Visit any social media site and it is likely that you will see an ad from some pundit claiming that they know the secret to build wealth. It may be a new invention, industry, or investment such as bitcoin that is supposed to revolutionize or “change everything.” It is true that new ideas and innovation bring prosperity. Real Median household income in the United States has been on the rise according to the American Community Surveys (ACS). But how do you keep more of the money you earn? After all, it’s not about what you earn, it’s about what you keep and have the opportunity to benefit from that matters.
Contributing to retirement and investment accounts is one of the fundamental ways to build wealth. Unfortunately, many neglect this crucial step on their path to financial independence. Young investors often say they will get around to it when they are older or down the line. Some are busy chasing the next new fad and dumping money into a project after project looking for the next way to make a fortune. Making a 401k contribution should not bankrupt your startup ambitions. If it does, you may want to revisit your overall strategy.
While self-driving cars are eagerly anticipated, consider choosing a self-driving method of saving. Press the autopilot button on saving and investing. Every month direct funds into a separate bank account that you do not touch. Consider this money spent and inaccessible. Do the same with a brokerage account. Many options for investing exist, remember to consider a diversified solution. This solution should also take into account your risk level and time horizon for the investments. If you are unsure about how to follow through on this course of action, work with a financial advisor to create a customized plan to build wealth.
Increase your savings and investing rate at least annually to boost your overall net worth. The axiom reads: “The more you make, the more you spend.” If you change just this one thing, chances are, your net worth will skyrocket. Let your creed be: “The more I make, the more I save and invest.” Of course, your investments must perform over time to build true wealth, but consistent and meaningful additions to your accounts are the key to building a legacy. Chasing your financial goals and remaining laser-focused does not mean sacrificing the bigger picture.
DLX contributor Adam Torres CFP®, AAMS® is CEO of Century City Wealth Management and serves as an independent financial advisor to small business and individuals. He is also the author of Money Matters and has been featured in media such as Forbes, Inc., Fox Business, U.S News & World Report, and Investors Business Daily to name a few.