What is Wealth Creation?
What is wealth creation and how can you create a savings strategy that works? This is a question that’s probably crossed your mind at least once. Americans across the nation struggle to obtain financial stability. But, why is this so common?
According to a CNBC report, only 29% of Americans are financially “healthy.” This is a concerning stat that raises concerns about our ability to make the most of our income.
What is Wealth Creation and Preservation?
The same CNBC report as above says 54% of people are “financially coping” while 17% are vulnerable. And, if 2020 stays on its current path, these numbers are going to rise drastically.
To overcome the fears of financial distress, it’s important to start with the basics and work your way up. So, what is wealth creation exactly? It’s the steady and consistent accumulation of income and assets over a period of time.
Building wealth is something that everyone wishes to do throughout their life. However, very few people actually prioritize it.
To create your path to wealth creation, you must start by developing a savings plan that is realistic and attainable. For example, this should include:
- Specific personal and professional goals
- Short-term and long-term budgeting objectives
- Plans to eliminate debt
- Retirement targets and investing strategies
This general list is the perfect starting point in assessing your future. In addition, start with smaller goals that build up to long-term success. Cross one goal off your list at a time and stick to your plan. It’s important to adjust along the way, but remain focused on your initiatives to build wealth.
Personal and Professional Goals
What is wealth creation without goals? In fact, it’s not possible. Your personal and professional goals will drive your ability to create wealth over time.
However, you are still behind the wheel. So, you have to determine what these goals are in the first place.
Start by writing down your needs and wants. Now, what will it take to meet these needs? This will help you establish realistic goals.
Make sure each goal is measurable. It should have a clear path to success. Specifically, there needs to be a target to hit, or else you are taking shots aimlessly into the wind.
If you don’t have anything to strive for, you will never be able to build wealth in a consistent fashion.
Short-Term and Long-Term Budgeting
Start saving as soon as you begin earning income. This isn’t as easy as it may sound, and I get it. Life happens and you have to adjust. From your health to living expenses, costs will continue to rise and affect your budget.
But, that isn’t an excuse to not create a plan. It does, however, give you the choice to be conservative or aggressive in your budgeting.
For starters, what is wealth creation budgeting? It’s your ability to take full advantage of your income. A guiding principal for this is the 50-20-30 rule.
This rule suggests you place 50% of your income in your fixed expenses. This includes bills such as your rent or mortgage. Next, place 20% into your savings.
The final 30% should go into living expenses. This is where many people begin to struggle. You have to be honest with yourself and recognize what you really need in life.
Plans to Eliminate Debt
Debt is your biggest road block to wealth creation. Therefore, eliminating your debt should be near the top of your priority list.
Pay off your credit cards as soon as possible. In general, don’t indulge in spending money that you don’t have. Life’s unique circumstances may require you to do so from time-to-time. But, pay it off quickly to get back on track.
Focus on “good debt” after your credit cards are taken care of. This includes your house mortgage or student loans. For instance, you may want to consider using your bonus to pay off your college tuition before jumping into a brand-new car.
Retirement Targets and Investing Strategies
I can’t express enough how important it is to invest in your retirement. Setting up a retirement account can make all the difference in your future.
This is a pillar to savings that many Americans fall behind. Statistics suggest millions of people don’t begin saving for retirement until their late 30’s or early 40’s. Don’t become a statistic and begin saving with your first check.
And, the best way to save is through good investments. Passive income is a hallmark to wealth creation.
Learn more about the stock market and investing in general. For instance, owning real estate is a popular choice.
What is Wealth Creation Without Smart Investments?
Investing can guide you towards financial freedom in a seamless transition. So, what is holding you back?
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What is wealth creation without smart investments? Find your path to building wealth today by setting goals, eliminating debt, budgeting properly and accumulating passive income.
About Corey Mann
Corey Mann is the Content Manager of Investment U. He has more than 10 years of experience as a journalist and content creator. Since 2012, Corey’s work has been featured in major publications such as The Virginian-Pilot, The Washington Post, CNN, MSNBC and more. When Corey isn’t focusing on Investment U, he enjoys traveling with his wife, going to Yankees games and spending time with his family.