There are 3 core steps to building wealth. Making more money, saving more money, and investing more
money. And my goal for this conversation is to speak to each of these steps in a way that's
easy to learn and understand. I'll break down why it's important and how to get started with
very easy examples that you implement starting today. Plus I have a tool for you that will help
lower the barrier of entry into investing and wealth building, and that tool is Wealthfront.
Now Wealthfront is a company that pioneered automated investing services and they make it
beyond easy to get started with not only investing but also understanding what your money is doing.
One thing I strongly believe in is that you should never put your money into something you don't
understand, especially investments. This is a rule I live by and one I want to encourage
you to follow as well. But Wealthfront is very upfront with showing you exactly how
and where your money is being invested. Plus you can easily change your risk score
depending on your risk tolerance when it comes to investing.
I mean they truly make investing easy, affordable, and accessible
by filling the gap between what you don't know and what you already know. They also
offer a range of investment accounts—which we'll talk more about later on in this conversation.
So, if you're interested in learning more or if you're ready to get started now,
all you need is a few minutes and $500 to open an investment account and they take care of the
rest. I'll leave my link down in the description below for you to check out, plus I'll be available
in the comments if you have questions. And thanks to Wealthfront for sponsoring this video.
Alright, let's talk about making more money,
because regardless of where you are on your financial journey, increasing your
income will always have a positive effect on your ability to build wealth in your life.
Now in order to do this, I'd suggest having multiple income streams. This is the most
fundamental step to building wealth, because not only will you be setting yourself up to have more
money flowing in every month, but you'll also be protecting yourself because you'll never
be dependent on just one source of income, for example, your job, to take care of you and yours.
This is important because let's say, for example, you lose your job or the company
you work for decides to implement pay cuts or go out of business. What are you going to do? Now,
sure, you can easily apply for another job but you'll still be sitting in the same boat,
with only one stream of income. So other than your job, it's best to have multiple streams of income.
Here are a few ways you can increase your income and build wealth fast.
Number one: Take up high-paying jobs.
Now I know I just mentioned that relying on your job as your only source of income is not
the best idea, for reasons like what if you lose your job, or what if there's a pay cut.
And I still stand by that sentiment, wholehearted, however, I wanted to
mention high-paying jobs because this is still a very viable option for many people.
So maybe this means asking for a promotion at work or making the decision to change
jobs in order to move up the pay ladder. Now something I want you to keep in mind,
is that more often than not, a pay increase also comes with an increase in responsibilities.
Don't think that you'll be paid more without doing more work.
That's not the way works. So before you ask for that promotion, or apply for that job
make sure you're willing and able to provide value in return for the additional pay.
Number two: Venture into business.
The wealthiest people in the world are not employees, but business owners and founders.
Therefore, if you have a business idea that can increase your income, get started.
Now, let me be the first to tell you entrepreneurship is not easy.
It requires a ton of work and very long hours, especially in the beginning.
And sometimes you might have to continue working that nine to five
until your business grows and makes enough to support you and the business itself. However,
the income potential is essentially limitless. Regardless if your business is small or huge,
as long as you're providing value that your customers need, you'll grow and make money.
Number three: Start a side hustle.
Now even if you have a job that pays well, or has a track record of being pretty reliable,
you still don't and shouldn't rely on your paycheck. So consider exploring
your options for running a successful side hustle that can increase your income. Maybe
you can turn your talent or hobby into monetary value during your free time.
Some examples include: working as a virtual assistant; a freelance writer,
editor, and designer; online or in-person tutoring and coaching; coding and app development;
driving for Uber or Lyft; maybe it's selling your baked goods if you throw down in the kitchen;
flipping furniture if that's something you're into; maybe it's starting a YouTube channel
or a Podcast if you love talking and have a valuable message to share with others.
See you're options for starting and building a successful side hustle are endless.
All you have to do is ask yourself, what skill do I have? or what service can I offer?
That other people are already paying for or willing to pay for.
Number four: Lower expenses and pay off debt.
When it comes to increasing your income, most only think about ways to make more money,
but I want to challenge you to also think about reducing how much money you have going out
every month as an easy to keep more of your money—essentially giving yourself a raise.
So, take a hard look at all of your monthly expenses and decide what can you cut from your
life and stop paying for. If it's debt-related, devise a plan to pay it off as soon as possible.
Because the math is simple. The less money you spend every month, the more money you keep, and
the more you keep the more you have to put towards other things such as investments for your future.
Now, I already put together a guide to frugal living: how to save more money
that I'll link to below. This is filled with ideas to help you lower your expenses and save money.
Definitely check that out if you haven't seen it.
