12 Wealth Building Habits You Need To Start Now

Wealth building Habits are the financial actions you take and repeat over your lifetime to build wealth. Yet, we can get deeper into it.

Your wealth can typically be managed 1 of 2 ways: Either you are building your wealth, or you are shrinking your wealth.

Each and every day, we are faced with multiple decisions that ultimately have an impact on our financial lives – and it’s up to us to make the best decision for our future financial success.

The good news?

Many wealthy and successful individuals have shared their wealth building strategies, and it appears that building wealth often comes down to your daily habits.

Related Post: 20 Bad Habits that are Keeping You Poor

While practicing the right habits can substantially help increase your wealth, it’s important to realize that it takes time for a habit to form and become second nature.

You probably won’t see overnight success by implementing these wealth building habits. You simply have to give yourself time.

In fact, studies indicate that it can take an individual anywhere from 18 to 254 days to form a new habit, and it can take an average of 66 days for that new habit to become an automatic behavior.

If you start implementing these wealth building habits, you’ll start seeing a difference in your financial picture down the road.

Keep reading to learn more. 12 Wealth Building Habits You Need To Start Now

Secrets to Wealth Building: Change Your Habits

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I actually dislike when articles include the clickbait word of “secrets” in their headlines, especially with finances.

Because to be honest, there are no secrets to this stuff!

People and publications may disguise them as secrets, but when you read them these things are more logical than anything. And I get it, that word reels people in and everyone is looking for a fast and secret solution.

Related Post: Thinking Habits of Self-Made Millionaires

With wealth building there isn’t any huge secret. Before we get into the wealth building habits below, I will say the real secrets are these simple traits:

• Patience
• Commitment
• Not Afraid of Risk

And lastly, you do have to sprinkle in a bit of luck. Because those above things with hard work, are not always a guarantee of wealth building. It will greatly improve your odds, but nothing is of certainty.

Now besides practicing those “secret” traits above, apply these habits below and your odds of wealth will be in your favor.

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12 Wealth Building Habits To Learn Today

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If you’re ready to change the trajectory of your financial future, then take a look at the ultimate 12 wealth building habits below.

I don’t consider myself financially wealthy yet, but I’m on my way.

Some may think I am now because I’m on a path to 500k saved and others see that as still a ways to go.

We all view wealth a bit differently and I don’t think there is an exact number either.

Below are wealth-building habits or tips I’ve learned and am currently practicing that are helping me get to financial independence. 12 Wealth Building Habits You Need To Start Now

1. Surround Yourself With Successful People

The people you surround yourself with can actually have an impact on your mindset to building wealth.

Associating with like-minded people, who are interested in:

• Investing,
• Finances, and maybe
• High-earners can motivate you more than you realize.

This doesn’t mean you need to drop your current friends (unless they are toxic to your life). But network with people you can learn from.

Find people that motivate you to have good wealth-building habits and can be a mentor to your decisions.

More on this in a Forbes article here.

I was lucky to have a few friends who in their 20s were already working towards some amazing financial goals.

Seeing what could be done motivated me. But we could also talk about:

• Investing,
• Business, and
• Money.

I have no doubt this has been beneficial to pushing me where I am today and will continue to.

2. Create a Budget – Sure Wealth Building Habits

Think about the last time you (or someone close to you) took a long road trip.

Chances are, you probably needed a map or some sort of guide to help you get from Point A to Point B in a reasonable amount of time.

And that’s exactly the function of a budget: A road map.

Budgeting is one – if not the – most important wealth building habit that you can start implementing in your life today.

Not only does budgeting help you better understand your current financial position, but budgeting also helps you gain a better view of your expenses and income.

In fact, a budget gives you the chance to understand where you are spending your money and can help you identify areas where you can potentially cut out unnecessary living costs (like eating out five times a week).

Typically speaking, you’ll want to review your budget and track your expenses daily – if not weekly (at a minimum).

3. Spend Less Than You Make Every Month

Something that probably should be a no brainer, but it’s so easy to fall into this trap.

A great way to build wealth, even without a big salary, is to spend way less than you make.

The challenge is, our society gets wrapped up in instant gratification and consuming things to keep up appearances.

People who are wealthy keep their spending low and never spend more than they make.

I’ve been fortunate to catch on to this simple concept pretty early in my mid-twenties, but needless to say there are always temptations to spend.

But if you are on your own path to wealth, you always need to spend less than you make. Easy concept, but not always easy to practice.

4. Pay Yourself First – Train Wealth Building Habits

Paying yourself first does not mean going to the mall or to the car dealership the second you receive your paycheck to spend it on yourself.

It means quite the contrary.

Paying yourself first, in fact, refers to building wealth for your future self.

Here’s an example: When you receive your paycheck, before you pay your bills, make new purchases for the month, etc. – first deposit a small amount of your paycheck into your investment account (for example).

Once you’ve deposited a portion of your paycheck into your investment account, you can use the remaining money for your daily living expenses.

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Why is paying yourself first so important?

You take care of yourself first.

Instead of spending your paycheck first and investing whatever amount is leftover at the end of the month (which typically is not much), you flip the script. You spend the money that’s leftover after investing it into your future self.

