Thursday, November 02, 2006

Six Steps to Creating Personal Wealth

Here are the six steps I am using to build my wealth:

Use savings as the foundation. Saving is the first thing I needed to do to create wealth. Sure, there are many stories of creating great wealth via new ideas and businesses. And these are valid ways. However, this was not the way for me, an average person looking for a guaranteed way. (Read more...)

Start young, no later than 30. The power of starting your savings young cannot be overemphasized. There are many calculations showing the benefits of using time to grow your savings. You can become a millionaire even if you earn a normal income. Here’s a real life example of a teacher who started saving at 22 and was a millionaire when she retired. Older than 30? Try the Late Savers Guidebook from the National Endowment for Financial Education for catch-up strategies.

Pay yourself first. It’s the only saving strategy you’ll every need. (Read more...)

Buy only what you need. The challenge to saving is that most of us spend all of our monthly, biweekly or weekly paycheck before we have received it. To get money for savings, I had to break the cycle. I am not a big fan of budgeting. It is kind of like dieting. Most of us can do it for a short time, but then we fall back into the old habits. (Read more...)

Invest your savings. You get it. Save, save, save. That's the road to riches. Now how do you get the savings to work for you? Stocks, Bonds, Real Estate or CDs? (Read more...)

Manage your savings and debt ratios by growing your savings and reducing debt as you get older. Retire with a next egg greater than 12 times your final salary and no debt. (Read more...)

To note, one should protect one’s wealth against major extended negative events (e.g. health issue, disability, legal liability, or death of wage earner). While I carry insurance in these areas, fortunately, none of these events have happened to me. Using insurance to protect against these types of events will be the subject of a future post.

This is not financial or wealth building advice. Please consult a professional advisor.

Copyright © 2006 Achievement Catalyst, LLC

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