Does building wealth feel like a distant dream? Do you wonder how you could possibly get on the path to financial security?
If you’re starting from square 1, the idea of building wealth may seem intimidating – maybe even ridiculous. But “building wealth” doesn’t necessarily mean that you’re going to end up with a Lamborghini and a beachside mansion in Malibu.
It just means having enough money that you have control over your life. You can enjoy a comfortable lifestyle and pursue opportunities that excite you.
And starting today instead of continuing to put it off can save you a lot of financial stress in the future, so grab a pen and paper and take notes! Today I’m going to give you 9 steps to build wealth from scratch starting today!
9 Steps to Build Wealth from Scratch
I’m going to give your strategies for growing your money in a minute, but first let’s go over some foundational steps for financial wellness you need to take first in order to set yourself up for success.
1) Invest in financial literacy
The first step is something you’re already doing – investing in financial literacy!
Before you make financial progress, you need to take some time to educate yourself on personal finance. After all, you need to understand personal finance in order to strategically navigate the financial world and make smart money decisions.
You can start by binging our YouTube channel. We have hundreds of videos on everything from money habits you should develop to how to pay down debt to how to build a strong investment portfolio – and a whole lot more.
If you really want to uplevel your finances, you could also look into our programs. Million Dollar Year is our flagship program for financial wellness, and here’s a little tip: if you watch our masterclass, we’ll give you a special offer!
2) Create a weekly money ritual
A weekly money ritual is a phrase we coined here at Dow Janes. If you’ve been around a while, you’ve almost definitely heard us talk about it before, but there’s a good reason for that: it’s a fundamental part of financial wellness.
A weekly money ritual is an hour that you set aside every week to spend on your finances. This could be reviewing credit card statements, re-allocating your investment portfolio, or evaluating your progress toward your financial goals.
Consistently monitoring your financial situation with a weekly money ritual allows you to:
- stay informed about your financial situation
- make informed decisions
- track progress towards your goals
- identify areas for improvement
- avoid overspending
- seize opportunities for saving and investing.
Overall, by dedicating time to managing your money regularly, you can maintain financial stability, minimize stress, and work towards achieving long-term financial success.
Tips for creating a weekly money ritual you’ll actually enjoy!
3) Build an emergency fund
Building an emergency fund before investing is crucial because it gives you a financial safety net for unexpected expenses or income disruptions.
Without an emergency fund, you may be forced to sell investments at a loss or incur debt to cover emergencies, undermining your long-term financial goals.
By having a cash reserve, you can handle unexpected expenses without derailing your wealth-building strategy, ensuring financial stability and peace of mind.
4) Decrease your expenses
You can’t build wealth if you have more money coming into your account than you have going out every month.
If that’s the case, then you have two options: 1) explore ways to decrease your expenses or 2) try to increase your income.
This could mean something as simple as canceling subscriptions. Or it could mean something more drastic, like finding somewhere cheaper to live.
5) Open a high-yield savings account
A high yield savings account is a type of savings account that offers a higher interest rate compared to traditional savings accounts, allowing savers to earn more on their deposits.
With competitive interest rates, your savings can accumulate more over time, providing a buffer for emergencies or helping you reach your financial goals sooner. This is an easy way to keep your money accessible while allowing it to grow with compound interest.
Additionally, high yield savings accounts often have no monthly fees and are FDIC insured, offering a safe and convenient way to save money.
6) Use tax-advantaged accounts
Using tax-advantaged accounts like a 401K, IRA, or HSA is advantageous because it allows you to minimize your tax liability while saving for various financial goals and growing your money. Contributions to these accounts are often tax-deductible or made with pre-tax dollars, reducing your taxable income.
Additionally, investment growth within these accounts is tax-deferred or tax-free, maximizing the growth potential of your savings over time.
Using tax-advantaged accounts can help you keep more of your money working for you and build wealth more efficiently in the long run.
7) Create multiple income streams
Did you know that 65% of millionaires have at least 3 income streams? And that’s actually achievable for most people?
Laurie-Anne has already explained the 7 different types of income streams, but here are just a few examples:
- Interest income: money you make from lending your money out. There are multiple ways to do this, but a simple example is government bonds.
- Rental income: money you make from owning property and charging people to use it
- Capital gains income: money you make from buying and selling an asset
Look for opportunities to increase your income, whether through side hustles, freelancing, or entrepreneurship. Additional income streams can accelerate your wealth-building efforts.
8) Invest Wisely
Once you have some savings, the next step is to start investing.
Investing in stocks and bonds is crucial for building wealth and achieving long-term financial goals. Stocks offer the potential for high returns over time, helping you beat inflation and grow your wealth. Bonds provide stability and income through regular interest payments, balancing the risk in your investment portfolio.
By diversifying your investments across stocks and bonds, you can manage risk while maximizing the potential for growth, ultimately securing your financial future.
Consider a mix of assets like stocks, bonds, real estate, and other investments based on your risk tolerance and goals.
9) Re-invest returns
Re-investing returns is essential for maximizing the power of compound interest. By reinvesting dividends, interest, and capital gains, you can accelerate the growth of your investments over time.
This compounding effect allows your earnings to generate additional earnings, leading to much greater growth in your investment portfolio. Overall, reinvesting returns can significantly boost your wealth accumulation and help you reach your financial goals faster.
Want to learn more?
And that’s it! This should give you a roadmap if you’re trying to build wealth from scratch.
If you want to learn some more advanced tips, be sure to check out our free masterclass! We'll teach you the method thousands of women+ have used to transform their finances.
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