First let me preface this by saying I’m not rich, so take this advice with a grain of salt. I do pretty well for myself and since I’ve been following these principles I’ve established a good trajectory toward one day joining that 1% club I’ve been hearing about. In my life I’ve had the privilege of hanging around a lot of uber wealthy individuals. I’ve jotted a few notes down along the way and it’s only right that I share the wealth with my fellow Moguls on the Grind.
Keys to Building Wealth:
1: Pick a High Paying Career
Yeah I know what they say about pursuing your passion and all, but if your passion pays minimum wage maybe you should pursue your passion on the side and if you blow up from it then cool. My advice is to choose a career that pays well. It makes it that much easier to save and jump starts you on the path to generating significant wealth. Here’s a list of top paying gigs that might be worth taking a look at.
An alternative to picking a career that pays well is getting a side job to generate extra income i.e. driving for Uber/Lyft, Postmates, etc. The bottom line is take action to increase your net income.
As you advance in your career or generate more revenue be cognizant of “Lifestyle Creep,” the more you earn the greater the temptation is to increase your expenses. You’ll want to avoid this if you’re interested in getting rich.
2: Save a Minimum of 20%
A lot of financial advisors suggest saving a minimum of 10% each paycheck for retirement. I’m of the ilk that you should save as much as you can without going insane. Have fun every now and then but stack your paper. In addition to the 10% saved for retirement purposes, save an additional 10% for near term expenses/emergency funds. In other words save at least 20% of what you make (and more if you can).
3. Say No to the New Car (and other expensive wants)
You’ve got a little cash saved and you’re doing well in your career. Resist the urge to buy a new car. This is a surefire way to remain in debt and slow your wealth creation. Remember you don’t need the latest and greatest just to keep up with the Joneses. The goal is to be rich not look rich! Now let’s stay focused. Run your existing car into the ground then if you need a new car pay with cash.
Interesting story, A close friend of mine was fortunate to play a number of years in the NBA, at the height of his career while making millions, he was getting around in a Toyota Prius and his wife drove an old Mercedes Benz that used vegetable oil for fuel.
Like the rapper Nas once said “By the time you can afford it the car aint important.”
4. Make a Strategic Home Purchase.
I think owning real estate is an important vehicle for creating wealth. My wife and I currently own two properties. My philosophy on real estate is this: If you’re going to be paying someone’s mortgage why not pay your own or have someone paying the mortgage for you (a tenant in an investment property)? Of course you have to get into a position to purchase real estate, hence this is why we do steps 1, 2 and 3.
When it comes to real estate, there’s only 3 things you need to remember, location! location! location! Agents say (and history confirms), the extra money you spend purchasing in desirable neighborhoods in a good school district is money well invested (high demand equals higher returns).
5. Start a Business
The first 4 points listed above will get you to a solid foundation and generate wealth for you, but I found one thing very common among the super wealthy that I’ve had the privilege of meeting. The majority of them created their own businesses. Whether it’s their own Sports Agency, PR Firm, Tech Startup etc. They all took a chance, in fact they took several chances. They’ve failed plenty of times in business but they learned from those hard lessons and came back even stronger.
If they can do it, you and I can do it. Let’s get to work!
What are some of your tips for wealth building. Hit us on the Gram.
“By the time you can afford it, the car aint important.” Nas (around the 2:30 mark)