There is no fast-track way to becoming sustainably wealthy. Wealth-building takes time and a particular set of regular habits to manage your money and achieve and maintain financial freedom. It’s likely that you already show signs of financial stability such as having little to no debt, having a solid emergency fund, and continuously growing your net worth, but integrating further qualities like consistent saving and planning, frugality, and clever investing will push you further, enhance your personal development, and grow your fortune over time.
In this post, we will talk about the pillars of a wealth strategy, highlight several money-saving tips for the wealthy, and discuss some of the key habits associated with creating fortune as well as how to apply them to your daily life to enhance your overall wealth and maximise long-term returns.
The 4 pillars of a wealth strategy
Whilst there are no clear-cut methods that’ll work for everyone, there are some common values that can be applied to your wealth-building strategy. Particularly revolving around areas like self-development and making meaningful choices, here are four pillars that could help with building sustainable long-term capital.
Ultimately, building wealth means increasing income, but there are several ways to do this other than simply having a well-paid job. Enjoying what you do is important, and a meaningful career is a common driving force of a wealth-building strategy. Self-employment is popular amongst the wealthy, but although 80% of millionaires own their own profitable businesses, other important factors that contribute to the success of making money is being frugal with your spending and making clever investments.
2. Accumulating assets
Property is a valuable asset. On top of your primary residence, real estate is a long-term investment that can prove to be lucrative over time through price appreciation (be it inflation or property development, or a combination of both) and rental income. You can also consider assets that generate passive income such as property bonds, common stocks, or mutual funds.
When looking at the topic of debt, it’s important to understand the difference between good and bad debt. “Good” debt adds value to your life and goals, whilst “bad” debt diminishes them. For example, a mortgage on a property is good debt as it allows you to make a meaningful investment that is likely to generate growing returns, whilst credit cards are a form of bad debt due to high interest rates. So, use debt to create leverage – borrow for the right reasons and with low rates. Also, if possible, refinancing or adding extra funds to your repayments can reduce the length of your mortgage and, therefore, add to your savings.
Not all valuable practices are monetary, and physical, emotional, and educational wellbeing is just as important as financial. Invest in your self-development through a good diet, a healthy sleep schedule, and regular physical exercise, as well as continuous learning – anything that makes you feel energised and productive will contribute positively to your wealth-building capabilities.
On top of the above pillars, saving and budgeting are essential to a successful wealth-building strategy. Whether it’s for your next investment or an emergency fund, consistently planning, saving, and working towards your goals can help accumulate wealth and achieve financial security. Here are a few good money habits that can boost and optimise your savings:
1.Pay yourself first
Invest in your future self. Some of the world’s wealthiest people swear by the ‘pay yourself first’ rule. Whether it’s 10% or 20%, this is a fixed portion of your salary that is set aside each and every month and builds up your savings pot or investment pot. Having a fixed amount also helps normalise and maintain the habit of saving.
2. Set a fixed budget
A key to maintaining wealth is to have a fixed budget. This means knowing exactly what you can afford and sticking to it. A popular budgeting method is the 50/30/20 rule, which simply means allocating 50% of your income to needs, 30% to wants, and 20% to savings. Another way to manage your budget is to follow these guidelines:
· Dedicate a maximum of 25% of your income to housing costs
· Dedicate a maximum of 15% to food
· Limit your spending on entertainment to a maximum of 10%
· If you have or are considering purchasing an extravagant car on a loan, limit this to no more than 5% (94% of the wealthy buy their cars outright rather than leasing)
Ideally, you should try to have 6 months’ worth of living expenses in your savings and contribute what’s left to your retirement pot.
3. Practice frugality
Frugality is your best friend when it comes to building wealth. Once you pay yourself first and determine your budget, living off the remainder in a savvy and prudent way is a principal habit that will maximise your savings and, therefore, the funds you can dedicate to a worthwhile investment. This means avoiding any unnecessary luxuries and, instead, practicing responsible spending through methods like bulk buying and bargain hunting.
The trick with any of these methods is to keep your strategy consistent and disciplined. Saving and budgeting should be a regular part of your daily life – like second nature. Run the numbers, find the budgeting split that works for you, and make it a habit to stick to it on a regular basis. The next step is to enhance and preserve your money.
Habits that help maintain a wealth-building strategy
Success isn’t determined simply by the size of your savings, it’s also about your attitude, outlook, and daily habits. To maintain your wealth-building journey, there are certain common behaviours amongst successful people that promote wealth, such as:
1.Read every day
Your education shouldn’t stop after graduating from university, and the idea of reading every day goes back to investing in your self-development. Enhancing your knowledge will make you more valuable and help you keep up as the business world progresses. It’s been found that 88% of wealthy people read for at least 30 minutes each day and others listen to audiobooks, catch up on daily news, or read up on history. By reading a little more every day, you’re improving yourself, growing your knowledge, and increasing your value.
2. Set yourself goals
Having a goal to work towards fuels your passion, dedication, and energy. Each year, 70% of wealthy people set themselves a major target to aim for, giving them the persistence and focus they need to be successful.
3. Engage in networking and volunteering
Associating yourself with like-minded people can boost your optimism and enthusiasm, keeping you focused on your goals. It’s equally important to avoid negative influences, which can throw you off track. Volunteering at least 5 hours a month is one way that wealthy people expand their network and surround themselves with positive people whilst giving back to their community.
4. Support others
This is another way of engaging with like-minded people that are goal-orientated like you. Helping others succeed can aid your own achievements through sharing positivity and thriving in the mutual pursuit of success.
5. Create your support network
Another form of surrounding yourself with the right people is creating your own financial and supportive team. This should include the likes of accountants, wealth managers, and real estate brokers – a robust team that forms your support network and help you meet your goals.
6. Have multiple sources of income
Having more than one revenue stream increases your savings and wealth-building capabilities. Examples of additional sources of income among the wealthy include rental properties, stock investments, and stakes in other businesses.
Wealth-building with Propiteer Capital
Propiteer Capital can help with your wealth-building strategy by offering asset accumulation, investing in lucrative property, and generating long-term returns. With the Propiteer Capital Property Bond, you can grow your money through asset-backed real estate, allowing you to plan your goals and finances easily whilst benefitting from a diverse and profitable pool of developments on a regular basis. Our bond is also fixed-rate, so you can remain in control, knowing that our rates won’t decline throughout your term. The returns from your Propiteer Capital investment are also an excellent opportunity to expand and add to your income sources.
Recommended Read: Personal Finance Tips from the Wealthy to the Wealthy