Wealth building is not the same thing as making a shit ton of money! Most people, when they think of wealth building, think they must be making a high per year income in order to successfully obtain it!
What exactly is wealth building then? A term I think most people would understand is your net worth. What’s net worth? Simply put, your net worth is how much money you are worth. You get this number by deducting/subtracting your liabilities (debts, expenses, etc.) from your assets (income, value of property, etc.)
So how exactly do you build wealth if it’s not about how much you make?
Instead of focusing how much you make, you must focus on how much you keep! This is the first major shift in your thinking that’s necessary in order to start building wealth. It seems like a simple concept, but fully grasping this will immediately start to shift your life towards a life of wealth building instead of income generation.
If you’re at a job making $250,000/year but you’re spending $250,000/year you’ll never accumulate wealth. If you ever lose your job, you’ll be back at where you started at best. Worth exactly zero dollars!
As I said, that’s at best! Most people actually become worse off after because they now owe debt conclusive to earning a high income that they no longer can pay!
Once you have this shift of focus and realize it’s not what you make but instead is about how much you keep, what’s the first step?
It’s really that simple. No matter how much or little money you are making, the first step is committing to saving 20% of what you make! Instead of looking at money as just a resource that comes for you to spend you must start taking some of your money and making it work for YOU!
This means saving 20% of your income and then using that money to invest. This could be investments in stocks that pay dividends, rental properties that generate income or even a simple CD at a bank that earns 1% returns.
Again, the focus isn’t so much about what investments you decide to pursue per say, but instead realizing that you have to make your money work for YOU! Creating a passive income, your money generating more money for you is a key aspect in wealth building.