November 24, 2023

5 Tactics to Build Wealth Fast

The hardest part about building wealth is just starting. After that it gets easier, as you build and build on the initial momentum.
At first, there’s so much information to absorb, and so many different routes you could go in.
So, here’s general order of what things to tackle first.
Some of them you’ll likely want to do in parallel, and that’s great. But overall, some things are best saved for later (like investing), while other things need to get done right away (like paying off debt).
So here goes:
1)Pay off high interest debt now
High interest credit card debt, unsecured loans, and basically anything over 6% per year needs to be paid down right now.
Keeping some low-interest debt like a mortgage or student debt can actually be a good thing, because it lets you save money in assets that produce a higher rate of return and start building wealth. But those other high interest debts need to go, so channel money aggressively into them until they’re done.
Seriously, if you have high-interest debt, consider it an emergency and work extra hours or do whatever it takes to fix that this year. You’ll thank yourself later.
This will also help boost your credit score, which saves you a ton of money with interest payments and gives you access to great rewards cards.
2)Establish an emergency fund for liquidity
Around the same time as you’re paying off debt, you need to have some money on the side. Not necessarily a ton, but some.
The statistics are alarming for the percentage of people that couldn’t come up with 500 if they had to. There are so many things that can go wrong, like a car breaking down, or a medical issue, or a death in the family, or a variety of other things, and you need to have liquidity to act on those things without turning to a credit card.
3)Mercilessly cut spending on things that don’t serve you
This is where I differ from a lot of people.
I don’t like frugality, and am not frugal. Instead, I believe in minimalism.
I spend plenty of money on high quality, ethical, and sustainable food, without caring about the price tag. I travel to other continents and spend time in luxury hotels, and those experiences are some of the best times in my life.
But my car? I don’t care about it at all other than it being reliable and safe. It’s cheap and I’ll run it into the ground before buying another one. I have no cable television. My apartment is so sparse that my landlord once asked if I even live in it, and assumed that I’m always on business travel or something.
That’s how I like it, because it lets me focus.
I’ve found that having a passion for something, and cutting expenses, goes hand-in-hand. The first naturally leads to the second.
Being frugal and pinching pennies can be really boring and unsatisfying as you focus on what you lack. But simplifying the possessions around you, traveling lightly through life, and spending your time and energy on projects that interest you (and that often produce money), can be incredibly satisfying.
The main reason I avoid buying things is that I just think of how much time and energy they’ll drain from me, and how distracting they’ll be. I’m allergic to clutter.
Everyone’s different, but this works for a lot of people. Spend liberally on what you love, and cut ruthlessly what you don’t.
4)Seek out higher income streams
There are three main ways to approach this:
•Focus hard on your career and earn a high income for your expertise
•Work a decent job and have a profitable side-hustle as well
•Go full-on entrepreneur and start a bigger business
If you go the first route, it usually means spending time and money on education and continued training, making the effort to be a top-performer at work, and maximizing your return through effective negotiation. This is the route of doctors, lawyers, lead engineers and scientists, upper level management, and so forth. You can have a side hustle as well, but it’s hard because your job takes so much focus.
If you go the second route, your job might not be as glamorous and you may not have a really high-level education, but you may have extra time for building more income streams on the side. Whether it’s freelancing, tutoring, dog-sitting, or whatever, there are countless ways to make money on the side to accelerate the process of building wealth.
The third route is the rarest, where you drop your main job and go hard-core into founding and growing a business. The payoff could be huge here, but it could also go bust and result in wasted time and capital.
Pursuing any of these three options is a historically reliable way to get rich over time. The only mistake would be avoiding all three by working a regular job, not having a side hustle, and not doing any business. Millionaires don’t work 40 hour weeks.
5)Invest money as soon as you get it
For each pay check (or each month if you don’t have regular pay checks), the first priority should be putting a lot of that money into investments before it becomes spendable. This is called paying yourself first.
If you have a 401(k), automatically put at least 5% of each pay check into it.
Max out a Roth IRA each year, if applicable. Set it up for automatic withdraws from your checking account if possible.
Put additional money into your 401(k), or start putting cash into taxable accounts.
By saving at least 20% or more of your income each year, you’ll begin aggressively compounding your wealth.
After much of this is automated, and you’re putting a ton of money into your accounts each month, you’ll be more free to spend what’s left on whatever you wish.
Final Words
Wealth means different things to different people, and for a lot of people, it can seem bewildering or out of reach.
But you can use a framework like the one described here to map out what your target wealth level is, and how to get there. When you break a big process like wealth accumulation into smaller variables, you can start to see realistic paths forward.
Figuring out how much investment income you need when you retire or become financially free is a good starting point, and from there, you can determine the combinations of monthly contributions and rates of return you need to achieve those goals.
There are plenty of ways that you can achieve any realistic wealth target and passive investment income that you have in mind, as long as you plan and act accordingly.

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