Building wealth is often considered a hectic task, which is precisely why many people get involved in easy things like get-rich-quick gimmicks and pursue transactions like purchasing lottery tickets that never seem to work.
Wealth comes from an asset. An asset is something that even pays you when you sleep or dream. The best form of an asset is holding equity percentage in a business. Equity is a financial term that is the percentage of shares you keep in a company.
This guide will discover how you can make, save, and invest money to build wealth as a beginner, leading to ultimate financial freedom.
Let’s get started.
How To Make Money?
When you are just starting without any money in your pockets, there are only two ways you can make money: sell a product or render a service.
To the best of my knowledge and expertise, rendering service is the best way to start. Because selling a product can be tricky, especially when you’re a beginner and lack money. Even if you can become an affiliate for a company and make sales for them to get commissions, it still requires a new skill set in sales.
There are millions of small businesses looking for professionals who can undertake their business tasks and help them overcome difficulties. All of this comes under the bracket of rendering the services.
For example, if you have a knack for design or marketing, sell your services to small businesses that need help with these areas. Designing logos, creating flyers, and coming up with advertising campaigns are all ways you can make money.
There are also countless other ways to earn a living, such as:
- Getting a job in a company that pays you a defined monthly salary.
- Tutoring students that need help in a particular subject. You can tutor both online on teaching platforms and in your local area.
- Performing drop-servicing, where you take orders from a client, get them fulfilled by a freelancer and then retain your portion of the money.
- And more.
The key is not to get stuck with this phase of life forever. Your goal should be to make enough money to cover the expenses and save whatever remains.
How To Save Money?
It might be tempting to spend cash when you have a lot of it. It’s not wrong; however, you still need to save for a rainy day. Below are the easy tactics that, if you can adopt and implement in your life, can save you a tremendous amount of money by the time you can invest it in a business.
Use Coupons
Coupons are one of the easiest ways to save money. You can cut costs on groceries, household items, clothing, and more by clipping coupons without spending time researching deals.
Buy In Bulk
Buying in bulk means buying large quantities of food, toiletries, cleaning supplies, and other household goods at discounted prices, for example, buying a case of shampoo rather than four individual bottles will cost you less per bottle.
Get Organized
Organizing your finances makes it easier to track spending and find savings. It also helps you stay managed to locate important documents such as receipts and bills quickly.
Start Saving Now
Saving money doesn’t mean waiting until you have enough to do something big. Instead, set aside a certain amount each month to put into savings. Even $30 a week adds up!
Avoid Debt
Debt is expensive. The crucial task is to pay off that debt first with the most interest percentage. That way, it will not accumulate over time, and you can save yourself from a big financial disaster. Paying off debt early can save you thousands throughout your lifetime.
Find A Budget Planner
A budget planner lets you see how much money you must spend every month. It’s easy to use and helps you avoid overspending. Further, track your spending habits to identify areas where you can cut costs. Look for places to reduce wastefulness and unnecessary purchases.
Learn How To Cook
Cooking healthy meals at home can save you hundreds of dollars a month. Plus, cooking from scratch gives you complete control over your ingredients.
Make Friends With People Who Have More Money Than You
Having financially successful friends can inspire you to work hard and earn more money. They’re also likely to offer advice when you need it most.
Take Advantage Of Free Services
There are many free services out there that you may be able to take advantage of. Check online to find out if any local organizations provide free services.
Cut Down On Expenses
Cutting down on expenses can help you save money. Try to live within your means and stop wasting money on things you don’t need.
Work From Home
Try to find a job that lets its employees work from home because it can help you become more independent, save money, and can also help you avoid long commutes.
How to Invest Money?
Now you have enough savings to invest in different assets to properly diversify your portfolio and save yourself from a potential recession.
Remember what we discussed at the start?
The best way to invest is by getting an equity share in a company.
You can do it in two ways:
- Purchase stocks of a company with an intent to receive long-term dividends.
- Incorporate your own company and occupy 100 percent of the equity.
If you want to play it safe, the first option would be viable because incorporating a company is like nurturing a newborn baby. My article on passive income ways would prove helpful if you are looking to opt for the first method.
As for the second option, you can kickstart your business by selling a product or providing a service by forming a Limited Liability Company (LLC). However, a whole new set of responsibilities will fall upon you by incorporating an LLC, such as:
- Keeping a record of every single transaction.
- The bifurcation between business and personal transactions.
- Performing transactions only through business bank accounts.
- Submitting annual financial statements and income tax returns to the government authorities.
- And more.
Nevertheless, you don’t have to perform all these tasks singlehandedly. A certified public accountant (CPA) will handle all these errands for you. From bookkeeping to filing records with authorities, you have to delegate these tasks to your CPA to focus on more critical elements of the business, like sales and copywriting, etc.
Just like when you invest in a stock that pays you dividends, you can withdraw your LLC’s earnings in dividends and pay fewer taxes than a salaried individual. This is how the rich operate in their everyday lives. They always own a piece of equity in their companies to withdraw dividends.
Bottom Line
This was an overview of the fundamental steps to building wealth. It may be enticing for beginners to go for get-rich-quick schemes, but wealth building stands on the above tried and tested blocks. It’s OK to take small steps. The important thing is to start.