This post may contain affiliate links to products that I recommend and I may earn money or products from companies mentioned in this post. Please check out my disclaimer page for more information.
Building wealth and knowing how to build wealth fast may seem like a fantasy for some. If you are living paycheck to paycheck, it probably seems impossible to become wealthy. You probably have no clue where or how to start building wealth fast.
Relax, there are so many ways to acquire wealth. For example frugal living is often a popular strategy for millennials to start building wealth. There are other common strategies as well for building personal wealth fast
While nobody knows what form the future of money will be, we all know that we will need it in some form.
Some of the best ways to build wealth fast include high-interest debt elimination, reducing everyday spending, increasing disposable income, investing money, acquiring income generating assets, tracking your progress, and reinvestment.
If you are interested how to grow your wealth fast and other wealth building tips be sure to check out the best strategies below.
What is Wealth Building?
Knowing the definition of wealth building is important for growing wealth. Wealth building is the process of increasing your net worth through multiple sources including cash, savings, physical assets, stock investments, real estate, and other diverse sources of income.
Why is Wealth Building Important?
Wealth building is important so you can improve your financial stability and financial status for you and your family. It is important to improve your net worth through growing wealth. If you were to solely rely on saving your income as the means improve your financial stability, you would fall behind financially due to inflation.
Sticking your income in a savings account will earn less. You won’t build a fortune by having your money sit in a savings account earning 1%. However, you do need to have a good amount of cash on hand for investing.
A better option is to grow wealth by using some of your income and invest in the stock market. The stock market on average returns 8% each year.
Why is The Importance of Wealth Growing?
The importance of wealth is growing because families don’t want to fall behind financially anymore. A lot of people still rely on only one source of income, their main employment. However, when that income is reduced or eliminated, you may suffer a huge financial loss. Often times, you and your family will have to make drastic changes such as moving back in with your parents.
Building wealth and creating long term wealth however offers a safety net. If you were to lose your employment, you have other sources of wealth. Knowing how to create wealth on your current income is important so you can improve your overall financial health for your family.
Why Should You Build Wealth?
You should build wealth so you are financially prepared for the future. Nobody can predict the future, but you might suffer a loss and be forced into retirement early. Another scenario might be that your employer has sold the company and you are laid off after 25 years. If you haven’t accumulated wealth, you may find yourself struggling financially. Knowing what happens if you don’t save for retirement is just one reason why you should build wealth.
How to Build Wealth From Nothing?
There is a misconception that it’s hard to build wealth from nothing. The truth is that you can build wealth without money with a simple formula. Below are the simple steps how to build wealth from nothing:
- Reduce Spending
- Capture Savings
- Increase Income
- Make Investments
- Reinvest Profits
While it does take money to make money, you can certainly build wealth from nothing by implementing the formula above. Following that basic systematic formula above, you will be able to build and acquire wealth.
Below are the steps to fast wealth creation.
6 Step Plan How to Build Wealth Fast
If you are trying to build wealth from nothing you may think that it will take a long. That’s not the case. There are ways that you can grow wealth fast by following a methodic plan. If you use a personal finance flowchart and follow these strategies, you can start to accumulate household wealth faster than you think.
Below are the steps how to build wealth fast.
High-Interest Debt Elimination
How to obtain wealth starts with eliminating your high interest debt. Your objective should be to payoff your high interest debt. In order to start building wealth fast, you must have positive cash flow. You can’t build wealth fast if your drowning in debt.
The biggest hurdle many households have that function paycheck to paycheck is that they have crushing amounts of debt. This debt prevents them from creating a budgeting strategy for their household budget.
What Kind of Debt Should You Eliminate to Build Wealth Fast?
There are two types of household debt known as secured and non-secured.
- Secured debt is debt such as mortgages or auto loans that are secured with an asset such as a house or an automobile.
- Non-secured debt is debt that has no asset tied to it. This often includes credit cards, student loans, medical bills, and personal loans to name a few.
The path to building wealth in your household must start with reducing and eliminating the non-secured debt. Debt with higher interest rates is usually non-secured debt because it is more risky for the creditor. If there is any extra money after paying your monthly bills, apply it to the credit card balances.
That is one of the biggest obstacles to building wealth fast is non-secured debt. The interest rates on non-secured debt have much higher interest rates usually than secured debt.
According to NerdWallet and the Federal Reserve, the average household credit card debt is now at $16,883. You may not earn enough money to pay that debt down fast just on your income. See: $40,000 a year is how much an hour?
If you are working class or middle class, you will have to payoff your debt with other tools than just based off of your income.
Even with a modest interest rate of 12.5% for credit cards you are still looking at hundreds of dollars in interest charges per year that need to be paid back. It quickly becomes very hard to get ahead of that curve ball.
Reduce Everyday Spending
An important step for how to build wealth fast includes reducing everyday spending. You may not realize that everyday spending can add up. Reducing everyday spending is necessary to build wealth fast because you need liquid capital available to put towards growing your wealth. You cannot build financial security or wealth unless you spend less than you earn.