While most rules of thumb suggest for you to save about 10% of your gross annual salary each year, if you’re really looking to make a dent in your financial future, you may want to increase your savings rate to at minimum 30% of your gross annual income per year.

5. Don’t Be Afraid Of Investing Your Money

Building wealth by just saving money from your business or salaried job is great, but it can take quite a long time to build wealth.

In order to get to the next level, you need to put that money to work for you while you sleep.

This means you can’t be afraid to invest your money.

Financial downturns happen and yes the financial crisis in 2008 was scary times. But, if you approach investing methodically, have a plan, and assess your risk tolerance, you’ll be on your way to wealth.

Investing can be in various assets like real estate (rental properties, fix and flip), stock market, businesses, art, etc.

If you think of the wealthiest people you know or even well-known names, I’d guarantee a lot of their money was tied up in various investments to get them where they are.

And growing or maintaining their wealth is compounded over time by their continued investing mindset.

You shouldn’t go “all-in” with your money, but learn to invest and put it to work to exponential grow your wealth.

6. Start a Side Hustle

Budgeting and slashing expenses is a great way to save more money.

However, these money saving strategies have their limits because you do, after all, have to spend some amount of money for your basic living expenses (such as rent, food, electricity, etc.).

While cutting costs is limited, earning more money is unlimited.

And that’s where the side hustle comes into the picture.

A side hustle is essentially extra money making activity that you engage in, that’s not your full-time job.

Side hustles can earn anywhere from $10 a month to $ 1,000’s per month – at which point, some side hustles can actually turn into your full-time job.

The point is that if you’re strapped for cash and you truly believe you’ve done everything in your power to cut costs, your next step might very well be to take on a side hustle and start increasing your income.

Any extra income you earn could be used to help pay for basic living expenses or help improve your future financial trajectory by investing the extra money you make.

7. Understand and Value Good Debt vs. Bad Debt

While some financial gurus will tell you all debt is bad, there are some areas where debt can be good for wealth building.

Of course, you should be avoiding high-interest debt, like those on most credit cards. But there is also some good debt, that will greatly benefit your ability to skyrocket your wealth.

I won’t get too much in detail here, but this is a great article that covers the difference further. Instead, I’ll give you a simple breakdown.

• Good debt is borrowing money to pay for education or an asset that you believe will return more money in the future than it cost you to finance at this moment (an investment like rental properties).
• Bad debt is borrowing money to pay for something that depreciates in value, or has no purpose (i.e. consumption).

8. Invest For The Long Term

When it comes to money, time is your greatest advantage.

That’s because of compound interest, which Albert Einstein dubbed as the “8th wonder of the world.”

Compound interest is when your money starts earning you more money – without you having to move a single finger.

Compound interest typically doesn’t happen from one day to the next – it often takes years to see a substantial difference in your net worth.

So how do you take advantage of compound interest?

It all starts with investing.

The great news is that you don’t have to hold an MBA, have graduated from an Ivy League university, or have spent years trading on Wall Street to become a successful investor.

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In fact, some of the most successful investors (I’m thinking of the sixth wealthiest man in the world, Warren Buffett, for example) often elect to invest their money in what is known as passive index funds.

Passive index funds basically mirror the stock market, so there is little chance that you’ll ever outperform the stock market. But from a historical perspective, the stock market has always gained value over the past few decades.

Not every index fund is created equal, but a very popular fund option is the S&P 500 index fund. Which captures the returns of the 500 largest US companies.

And, one can infer that the S&P 500 is likely a stable, blue-chip fund.

Keep in mind that as your income grows, the amount of money you contribute to your investments should also increase.

Assuming you’ve stayed invested and have consistently added to your investments. In 3 to 4 decades, compound interest could make a very substantial difference to your net worth.

9. Pay off High-Interest Debt

Mark Cuban once said, “If you use a credit card, you don’t want to be rich.”

While sometimes a credit card is necessary and can help you establish and build your credit for future big-ticket purchases (like cars, houses, etc.), maintaining a credit card balance will certainly not help you build your wealth.

In fact, a credit card balance is like poison to growing your net worth. 

That’s because many credit card carriers charge a very high-interest rate (typically north of 20%) on any unpaid credit card balance that you carry.

Think about it this way: If you invest in the stock market, the average annual return lies between 7% to 10%. On the other hand, if you keep your credit card balance, you could be paying north of 20%!

Financially speaking, what makes more sense in this case?

Paying off your credit card debt as fast as possible.

There are typically two main strategies to paying off your credit card debt, which are known as the Snowball Method and the Avalanche Method.

The main difference between these two debt pay-off strategies really has to do with the order of how you pay off your debt.

Here’s The Difference:

• Snowball Method – Pay off the smallest balance first (while making minimum payments toward your other debt). Once your smallest balance is paid off, roll your payments to the next highest balance (and so on).
• Avalanche Method – Pay off the balance with the highest interest rate first (while making minimum payments toward your other debt). Once your highest interest rate balance is paid off, roll your payments to the next highest interest rate (and so on).

From a financial standpoint, the avalanche method saves you more money. However, from a psychology standpoint, more people have found success with the snowball method.

