You don’t have to be born with a silver spoon to build wealth throughout your life. You don’t even have to be a financial expert. A few simple principles can help you acquire and build wealth over a lifetime.
Go to College
The key to accumulating wealth is to make more than you spend. Going to college is one way to increase the likelihood of making a high salary. Do your research to find out what industries are growing and which ones are the most highly paid, and choose one that interests you. You can take out loans to finance your tuition costs, including student loans from private lenders. The process of checking your eligibility for private loans is usually quick and easy.
With the exception of your student loans and the mortgage on your home, you should avoid going into debt. This means only using credit cards if you can pay off the balance monthly and postponing the purchase of things you want until you have saved up enough money. You should avoid common mistakes like mishandling your credit, at all costs. One of the main benefits of avoiding debt is that you won’t find yourself paying interest rates that can eat up a significant amount of your income.
Always having an emergency fund is the key to avoiding debt. Even the most fiscally responsible people may find themselves falling into debt when something unexpected happens, from a sick pet to a car accident to job loss. An emergency fund that initially has a few hundred dollars in it, then a few months’ worth of expenses and finally a year or more of expenses in it can carry you through these events. You won’t have to turn to credit cards or other types of loans if an emergency does happen. Be sure that you keep these savings in an account that is easily liquidated.
Max Out Your Retirement Account
If your employer offers a retirement account, you should put the maximum amount allowable in it. If your employer doesn’t offer one, you should save for retirement yourself via an account that you put the maximum amount into. You might think that because you are young you don’t have to worry about this, but that is actually all the more reason to do so. Money that you put away in your 20s can grow exponentially, leaving you in a great financial position when it comes time to retire.
On top of your emergency savings and your retirement account, you need to be investing. In order to really build up wealth, you’ll have to take some risk, so it’s important that you can afford to lose this money. You might want to work with a financial adviser to help you determine what the best investments will be for you based on your age, your goals, your income and other factors. However, teaching yourself about investing and doing it on your own is also easier than ever before thanks to apps and online brokers. Diversification should be your watchword so that you have your money spread across various investment vehicles.