There should be enough liquid cash available to cover things like additional one-time expenses such as a baby nursery or costs for a vacation. Having money available to cover these expenses without having to rely on credit cards is important. Reducing everyday spending is important because if you don’t have money set aside for emergencies, then setting up a separate savings account is a good way to address these costs.
One way to reduce everyday spending is to stop buying things you no longer need. Recently, I found 30 things I stopped buying to save money in my life. I used that savings money as a way how to build capital. You can do the same.
If you do not have any additional money, then you need to first get out of debt fast and then take a look at what can be reduced in your budget or eliminated. Getting your day-to-day finances on track is an essential factor how to build wealth fast. Reducing everyday spending is necessary.
You will not be able to build wealth fast if you do not have positive cash flow. You may have questions on how to budget your money. There are many different budget methods available for setting up a budget. Using a budget is a great way how to control your everyday spending and eventually reduce it.
Maybe you do not need cable TV anymore since there are so many cable TV alternatives available.
You can also look at switching auto or home insurance to find some additional money.
Once you have located some items and have reduced everyday spending, be sure to adjust your budget to reflect these savings. You can simply put this money into a savings account for now.
Increase Disposable Income
Another way how to build wealth fast is by increasing your disposable income. In addition to reducing expenses, you also need to increase income to accumulate wealth. Some of the best ways how to increase income to build wealth fast are below.
Work Side Jobs
You can build wealth fast by working side jobs as a way to earn extra income. You can work under the table jobs that will increase your income. These jobs are more as-needed type jobs which means you can work them if you have the time.
Additionally you can work and run ads for appliance recycling and then determine who buys used appliances near me and make a few hundred dollars a month.
Work PT Jobs
If you have a certain amount of time such as evenings that you can dedicate to working, check out part time jobs. You can become an unlicensed real estate assistant and earn steady paycheck amounts while also working in a career field.
Additionally, there are a lot of jobs that you can work from home that can provide sources of additional income that you can use to grow your wealth. You can even make money online with Google as a way to ern extra income.
Even if you have to go get additional certifications or take a few classes to do this, in my opinion it will always be worth it.
You can also take surveys as a way to increase income for wealth building. While these won’t yield a ton of money, you can earn some money that can be used for wealth building. The InboxDollar Hack is a great way to earn money by taking surveys.
You can also sell possessions as a way to increase income. You may not be able to itemize your deductions right now. As a result, when you get rid of your clothes, you are unable to take advantage of the tax deductions available. Instead of tossing them in the dumpster, you can sell them. There are a lot of places to sell used clothes online for cash which is a great alternative to throwing your clothes out.
Once you have paid off debt and increased your income, the next step how to build wealth fast is to invest the money you have. Investing your available money is one of the best ways to grow your wealth fast. There are a couple of ways how to grow wealth by investing money.
How to Build Wealth in the Stock Market
One of the best ways how to build wealth fast is by investing in the stock market. Historical returns on average are between 6% and 8%. You can invest in the stock market monthly and create long term wealth slowly.
The easiest way to create long term wealth through investments is by contributing to your pre-tax retirement accounts. Since you are investing with pre-tax, you have the advantage of using those pre-tax dollars to your advantage by investing them instead of paying tax.
I save anywhere from 25% to 36% of my income every year into my retirement accounts. This is one way how to build wealth in the stock market. They key to this is that you want to be able to put as much as possible into your retirement savings accounts as early as possible.
Therefore, the money you do put in has a lot of time to grow and compound quarterly with dividends. Over time this money will add up. Even with market crashes and corrections that do occur, the stock market historically averages between 6% to 8% per year on return.
Invest in Homeownership to Grow Wealth
Investing in home ownership is one of the easiest ways to grow wealth. It’s an investment that you get the privilege of living in and don’t have to work too much to do it. Growing wealth through home ownership is a better option than throwing your money away on rent. Additionally, there are also tax advantages of owning a home.
In all actuality, wealth creation through home ownership is a great way to obtain financial stability because even though you are paying a liability and a secured debt, home ownership is a great investment vehicle to build wealth and hedge against inflation. That’s just one reason why home ownership is important.
You will always have a physical asset, even if home values go down. Most of the time, home prices appreciate while you live in your investment.
For example, if your house is worth $250,000 and prices increase 3% in value in a year, you have just made $7,500 in household wealth just by paying a mortgage and living in a house. Homeownership is also a great strategy for not only building wealth but also generational wealth as well.
Grow Wealth Fast Through House Flipping
While this method is highly dependent on the real estate market, you can build wealth fast through house flipping properties. Investing money in real through house flipping is one of the fastest and most profitable ways to grow wealth fast since there is a large opportunity for big profits.
Depending on how much cash you have saved up, you can use this money for a down payment and to make repairs on your rehab property.
With rehabbing and flipping houses, the focus is on buying properties that are in distress and buying them at below market prices.
Once the repairs are made, sell the property for a profit as quick as possible. If you are able to sell the property within three to six months, you won’t have to endure a lot of carrying costs which can eat into profits.
House flipping is one of the fastest and quickest ways how to build a fortune in real estate and how to accumulate money.
