“It gives me goosebumps just thinking about it. The power of compound interest is absolutely astounding.”
Okay, so how do you build wealth fast? Let’s take a look.
Drop Your Living Expenses Like Crazy
I know, this isn’t very exciting, but this is the definition of wealth. As Todd Tresidder of FinancialMentor.com says, “Great wealth builders focus on both saving money and earning more.”
What Todd is pointing to here is the gap between your expenses and your income. Expenses should always be lower than your income. The larger that gap, the more wealth you can accumulate.
Let’s face it, you can’t invest unless you have money to invest. If you’re currently living beyond your means and have no additional money to put to work for you, you’ll never build wealth.
1. Save on Vehicles
I was very fortunate that I learned this lesson when I was still in college. This led to me driving a 1998 Chevy Lumina that was completely paid for because I inherited it from my deceased grandmother.
Not having a car payment allowed me to invest into myself, my Roth IRA, and my 401(k).
According to Jason Fogelson for Forbes: “The biggest mistake a car buyer can make, especially in the age of the Internet, is to buy a car without doing research first. Some buyers are so eager to get through the car-buying process that they don’t take the time to find out everything they can about vehicle reliability, pricing and financing.”
I agree. But let’s focus on the financing part for a minute. Car loans come with ridiculous interest rates that nobody should have to pay for to obtain transportation. Car loans can easily be one of the highest-cost debts of many American households.
Too many people view the car payment as “normal.” Sure, it’s normal, but “normal” won’t help you produce wealth, my friend. Instead, consider doing what I did and drive a car that you own outright. It’ll be easier on your pocketbook over the long-term – I promise.
2. Save on Shelter
….related:
How Much Money You Should Have Saved at Every Age
