A goal like wealth accumulation is an excellent step to help you get closer to financial freedom and a luxurious retirement. Making choices like getting out of debt, using cash, and investing properly will help you get closer and closer to your goals.
Wealth accumulation isn’t something that will happen overnight, but it is something that is possible for almost anyone. If you look at a few simple steps written in this guide, then you will be able to begin accumulating wealth.
Let’s Define Wealth Accumulation
Wealth accumulation is an important step in adulthood that not only can be fun, but essential for a comfortable lifestyle into retirement. In order to build a retirement, you need to know how to build wealth.
Through a few simple steps, you can look at growing your wealth into the millions. While it might sound like a far-off dream, it really isn’t.
Related: How Much is a Million Dollars?
With a few simple tips and tricks, you can get out of debt and begin working toward financial freedom (learn exactly what is financial freedom).
Being wealthy does not mean being rich (read rich vs. wealthy). You don’t even have to have millions of dollars to be considered wealthy.
What you need is to accumulate enough wealth to allow yourself to lead the life you want to live. That’s it.
For some, this is millions, for others it’s just enough to cover basic living expenses.
Wealth=time freedom/financial freedom.
Why Do You Want to Work Toward Wealth Accumulation?
When you begin to work toward wealth accumulation, it is important to understand that it won’t happen overnight. Depending on your current financial situation, you may or may not need to map out a plan that could take years.
Here’s the deal though- the time will pass anyway. Why not start with some small steps to help you accumulate wealth?
When you decide to work towards building your wealth, you are making an investment for your future self and your family. To have hundreds of thousands (or maybe millions!) in assets and savings means that you will have the financial freedom to truly live your best life.
Think about your life in 20 years, where do you want to be? Do you want to still be working and tied to a job that doesn’t fulfill you or have your mortgage paid off and planning your next trip to Hawaii? I know what I would choose!
It will also help you if you hit any type of financial hardship (lose a job, get an illness, etc.) – if you’ve accumulated some wealth this should be less difficult to manage.
So what are you waiting for? There are several key steps to wealth accumulation- keep reading to learn all about them and how to apply them to your own life…
Key Steps to Wealth Accumulation
There are a few steps that you need to take to start your wealth building journey.
Create a Budget
Whenever I first begin talking about creating a budget, there are always those readers that sort of drift away. I get it- it can be scary to start looking at your spending habits! If that’s you, it’s okay.
Just know that creating a budget is essential to wealth accumulation and I want that for you!
Creating a budget is simply telling your money where it should go and helping you hold yourself accountable. You can do it! Plus, there are plenty of awesome tools out there to help you get started.
For one, there are budget apps right on your phone that help you with your spending or some incredible books about budgeting. Getting a few resources will help your new budgeting lifestyle be a success for sure.
Pay Off High Interest Debt
If you take the time to budget, the best thing that you can do is to implement a system to help you pay off high interest debt. No matter how much you owe, looking at the interest can help you understand how much you are actually paying. In some cases, you pay almost double! That’s absurd.
When you are paying off anything with an extremely high interest, wealth accumulation will seem farther and farther off.
Instead of eating out for lunch each day, consider making a sandwich at home and putting that money saved toward paying off your car. Better yet, trade the car in for something more affordable so that you owe less in the end.
If your interest is high on something like your mortgage, consider refinancing or adjusting your lifestyle to live a mortgage free life. Even if it’s not, paying off your mortgage can be a huge weight off your shoulders.
Create an Emergency Fund
An emergency fund is one of the most important factors when you are attempting to accumulate wealth.
Whether you chose to save one thousand or five thousand dollars, having this emergency fund will be helpful when bad things happen. It’s just a factor of life- the car tires will go flat or the basement will flood.
When you have the funds ready to pay for whatever life throws your way, then it will help you save money in the long run. Instead of putting the emergency on a credit card where interest is high and it ends up costing you more.
Pro tip: set boundaries on this emergency fund so that it isn’t used for an ‘emergency shoe sale’. For my family, we allocate the emergency funds specifically to medical, transportation, or home emergencies. We also have to agree on spending it before it so we are on the same page.
Earn More Money
If you want to accumulate wealth, earning more money is always an excellent place to start. Luckily there are plenty of ways for you to increase your income to go toward your savings, paying off your debt, or buying that new kitchen table that you love.
One of the best ways to earn more money is to ask for a raise. Yes, this does take a little bit of work to make sure that you can prove that you deserve this raise, but it is possible.