If you can flip 4 or 5 properties, it’s not uncommon to clear $250,000 in profitover the course of a few years. Knowing about real estate finance can help with your taxes when the time comes to file.
Invest in Crowdfunding for Real Estate Projects
If you choose not to do the heavy lifting for investing in real estate yourself, there are other options to invest in real estate. You can invest in real estate crowdfunding and have other companies do the rehabbing and flipping of properties so you don’t have to.
You simply invest into the projects and you will receive a percentage of the profits while the project is ongoing and during the renovations as well.
When the project is complete, you will receive a share of the overall profits. It’s a great way to invest in real estate without actively being involved. Investing in crowdfunding for real estate makes sense especially if you don’t have a lot of time to dedicate to real estate projects yourself but need an avenue to invest in.
Acquire Income Generating Assets
One of the most important steps how to build wealth fast is to acquire income generating assets. Some of the best income generating assets to build wealth would include businesses, and rental real estate. By acquiring income generating assets, you can put the process of accumulating wealth on auto pilot.
Build Wealth Through Investing in a Business
Another wealth building strategy is to invest in starting your own business. Starting your own business is an excellent way how to build wealth fast since there are so many tax advantages that come with owning your own business. Additionally, you can also grow your business into a huge asset then sell it as a vehicle for growing wealth. You can also focus on starting a part time business as well such as how to start a pooper scooper business and then expand it down the road and hire management to run it.
Running a profitable business will help your overall goal of increasing your wealth since you can use the profits and invest them either. You can invest the profits into the business and grow wealth that way or use the business profits and buy stocks.
You can obtain wealth in either of those scenarios.
Accumulate Wealth Through Rental Income
Another income generating asset that you can use to build wealth is real estate rentals. The key to rentals is having positive cash flow each month. Even if it is just a couple hundred dollars, you can use that money to speed up the profit process. The key to building massive wealth through real estate rentals is to pay off the mortgage.
If you pay off the mortgage early, you will have significant positive cash flow. By using the positive cash flow and rolling it into a second property, you are now building wealth.
You can focus on single family and multifamily units. The advantage here is you can live in one unit while you rent out the remaining ones having most of your monthly mortgage covered. Living in multi units is one way how to build wealth on your current income since you may live mortgage free for a while.
A second option for accumulating wealth through rental income is to focus on public housing. You can become a section 8 landlord and earn guaranteed income from the government. Also, you won’t need a lot of capital to purchase section 8 rental units because they are usually a lot cheaper than traditional single family rentals (SFRs). This allows you to enter public housing as an investor with not a lot of initial capital therefore becoming profitable faster.
One advantage of using rentals to acquire wealth is over time they also appreciate and gain value. Down the road you can use one of the best 1031 exchange companies to roll your gains into a better property.
One of the most important steps how to build wealth fast is to track your progress. You need to know if your wealth building strategies and the plan implemented has been successful or not. One way to measure the steps you are taking to build wealth is by tracking your progress.
Be sure to create a monthly budget so you can account for your financial operations. List your expenses and income for businesses, real estate rentals, and stock market.
Determine where most of your income is coming from. One of my favorite budgeting tips and tricks is to add percentages to your budget spreadsheet. This will help you analyze all of your categories fast.
Tracking your progress is one of the best building wealth tips because it is a roadmap that will show you what wealth building strategy has worked the best.
Tracking your progress is a great wealth building hack for leverage that you should use.
Reinvesting your profits is also a key step to build wealth fast. Once you have increased your income through the various methods such as extra jobs, stock market, or real estate, decide how to reinvest the profits. There are a lot of options for reinvestment to build wealth fast. Some of those options for building wealth through reinvestment are below:
- Start another new business
- Purchase additional rentals
- Scale up income generating assets
- Invest in tax-deferred retirement accounts
While you can invest in any of these options above, the best way to grow wealth is to reinvest in what has been the most profitable. You should be able to amass wealth fast if you are investing more in what has been working the best.
It’s still a good move to diversify your profits. You shouldn’t put all of your eggs into one basket because that can be risky. If all of a sudden the stock market or the housing market crash, you could lose all of your wealth that you have built. That’s why it’s always recommended to diversify your wealth into different assets.
Additional Questions for Building Wealth Fast:
How Can I Increase My Wealth Quickly?
One way to increase your wealth quickly is to reduce your housing costs especially if you are renting. Housing is one of the biggest monthly expenses for most people. If you are renting, consider other alternative cheap housing options to save money. Additionally, you can also move back in with your parents as well to generate immediate income that otherwise would be going towards housing costs.
Building Massive Wealth Summary
By following a plan how to build wealth fast, it is possible to build wealth in your current income from nothing. Paying off debt, reducing spending, and increasing your income are all important steps to building wealth fast.
The ways of wealth creation also involve investing money in stocks and acquiring income producing assets. Investing money in businesses and real estate rentals are also important steps for how to grow your wealth.
All wealth building strategies must include tracking your progress so you can measure success. The final step includes reinvesting your profits to grow your wealth quickly. Following this strategy will guide you to wealth and give you a methodic step by step plan to wealth building.
All you have to do is execute the plan and you will be on your way to building long term wealth for years to come.