When it comes to wealth building, having a plan is the most important thing, but there are also a lot of little actions to make that will make a difference in the long run.
MagnifyMoney co-founder Nick Clements spent years working in banking before founding his own business, so he knows a thing or two about the process of building wealth.
The following are some steps he’s picked up over his 15-plus years of experience in the business that could help put you on the road to wealth today.
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Eliminate expensive credit card debt as quickly as possible
It’s impossible to build any real wealth with a mound of credit card debt hanging over your head. Consider a balance transfer to a 0% interest credit card that you pay off before you start accruing interest on it (here are some of the best ones on the market today) or look into a personal loan where the interest rate is better than that which you’re paying on your card (use this story to determine if a personal loan might be best for your situation). Getting out of debt quickly is the most important step you can take on the road to building your personal wealth.
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Stop spending money on depreciating assets
Living within your means is one thing, but just because you can afford that fancy new Audi doesn’t necessarily mean you should. When it comes to purchases, some large-ticket items are worth it in the long run (see below), while others, like fancy cars, only depreciate the moment you purchase them. Think wisely before buying — if an item is only likely to significantly decrease in value, it’s probably not worth it.
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Put as much of your money as you can into assets that will appreciate over time
On the other hand, throwing your money into things like the stock market or a great home is a good decision, since history shows us that these items tend to actually earn us money the longer we hold on to them. Putting your money into things that will help you build wealth while you sit back and watch it happen is one of the great secrets of the already wealthy.
Just make sure that you don’t take on too much leverage when you buy a generally appreciating asset, like a home. The people most negatively impacted by the 2008 crisis were forced to sell their homes at the bottom of the worst real estate market since the Depression.
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