The best approach to start paying off your debt is simply by creating a list and organizing the type of debts you have.

• Credit Card,
• Mortgage,
• Car, etc.

The balance you owe, and the interest rate associated with each balance.

From there, you can create a timeline and a solid game plan to tackle your outstanding debt. Start chipping away at your outstanding balances bit by bit.

10. Consistently Read Books About Finances, Wealth, and Investing

The key to becoming financially literate was reading books. I had no financial background other than some real basic concepts. But books have made it easier to learn and shift my mindset to build future wealth.

Yet, even if you know a lot about finances or have learned over the years, continue reading throughout your lifetime. A common thread among many millionaires and billionaires is their book collection. Coincidence? Maybe.

But I think knowledge keeps your brain active and thinking in ways that help you build wealth.

While I have a pretty extensive knowledge now on money and investing, I have a lot to learn. I also still read beginner books too. I think it real helps instill the right money concepts.

Try to spend an hour or two each week dedicated to reading a book related to money.

11. Build an Emergency Savings Fund

While it’s cliché, it’s true that the only constant in life is change.

And that’s where we have to protect ourselves – financially speaking – from the unexpected curveballs that life loves throwing our way.

Some of those curveballs could include flat tires, a leaky roof, a vet visit, etc.

The point is that if you don’t have a suitable emergency savings fund, you may have to use your credit card debt to take on these unexpected expenses (and having a credit card balance is never fun, as you read in Point 5).

That’s where an emergency savings fund comes into play.

Related Post: Easy Ways To Start Investing With Little Money

An emergency savings fund is a cash account that you can easily access at any point in time and withdraw your money for emergencies only.

Typically, it’s recommended to stash about 3 to 6 months’ worth of your living expenses in an emergency savings fund.

Here’s another trick to earn more money with your emergency fund: Instead of keeping your cash at a regular brick-and-mortar bank savings account (which pays minimal interest on your cash), consider opening an online high-yield savings account.

As an example, for comparison purposes, a regular bank savings account typically earns you around 0.01% in interest on your money.

In comparison, an online high-yield savings account can typically earn you more than 0.50%, depending on the current economic conditions.

12. Set Goals and Create Plans To Achieve Them

One of my favorite essential wealth-building habits is setting financial goals and creating a plan on how to achieve them.

These goals are a mix of short-term and long-term, plus new ones will happen from time to time as well.

Obtaining wealth can be challenging without a clear vision of getting there or at least processing what you can do.

Review your income, appreciating assets, net worth, and how you can elevate these items. It can be attainable goals and more challenging ones.

But setting goals keeps you honest and focused on your path to building wealth. It doesn’t mean it will be easy as you should be thinking big, but goals and plans will make the path more possible.

13. Refine Your Financial Goals – Wealth Building Habits

While you might have a good idea of how you want your financial future to look, have you actually taken the time to write down your financial goals?

Chances are you haven’t – but you’re not alone.

Most people have a vague idea of what they want to accomplish, financially speaking, but they haven’t taken the time to truly crystalize their thoughts and plan out the steps they need to take to make their financial goals come to fruition.

That’s where you’ll likely want to consider incorporating the following into your wealth building strategy:

• Timeline
• Vision board
• Actionable tasks
• Crystal clear goals

As an example, a common financial goal for many is probably, “I want to become a millionaire.”

While this is a great goal to have, it’s not exactly defined.

Psychologically speaking, humans tend to accomplish tasks (or goals, in this case) with a higher success rate if these goals are distinct and well outlined.

So, instead of saying, “I want to become a millionaire,” you could improve your chances of accomplishing this goal by saying something like, “I will have a liquid net worth of $1 million in 20 years.”

To accomplish this goal, I will pay off my credit card debt within the next 12 months, continue investing $3,000 per month in low-cost index funds, live on $3,000 per month, and keep my emergency savings account fully funded.”

Talk about a clear goal!

Here’s Your Homework: 

Think about the financial goals that you want to accomplish in your future.

If you haven’t yet, take 30 to 60 minutes to write down your goals on a piece of paper (or on your vision board). Next, determine your timeline and what steps you need to take to make these goals a reality.

Remember that ink never fades.

That’s why a powerful wealth building habit is writing down your financial goals so that you can be reminded of them every single day.

The last step to start making your goals a reality?

Action.

Closing Thoughts On Wealth Building Habits

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Keep in mind to give yourself time and room for failure as you implement these wealth-building habits into your everyday life.

I’m sure everyone has some extra wealth-building habits or tips they might want to include, but these stood out to me the most.

They’ve been incredibly important as I’ve tackled debt, increase my savings rate, and investing.

You probably won’t start seeing a significant change in your financial picture in the short term.

However, as long as you stay focused on your wealth building goals – whether that’s becoming a millionaire or paying off your debt – you will likely start seeing a difference soon.

I have a long ways to go, but the above habits got me going on a great path. Hopefully, I continue to learn more too in the near future and can periodically update this post.

After doing your research, it’s time to start taking action. Your financial future counts on it – and your bank accounts will thank me later. 12 Wealth Building Habits You Need To Start Now