Many people believe that being wealthy requires a high income, but the real secret lies in consistent financial habits.
In fact, there have been many stories over the years about people with regular jobs that built up astounding amounts of wealth. Back in 2014, a janitor and gas station attendant named Ronald Read, who died at age 93, built up a $8 million fortune by being frugal and investing consistently. He left millions of dollars to his local library and a local hospital. Elementary school teacher Roberta Langtry left millions to non-profit organizations after she passed away in 2005. And there are more recent stories, too!
How did they do it?! We know teachers and janitors don't make Wall Street salaries, yet they were able to build impressive amounts of wealth for themselves, their families and their favorite organizations. Here are their secrets:
1. Automate savings. Savings is one way to start building wealth, especially if you put that savings into an interest-bearing account. The best way to save is by doing it automatically! Work with your human resources department or your bank to divert part of your regular paycheck into a savings account every pay period. That way you don't have to think about or remember to save every two weeks. This is one area where the concept "Set it and forget it!" really does work!
2. Budgeting. Budgeting is definitely less automatic, but it's so worthwhile! Every few months (or at least every year), go through all of your finances, including your income, debts, utilities, housing costs and create a spreadsheet of your expected expenses and how much you can afford in each category. If numbers aren't matching up, look for ways to save (from eating out less to canceling unused subscriptions). If this sounds overwhelming, we're here to help! CommonWealth One has a number of certified financial professionals who can sit down with you and help you create a budget that works for you and your family.
3. Avoid lifestyle creep. Sometimes when you get a raise, that extra $50 or $100 per pay period just... disappears! You loosen your spending rules a little bit and eat out more often, upgrade your car or pay less attention to saving money. And suddenly your lifestyle has crept up to match your new salary. A better thing to do: Every time you get a raise, try to set up an automatic savings or investment plan with it so you continue living on your old salary while creating wealth with the extra. Always try to live below your means!
4. Invest consistently. We know investing can be scary, because investments go up and down. Even though it may seem counter-intuitive, investing consistently is a great way to build wealth. We're happy to help you set up a meeting with an investment professional who can explain the ins and outs of investing, including why investing when the market is "down" can be a great thing. All you have to do is call, click or stop by a branch to set up an appointment.
5. Avoid high-interest debt. You always want interest rates to work for you, not against you. When you need to take out a loan for a car, a house, education or another reason, always look for the lowest possible rate and best repayment terms. Then, if interest rates get lower, shop around again and see if you can reduce your current loans. In addition, try to avoid loading up your credit cards and paying high interest rates every month!
6. Never stop learning! Over time, financial strategies can change, new financial products launch, or financial professionals may come up with new methods to save and invest money. It's always worthwhile to keep updating your financial education from credible resources. For example, keep up with us here at CommonWealth One! We offer members a wide variety of educational tools from online resources to free webinars, all designed to make you the most financially savvy of all of your friends.
It doesn't take a massive salary to build wealth! It does take knowledge, discipline and strategy. We're here to help you do all of those things in the easiest, most painless way possible. Contact us via online chat, call or stop by any of our branch locations to get started. We hope you become an incredible wealth story!
