Those who want to seize control of their financial destiny don’t point to inflation or economic setbacks and make excuses. They seek the knowledge and tools to overcome obstacles and chart their own course. If you want to generate substantial and sustainable wealth, this resource is for you. Unlike similar pieces, though, we won’t just list five investment options and call it a day.
1. Cultivate Your Leadership Skills
When you think of building wealth, skipping right to the money-making part is tempting. However, making money and generating wealth are two very different things. Someone half-heartedly working a minimum-wage job is making money. They are not generating wealth.Wealth generation requires a higher mindset that looks beyond individual dollars and cents. It doesn’t seek to exchange physical labor and precious time for a larger number of dollars per hour. To truly generate sustainable wealth, you must gain the confidence and discipline to guide your finances. In short, you must become a leader.
Corporate keynote speaker and metaphysical master Erin Patten is well-versed in the area of leadership development. Patten points out that wealth, as a concept, isn’t restricted to money. It applies to overall well-being and your mental, emotional, and spiritual condition.
- Know yourself: What are your strengths? What are your limitations?
- Know your why: Why are you generating wealth? What is your end goal?
- Commit to discipline: Self-discipline won’t just keep you on track toward financial goals. It will help you know when to rest and recharge.
2. Use Goals to Guide You in Generating Sustainable Wealth
The desire to generate wealth is common. It’s also nearly impossible to define without further input and clarification. To put it another way, “generating wealth” isn’t an end unto itself. It is a means to an end.So, what is that end? The wealth that you accumulate over time must have some kind of objective if you want to avoid becoming an Ebenezer Scrooge type obsessed with nothing but counting your coins.
Time-Bound Wealth Goals
The question is, what kind of goals do you set when it comes to generating wealth? Everyone likes to point to the SMART goals concept—and it’s wise to make your goals specific, measurable, achievable, relevant, and time-bound. When it comes to money, though, you really want to focus on the “T” part of that acronym.For example, you don’t want to invest in a long-term real estate position as a way to generate some cash for a vacation in a few months. At the same time, you don’t want to chase the latest meme stock craze or cryptocurrency launch if you want to generate wealth that lasts for fifty years.
- Near-term (or short-term) goals are within 2 years.
- Medium-term goals are within a three to 10-year window.
- Long-term goals are a decade or more in the future.
3. Cultivate Smart Spending Habits
There are two aspects to cultivating wealth that lasts—building new wealth and preserving existing wealth. The former is usually the focus, but often it is the latter that can undermine a potential fortune in the making.- Build a better budget: If you’re thinking of building sustainable wealth, you likely already have a budget. But is it tailored for saving and investing? If not, consider going over things and updating your current budget to reflect your new financial goals (see step 2).
- Follow the 80/20 Rule: If you aren’t sure how to adjust your spending, start with the 80/20 Rule. Save 20 percent of your income as a starting point and see if you can increase it from there.
- Skip recurring optional expenses: ESL Federal Credit Union points out that avoiding that $3 splurge on a daily cup of coffee can add up to $1,095 in savings in a single year!
4. Maximize Your Earning Potential
As you gain control over your spending, also consider ways you can increase your income. If you’re working a full-time job, evaluate if you’re making a reasonable salary. If you find your compensation package is lagging behind industry standards, consider asking for a raise or shifting to a company that will pay you better.Even if you can’t improve your primary salary, there are many ways to make additional money. From affiliate marketing to Airbnb, freelancing to mystery shopping, consider how you can maximize your earning potential.
Remember, if you improve your income in the name of building lasting wealth, every dollar you earn is worth more than its current value. It is another piece of your investment puzzle that can continue to work for you, generating passive wealth for years into the future.
5. Diversify Your Investments
As you integrate steps one through four, you’re going to begin having more money on hand. This is a critical first step. We’ve all heard the classic saying: It takes money to make money.As you find yourself with more money to invest, though, you’ll discover that choosing where to invest is more difficult than you might think. You could follow Warren Buffet’s famous advice and just ride with the S&P 500.
- Keeping some cash on hand.
- Choosing only quality companies, stocks, and other investment vehicles.
- Looking to areas like real estate along with traditional stock and bond options.
- Keeping risky investments like cryptocurrency to a minimum.
The Challenge of Building Lasting Wealth
As you consider ways to build lasting wealth, make sure to stay holistic in your approach. Don’t blindly follow lists of potential investments or quit your job to start a half-baked company.Sustainable wealth comes from consistent, thoughtful wealth management and decision-making. Start with that all-important leadership mindset. Set short-, medium-, and long-term financial goals. Cultivate smart spending habits and maximize your earning potential. As you invest and build your wealth, stay diversified.
If you can approach generation with a consistent, thoughtful plan in place, you can begin to build a personal fortune that can last well into the future. The only question, then, is figuring out what you’re going to do with it.
