How to Grow Your Wealth: 6 On-the-Money Tips

Our current economy has many wondering whether there is a way to grow wealth.

Baby Boomers hold the bulk of wealth as demonstrated in the chart below. That said, there's still opportunity, and the old adage still rings true, “Opportunity favors those who prepare themselves."

Key Takeaways:

• Setting financial goals is vital for growing wealth. Without it, it would be like trying to navigate a trip without a roadmap.
• Setting a budget, living within your means, putting an emergency fund in place, paying off excess debts and strategically using credit will ensure you are ready to grow wealth.
• Earning more will allow you to put extra money away for growing wealth. Advance your professional skills, change positions, or begin a side hustle to earn more.
• Invest your money. Speak to a financial advisor who can help you set financial goals.

6 On-the-Money Tips for Growing Wealth

What can you do to prepare yourself for growing wealth? Here are six on-the-money tips for growing wealth:

1. Establish Financial Goals

Would you drive across the country without a navigational plan (or, at the very least, a map)? Of course, you shouldn't plan your financial future without a financial road map.

Without a plan, how can you achieve your financial goals? You can't. You need something to work towards.

Since your overall goal is to grow wealth, you need to start planning and setting smaller goals that help you achieve your primary goal. For instance, you can utilize the power of compounding returns on your interest that builds over time to grow wealth to use during retirement.

Basically, you'll be earning "interest on interest" when future interest calculations carry on the original principal and any already-accrued interest.

2. Set a Budget (and Stick to it!)

Growing wealth requires controlling your money, and that requires a budget. It's the only way to stay on track financially. Setting and sticking to a budget will show you how you spend your money, where you can reduce spending, and plan for growing wealth.

3. Set Up Emergency Funds

Emergencies can happen at any moment, and if you are not well-prepared, they can devastate you financially. Not only do you want to ensure that your insurance plans cover you in case of natural or unforeseen disasters, but you should also have money available to use when these emergencies occur.

4. Pay Off Debts

Retiring with debt over your head will not help you grow your wealth. Once you have established financial goals, a budget, and your emergency fund, it is time to evaluate what you currently owe and how you can pay that debt off.

Set up a plan that will allow you to pay this debt off over time. Review long-term obligations (like vehicles, homes, or other properties) for better rates and pay off any short-term debts. Take care of any delinquencies or overdue accounts.

Contact the credit bureaus for a copy of your credit report, even if you think you may know what is on it. Verify that all items on your credit reports are correct, and file claims against fraudulent accounts.

5. Earn More

Earning more money is the best approach for growing wealth. You can save or invest any money you earn beyond living expenses.

• Advance your professional skills: Be the candidate most suited for the new promotion by advancing your professional skills to make yourself more marketable. That way, you can grow your career and your earning potential.
• Consider a job/career change: Perhaps it's time to change positions or fields. It's great to do what you love for a living, but if it doesn't help you grow wealth, it might be time to consider a more lucrative field of business.
• Begin a side hustle: Currently, 45% of Americans work a side hustle - meaning a job beyond their regular full-time job. It includes food delivery services and ride-share drivers or selling goods made through a hobby.

6. Invest (and Invest Again)

Your wealth can grow exponentially over time. You can do this with a combination of investing, patience, and a long-term timeline. (Although, it's never too late to set up a financial plan to save.)

Some can feel overwhelmed when they think about investing because they think it's too complex to navigate. Yet, learning the basics is easier than you think.

Many assume you have to have wealth to invest. That isn't true, either. Here are some ways you can begin your investment planning today:

• 401(k): An employer-sponsored account where the employee contributes to a portion using their pre-tax income. Often, employers match employee contributions to a certain point.
• Roth IRA: Post-tax contribution fund that allows investors to pay tax before contributing to the account, not upon withdrawal.
• Traditional IRA: Similar to a 401(k), contributions are pre-tax, meaning the investor pays tax when funds get withdrawn from the account in retirement.
• Index Funds and ETFs: Index funds and exchange-traded funds (ETFs) are ideal for anyone looking to invest beyond retirement. In the stock market, these funds are an aggregation of securities. They offer low fees and perform well long-term.

Additionally, remember that buying rental properties or investing in land are also investments. You can also grow equity in your home by upgrading or remodeling.

Speak to an Advisor to Develop Your Wealth Management Strategy

Growing wealth requires conversations with financial professionals to help you understand the best path to fit your specific needs and lifestyle. You can discuss the advantages and drawbacks of certain stocks, CDs, savings accounts, mutual funds, IRAs, and other investment options.

Your financial advisor will work with you regarding diversifying your accounts to ensure that you build a broad foundation for your financial goals. That way, if an unforeseen event adversely impacts your portfolio, only one area takes the hit, allowing you and your advisor to work on a strategy to manage these ebbs and flows.

Looking for more tips on how to grow wealth? Contact us today to speak to one of our knowledgeable professionals.