It is our intent to acquire wealth ever since we were kids. We go to school to learn all kinds of social skills so we can work when we are older. Once we graduate from learning in school, we begin a routine of working at least 5 days a week in order for us to earn a living. In most cases, we do not just work and earn to survive. We work hard because we want to grow our personal net worth.
While we all work hard to earn as much as we can, a lot of us have failed at it. We succeed in earning, yes that is true. But it is usually enough to finance what we need to survive. To grow our wealth, we need to have extra money for that. This is the money that will not be spent.
The wealth gap of the country is steadily declining – just as it has in the income inequality. This is according to an article published on the blog of NYTimes.com. While the country may still be rich, only a small percentage of Americans are enjoying that wealth.
In a report published by the Economic Policy Institute (EPI.3cdn.net) revealed the distribution of wealth in the country. In terms of the net worth, the top 10% has 73% while the bottom 90% of Americans share the remaining 27% amongst themselves. For the financial assets, the top 10% has 83% of the distribution while the bottom 90% share the 17%.
If you are reading this article, it is obvious that you are part of the bottom 90%. If you were rich, you wouldn’t be researching the Internet for tips on how to accumulate financial wealth fast.
2 important ingredients to boost your personal net worth
Fortunately for you, there are ways to help you grow your finances. There are two important ingredients that a lot of people are unaware of. They may be aware of the concept but they fail to realize that these two are crucial in building wealth.
A lot of you may be assuming that your income will be one of the ingredients. That is incorrect. While it remains to be an important part in becoming rich, it is not the end all and be all of wealth building. It is more important that you learn frugal living and investing. If you have these two ingredients, it will not matter how much you earn. You will be able to increase your financial wealth.
Believe it or not, frugality can make you rich. For those who think that frugal living is all about restrictions and deprivation, they do not understand how frugality really works. If you know how to implement this correctly, you will be surprised to find abundance despite a frugal lifestyle.
In building financial wealth, frugality will assist you by encouraging you to use your money only on what is essential. You will not deprive yourself of what you want to spend on. You will just be wiser and more practical in choosing the selected expenses that are within your income capabilities.
Frugality will make you focus on the quality of living that you need – not what society expects of you. By adapting this lifestyle, you will surely lower the amount that you spend every month. Not only that, your spending will no longer be based on your income. If the frugal budget you created only requires $30,000 a year, it will not matter if you earn $30,000 or $300,000. You will only spend on what you need and the rest will be saved. That is how a frugal mind works.
This can help you grow your wealth because of the growth of your savings.
In partnership with frugality is investing. While saving will help you increase your net worth, it will not be fast enough. If you want to be proactive about growing your financial wealth, then you need to take your savings and invest it.
What you will do is to put your money to work so it will give you returns even as you do nothing but monitor the stock market. If stocks, bonds and mutual funds will not work for you, then there are other means for you to make your money work. It can be in a rental place that you bought. You can enjoy a steady income through the monthly lease from the tenant of the property. You can also start putting money into your future in the form of retirement investing.
It is highly advised that you put your savings in a lot of investment opportunities. That way, your financial wealth will not be threatened even when one investment fails.
If you will choose an investment, you may want to pursue one that will give you passive income. That way, you will not have to work as much as you did before, and yet your finances continue to grow. This is how you set yourself up to be a financial success. Eventually, you may even be able to give up your job for a lower income career that you love to do. That will give you high quality of living without sacrificing your pursuit of wealth.
These two go hand in hand if you want to increase your personal net worth as fast as possible. So make sure you keep both of them in mind when you do your financial planning.
The role of your accumulated wealth in financial security
When you are pursuing the growth of your financial wealth, that does not mean you are being materialistic. It simply means you are being wise about the use of your limited finances so you can achieve financial security.
According to a study done by Census.gov, “wealth is the one of the primary bellwethers of household financial security and prospects in the United States.” The study mentioned that in times of economic prosperity, the financial wealth of consumers rise. This is the time when they are able to grow their assets.
When the economy is failing, the household wealth suffers along with it. The value of the assets plummet and will keep doing so until such time that the economy starts to recover. Despite the devaluation, there are some assets that will be enough to help the consumer recoup their losses. From the accumulated wealth, the household has a fallback where they are draw money when income is lower than the usual.
The wealth that you have built up for yourself and your family can help you evade financial traps like debt. Instead of putting yourself through debt, you can simply liquidate your assets so you have enough money to spend. You do not have to borrow money to get out of tight spots. That will keep you from wasting money on interest.
Probably the most important realization that you need to get when it comes to financial wealth building is this: it is not about the income that you take home every month. It is more important that you learn how to use this money. When you are smart about your money management, then wealth will not be far behind. You do not have to increase your working hours. In some cases, taking a look at your lifestyle will give you the insight on how you can tweak your finances to work in your favor.