If you were hired to increase sales and you can prove that in this past year you were able to do that by 30%, then justifying a raise should be easy. If they decline you, maybe it’s time to start looking for a new career with better pay.
Another way to increase your monthly earnings is to start a side hustle. There are countless side hustles that can help you earn more money to help you reach your wealth accumulation goals!
- Low Cost Business Ideas
- Best Night Time Jobs
- Freelance Writing Jobs for Beginners
- Bakery Business
- Become a Virtual Assistant
- Make $500/Month With Surveys
I am not going to lie- when I first started looking into the key factors for successful wealth accumulation, investing is the one that scared me the most.
If you don’t know much about investing, it can feel like you are giving away your money in an attempt to make more. It’s a gamble and that can feel uneasy.
If you sit back and do some research, however, you will quickly see how simple (and profitable) investing can be when done correctly. Surprisingly, there are over 10 ways to invest your money in a way that will help you reach financial freedom.
Have the Right Insurance
Investing in the right insurance for you and your assets is essential to wealth accumulation! Each plan is different and will cover different needs so make sure that you know what you are paying for so you don’t end up wasting money.
A few years ago, I started researching my car’s insurance to see if a cracked windshield was covered. I discovered that I was paying over one hundred dollars each month to cover mileage on my car that I wasn’t driving anymore.
Since I work from home, I only drive my car a few dozen miles a month, but I was still paying like I was driving into the city.
You can look into every type of insurance plan that you pay for just like I did and adjust at any time. If something in your life changes, take the time to look at your package to make sure that it still fits your lifestyle.
There are also ways you can use insurance for wealth accumulation.
Tips and Tricks to Stay Motivated
The 6 key steps listed above are essential to help you manage your money to begin accumulating wealth. The next question is, how do you stay motivated to help you on your wealth accumulation dreams?
Here are a few tips and tricks to help you stay driven to reach your goals!
Look at your Spending Habits
Take a good long look at your spending habits and see if everything that you are buying is essential. Yes, that latte was essential after a night up with a sick kid and now you have a presentation to give at work- but was it essential the following 5 days?
Every once in a while, I like to look over my bank account statement to see what choices I have made with my spending. It can be difficult, but taking an honest look at my finances helps me realize what could go into my savings for retirement or a big trip.
Hit a Financial Milestone
Nothing is more motivating to me than a financial win. Whether it is saving up a few thousand dollars for the emergency fund or paying off that annoying credit card bill, that small win always helps me get excited to keep going.
You may have heard of it as Dave Ramsey’s Snowball Effect. Look at a small, attainable goal that you want to hit within the next month or so.
Whatever that goal is, do everything in your power to conquer it and the next one won’t be as scary.
Create a Vision Board
What better way to feel motivated than when you are crafting? Get out the crafting supplies and get started on the vision for your financial future!
Wealth accumulation doesn’t happen overnight and a vision board is the perfect way to remind you of your dreams.
Write those big scary goals down and put them somewhere that you can visualize every single day. The more you see it, the more those dreams will become part of your day to day thinking.
Soon, they won’t seem so big and scary, but instead they will be attainable steps to a wealthy future.
My advice? Grab some wine, a charcuterie board and a good friend so that you can dream big and craft together!
Set a SMART Goal
If you want goals that you will be able to focus on and know when you succeed with them, then you want to make sure that every financial goal that you set is a SMART goal– Specific, Measurable, Attainable, Relevant and Timely.
Often, we set goals like ‘pay off the Sears credit card’, and while a goal like that seems nice, it isn’t very actionable. If you want to turn that goal into a SMART goal, you need to add more details.
For example, your goal is to pay off the Sears credit card in the next 3 months by contributing an extra XX every other week. This way you can actually track your performance each week to your goal.
Using cash is one of the best kept secrets in the financial world! There is something about using that $100 bill to pay for something as opposed to swiping a card.
Buying things with cash makes you think differently on how you spend because there is an emotional attachment to it.
The best way to use cash and stay within budget is to use a cash envelope wallet. It allocates how you will spend the cash for the month and help you reach any financial goals you have on your way to wealth accumulation.
Creating a life with by building up your wealth is an excellent goal for your future. With a few simple steps, you will be surprised at how much you can save and put toward your future.
Between saving for an emergency fund, finding the right investment opportunities, and updating your insurance, wealth accumulation is possible.
So tell me… are you committed to accumulating more wealth this year? What steps are you taking towards financial freedom? Tell me in the comments!