplace savings plan, maximize your contributions before you take any pay for yourself. There are good reasons for paying yourself:
- Employers often match a percentage of your contributions. It’s free money, so take advantage of it.
- By contributing to a savings plan, you get used to not having the money – and not spending it. It gives your funds the opportunity to reap the benefits of compound interest.
- Contributing to a workplace savings plan allows you the benefits of dollar-cost averaging. That means you’re making regular contributions to your plan, regardless of what may be going on in the financial markets, and reducing your exposure to market volatility.
- Don’t be too conservative.
With today’s low-interest rates, it makes no sense to invest all of your money in a bank account or in savings bonds. You simply won’t be able to build true wealth. You have to take some risks and learn to be comfortable with them. Investing in a properly diversified portfolio can help you strive for higher returns while also limiting some of the risk of markets. When market drawdowns occur, take advantage of rebalancing your portfolio.
- Don’t swing for the fences either.
Get-rich-quick schemes are just ways to lose money quickly. For every great business investment, there are five that fail. If you hear someone say he has a “can’t fail” investment, be skeptical. Be very skeptical. Look for experts who can vet the idea and help you decide if it’s real or a delusion.
- Pay attention to the little things.
Over time they add up. Make your own coffee instead of stopping at the gourmet coffee shop. Prepare your lunch at home and bring it to work. You can have fun and still limit your spending. Invite your friends over instead of going out. A special romantic dinner can be more meaningful when you make it together, at home.
- Make saving a family affair.
Educate your children and create a legacy by saving for things that are meaningful. Share the plan with your family and have everyone participate in the success of hitting a financial goal together.
- Get professional advice.
Heritage Financial Planning can help you clarify your goals and identify any gaps in your financial life. He or she will help you construct your personalized, comprehensive plan that takes into account your cash flow, assets, savings, and insurance needs while keeping in mind your goals for retirement, your estate, and the legacy you hope to pass on. Expert help can involve costs, but good advice more than pays for itself.
- Revisit your plan.
Of course, life isn’t static – and neither is your plan. Your needs and goals may change over time. There will be inevitable bumps in the road and unexpected developments and detours. At times you’ll need to reevaluate your financial strategy and make adjustments.
- Remember, wealth is not just about money.
Wealth is much more than your net worth. It’s about family security, meaning, and purpose. It’s about living life on your terms.
The economy may be volatile, just like the ocean. Your plan will help you navigate safely and allow for course corrections along the way. The challenges apparent in the global economy may very well end up being opportunities to build your wealth.
Heritage Financial Planning is here to provide guidance, resources, and advice for the betterment of your future. If you have any questions or concerns, give us a call at our office at (574) 606-4406.
- Adapted from original article: 10 Best Ways For Building Wealth In Today’s Economy (letsmakeaplan.org)