Speaking of saving money, this is another crucial step to not only building wealth but
also financial confidence and financial security. Because having money saved, is like building
a house on a solid foundation. When it rains, you'll have nothing to worry about because you
know your house isn't going anywhere. But when you don't have money saved, it's like building
a house on top of sand, and when it rains, and it will rain, your house won't be protected.
Here are a few things you can do, to save more money, and as I mentioned I'll link to that guide
I did on how to save more money if you want a more comprehensive breakdown with tips and examples.
Number one: Create a budget.
A budget is your financial plan and it doesn't mean you broke, it means you're wise. See,
having a budget is how you tell your money where to go and
how to behave before it's given an opportunity to act out.
It can also help you determine the things you can cut in order to increase your savings.
Now the best way to get in the habit of using a budget is by creating a new one
every month. When you commit to being consistent with creating and using a budget,
you'll start to learn a lot about your spending habits. And these learnings will
tell you everything you need to know so you can make the proper adjustments and save more money.
If you're curious about how my wife and I budget and manage our money on a monthly basis,
then check out this video here that I'll link to below, where I walk you through a
5 step system for financial success and how we're using this system personally.
Number two: Build an emergency fund.
Now an emergency fund is a pile of money that is saved and set aside
in a separate bank account for emergency use only.
A general rule around how much you should have saved is three to six months of your monthly
expenses. By doing this you are ensuring that you'll have the money you need to take care of
your responsibilities in case of an emergency—you lose your job, there's another national pandemic,
a car accident, medical emergencies where your
insurance doesn't cover the entire bill, and so on are a few examples.
Now, believe it or not, roughly 50% of Americans have less than one month of their income saved.
That’s just mind-blowing, and we can’t blame anyone but ourselves. So
if you want to improve your financial situation then start saving money
now. Set up an automatic transfer from your checking to your savings and forget about it.
Remember, saving small amounts regularly compounds into a substantial amount over time.
Number three: Live below your means.
Overspending can dramatically impact your ability to save money and build wealth. So if you find
yourself frequently overspending and living paycheck to paycheck, then I highly want to
encourage you to reevaluate your spending habits and cut any and all unnecessary things like eating
out, buying designer clothes, gadgets you don't need, and regular vacations you can't afford.
By doing this it will allow you to regain control of your life and money
so you can set yourself up for financial success in the future.
Now once your debt is paid off, and your emergency fund is in place, with other monthly savings goals
in mind, it’s time to invest. When you invest your money, it can make you more money in return,
much more than you would get from a traditional savings account.
Now, investing your income in the stock market, and in real estate
and retirement accounts like a 401(k) or a Roth IRA, can build your wealth over time.
Talk about changing your family tree. I mean,
I don't know about you but I have major goals and a plan to do just that for me and my family.
See something I've learned personally on this financial journey, as my wife and I
are starting to get more serious with our investing, is that good investing doesn’t
feel like a rollercoaster. Which is why investing in a diversified portfolio is the best way to go.
Now without making this conversation too technical,
I'll stick to the basics for now and just talk about retirement accounts—401K,
Roth IRA, and if you're a business owner, there's a SEP IRA.
A 401(k) is a defined contribution retirement account that employers
offer their employees. So if you have a job, your employer probably
offers a 401K plan where they match your contributions up to a certain percentage.
Traditionally a portion of your paycheck goes directly into this long-term investment account
and you cannot withdraw the money until you reach retirement age,
and at that point, it will be taxed.
A Roth IRA is an individual retirement account that allows for tax-free withdrawals,
once you reach retirement age. However, there are few additional differences here, such as currently
you are only allowed to contribute up to $6,000 a year in a Roth IRA, and unlike a company-sponsored
401K you are not given a match by your employer because this retirement account is an individual
account that you set up and open on your own, which you can easily do with Wealthfront.
And a SEP IRA, which stands for Simplified
Employee Pension Individual Retirement Account is essentially the same thing as an IRA,
except this account is limited to just business owners that have employees.
Now if you don't have a retirement account that you're paying money into consistently every month,
then I want to highly encourage you to do so. Because not only are you putting
money aside for your future self but the money you put into these
accounts can then be invested into the stock market through diversified,
low-cost index funds, where your money is working to make you more money.
Now if any of that sounds confusing to you, because I know it was for me when I first started,
then that is exactly why I mentioned Wealthfront at the beginning of this conversation.
They make it easy to start investing no matter what your knowledge of finance is.
They offer Roth IRAs, SEP IRAs, 401K rollovers,
and a range of other long-term investment accounts that are not retirement-focused.
So if you're ready to start investing and building wealth.
Then you can learn more by clicking the link below.
Keep growing, keep learning and always stay true to you.
I'll see you in the next one.
Peace!