When approaching finances, many people prioritize paying down their debts and building their savings. These objectives are undoubtedly important components of financial stability, but if they have been your focus for a while, it may be time to move forward. If your ultimate goal is to be affluent, then it is not enough to be debt-free and have a financial safety net. At some point, you will also need to actively work to build your surplus funds. Whether you are ready to begin this journey now or you still need time, here are some ways to get started.
Define Your Goals
Before any significant undertaking, it is always a good idea to spend some time thinking about what you want to accomplish and how you intend to go about doing so. Applying this concept to wealth building, you might specify how much money you would like to make over the next ten years and then list some concrete ways that you might achieve this end.
The “why” behind your goals is just as important as the “what” and the “how.” Presumably, you want to be wealthy so that you have money to spare, but what do you want to do with that money? Perhaps you hope to take extravagant vacations, or maybe you want to build the home of your dreams. Maybe deep down you believe that being wealthy is the key to being happy. Forcing yourself to consider what you really want will help you understand whether or not your motivations are realistic and healthy.
Do Your Research
Once you have defined your goals, you need to educate yourself on the basic aspects of wealth building. While you probably do not have time to become an expert, you should have a firm grasp of rudimentary concepts such as the definition of risk, options for building your portfolio, and different methods of investing. Having a solid knowledge base will help you make smarter choices as you move forward.
One way to solidify your knowledge of all these concepts is to read about people who have successfully built fortunes. Studying success stories can be beneficial in more than one way. On an abstract level, it may be inspirational to learn about the numerous paths that can be taken to reach the same end. More practically, it will educate you on the specifics of the various wealth-building methods, since it can be easier to digest complex ideas when they are explained using narrative formats.
Patrick Dwyer Merrill Lynch wealth advisor offers profiles of numerous financially successful individuals on his blog. Taken together, these biographies contain a diverse assortment of information, all of which can be quite useful along the journey to wealth building. These inspirational stories can whet your enthusiasm while imparting a great deal of information in a non-intimidating manner.
Once you have an initial picture of what you hope to achieve, it is time to seek professional investment advice. While you might think you want to pull yourself up by your bootstraps and learn the ropes solo, you will probably be more successful if you have a knowledgeable support system to inform your actions. A financial planner can evaluate your current financial situation and formulate a plan for eliminating its weak points and building on its strengths.
Certified financial planners are held to the most rigorous professional standards, so do not waste your time with anyone who does not meet this designation. It is also a good idea to look for fee-only financial planners. While some financial planners can earn commissions by selling products to their clients, fee-only financial planners profit only from what they earn by providing services. Fee-only arrangements protect clients from being on the receiving end of selfishly-motivated advice.
As you move forward on your wealth building journey, it would be wise to frequently refresh your knowledge on the subject. The financial landscape is dynamic, and you need to stay savvy. Financial planning firms tend to be excellent resources for educational materials. Many firms offer their clients opportunities to attend courses and seminars on a wide range of topics at no additional charge.
You can also take matters into your own hands by reading magazines, journals, websites, and books. Even reading for fifteen minutes a day is better than never reading a single word. If you are a more visual learner, there are thousands of finance education videos online. The more you know about the world of finances, the more likely you will be to navigate your journey successfully.
So what happens once you have defined your goals, sought professional counsel, and found educational materials? You sail forward on the voyage to creating a healthy nest egg. Life is full of surprises, so there will surely be times when that nest egg is not your immediate focus.
However, as long as you remember to pay attention to your goals and revisit them whenever you can, you will be able to gain valuable knowledge and use that knowledge to build your wealth.