Wealth gives you the freedom to live your life in alignment with your priorities, goals, and passions. In this article, we’ll explore why wealth building matters—and why it’s important to start now. We’ll also share our top four wealth building habits that you can implement today.
Are you ready to create your personalized wealth building plan? Schedule a call with a Bay Point Wealth advisor to learn how our expert team can help.
Why Wealth Building Matters
Money is essential for covering your basic needs and achieving goals like funding education and retirement or making large purchases, like a home. Wealth gives you control over your life and enables you to avoid borrowing money at unattractive interest rates. It also offers stability during difficult times.
Beyond your basic needs, building wealth allows you to enjoy vacations with family and friends, hobbies, and helping others through avenues like charitable giving. Wealth also offers you the flexibility to focus on personal growth and pursue your interests.
Passing down money to future generations—and teaching your children how to build their own wealth as you lead by example—enables you to step into an important role when it comes to establishing wealth building habits. The earlier in life you can adopt this mindset, the better positioned you’ll be to achieve your future financial goals.
Why It’s Important To Start Now
As Albert Einstein is reported to have said, “Compound interest is the eighth wonder of the world.” And while there’s no silver bullet for how to accumulate wealth fast, your money should be working for you.
The concept of compound interest means that if you start with a small nest egg, once you invest that money, it will begin to generate a return. Those earnings then get attached to your principal investment, and even your earnings begin to earn money. You can create great wealth following this process. Just keep an eye on your investment fees to ensure you’re not paying too much for the administration of your portfolio.
4 Key Wealth Building Habits
1. Write down your goals.
Quantifying your goals enables you to understand how much money you need to save to reach your objectives. Having a plan in writing and revisiting it periodically will help you stay the course. Writing your goals also ensures they’re clear, instead of vague, and empowers you to take actionable steps to achieve them.
2. Use a budget to monitor your spending.
Saving as a way to build wealth is an excellent strategy. While many online tools are available to help you budget, your work doesn’t end once you plug your budget into the latest iPhone app. Review your budget regularly and look for issues that may creep up, like subscription plans, high bank account and credit card fees, and investment costs.
3. Educate yourself on personal finance.
This is one of the best wealth building habits you can develop. Find out what’s available to you and take advantage of employer benefits like 401(k) matches, flexible spending and health spending accounts, and discount programs for items like car insurance and cell phones. Don’t leave money on the table.
You don’t need to be an expert in personal finance, but there is enough information available online nowadays that you can gain a solid base of knowledge about the secrets to building wealth. One great book to help you get started is The Millionaire Next Door by Thomas J. Stanley and William D. Danko.
4. Don’t try to time the stock market.
There is an emotional, human element to investing that’s difficult to avoid, but if your financial plan is correct, you’ll be more likely to stay on track through down markets. This means that instead of exiting the market and locking in losses, you’ll give yourself the opportunity to rebalance your portfolio and buy into stocks at a low price.
Let Us Help You Create Great Wealth
You now have our top four wealth building habits in your toolkit. At Bay Point Wealth, we believe in setting goals and creating the right plan for you, then sticking with that plan. We can walk you through each action step and provide expert advice at every turn.
We’ll also help you save as much money as possible. Investment products can be expensive, and the costs can be hidden. We avoid these products with our clients, and if you do come to us with these products in your portfolio, we’ll work with you to figure out whether it makes more sense to keep or discard them, so you can generate solid returns. Schedule a call with us today to learn more.