There is a stark difference between earning money and being wealthy. Wealth is the accumulation of appreciable assets—such as property, investment accounts, and retirement accounts. Creating wealth requires a strategic plan to save, invest, and grow your assets over time. Here are some ideas to get you on track to grow your wealth.
- Pay yourself first.
You are your most important asset. You are the person that earns your money. And you are responsible for taking care of yourself first. Make it easy: have money deducted from your earnings automatically and moved into your investment account. Investment accounts are different from savings accounts. Your savings are cash, CDs, or money market accounts and can be easily accessed in case of emergencies or large purchases. Savings accounts should represent what you need to live for 6 to 9 months, in case your source of income disappears because you lose your job, become disabled, or perhaps have to care for a loved one. Investment accounts, such as retirement or brokerage accounts, are meant for the longer term.
- Live below your means.
You shouldn’t spend all of your income. Period. Just because you have money in your checking account after you’ve paid your bills doesn’t mean you should spend it all. These funds should be allocated appropriately to your savings and investments accounts. This doesn’t mean you can’t treat yourself periodically. And it doesn’t mean you can’t celebrate or share wonderful experiences with family and friends. What it does mean is that you think about what is special to you, and you plan for it. For example, if you want a trip to Disney World, be smart about it. Save and look for discounts.
- Think long-term.
Wealth, although at times obtained through a windfall, is more frequently associated with consistent investing over time. These investments frequently include savings, retirement accounts, investment accounts, a home, and perhaps an investment property. For women this is especially important. We tend to live about 5 years longer than men. According to the Society of Actuaries, a 65-year-old woman has a 53% chance of living to age 85 and a 32% chance of living to age 90. So plan for it!
- Make consistent investments.
Like contributing to your company’s retirement plan, consistently making investments beyond a savings account allows your funds to grow in the stock market. Consistent investing also allows you to purchase securities when they cost less—i.e., when the market is down. Your investment accounts, such as retirement or brokerage accounts, are for the long term. As little as a $50 a month, invested consistently, can grow substantially if placed in a balanced portfolio.
- Ask for help.
Establish a relationship with a Financial Advisor. A Financial Advisor will work with you to create a strategy that supports you and your life goals. This person can help you turn your income into wealth by helping you identify investing strategies that support what’s important to you. Just think—your advisor may have ideas you’ve never thought of, or might be able to help guide you through a difficult time. Remember, there is no reason for you to do this alone! Once again, for women this is especially important. Many woman are unfamiliar or uncomfortable with the terminology of finance and how all the various instruments work. Therefore, find yourself an Advisor that is patient and grounded in educating her clients.