Building wealth in a short period of time can seem insurmountable, especially if you don’t come from money. But making the right decisions can significantly impact your chances. All it takes is some strategy, discipline and risk-taking.
Here are six ways you can increase your financial success in as little as five years.
Invest and Invest Some More
The No. 1 way to grow wealth is by investing, money guru Ramit Sethi told CNBC earlier this year. “Invest a percentage of your income every year automatically and increase that percentage by 1.
“We often believe that rich people have access to secret investments, and that’s how they make a ton of money. Listen, I have access to those investments, and I can tell you right now they typically do not perform better than a simple S&P index fund.”
Always Negotiate a Better Salary
Getting paid what you’re worth, whether that means negotiating where you work or finding a higher-paying job, will always reap rewards. A higher salary immediately boosts your income, which is the foundation of wealth building. It allows you to save and invest more money, accelerating your overall financial growth.
According to finance expert Skyler Fernandes, founder and general partner at VU Venture Partners, when negotiating a better salary, don’t solely focus on the monetary figure. “Many employers offer non-monetary benefits like extra vacation days, flexible work hours or professional development opportunities.”
He said these perks can have a significant financial impact.
“For instance, additional time off can reduce your personal expenses,” he said, “while professional development can lead to higher-paying positions in the future.”
He noted that negotiating for a comprehensive compensation package, including non-monetary benefits, can be a lesser-known strategy for increasing your overall wealth.
Manage Your Debt
You can be making good money and still not go anywhere if you’re holding onto a mountain of bad debt. High-interest credit card bills will end up slowly jeopardizing your financial goals.
To avoid this trap, try using the debt snowball or debt avalanche payoff methods. By paying off debt, you free up more of your income for saving and investing, reducing financial stress and increasing your future financial success as it’s easier to build wealth when you’re not burdened by high interest rates.
Keep Your Expenses Low
Managing expenses goes beyond creating a budget, Fernandes pointed out.
“Conduct a thorough audit of your monthly subscriptions and recurring bills,” he added, advising to cancel services you no longer use or need. “Many individuals unknowingly pay for unused gym memberships, magazine subscriptions or streaming services. This audit can free up additional funds that you can redirect towards wealth-building endeavors.”
Stick With Your Budget
As noted in the above tip, it’s not enough to make more money; you also have to allocate it wisely. As celebrity finance expert Dave Ramsey explains on his website: “No one ‘accidentally’ wins at anything — and you are not the exception! If you want to build wealth, you have to plan for it. And that’s exactly what a budget is: It’s just a written plan for your money. You have to sit down at the start of each month and give every dollar an assignment — and then stick to it.”
Take On a Side Business
Increasing your income is one of the top ways to build wealth quickly. Setting yourself up for success means you need to start putting your skill and time toward a side hustle that will generate and grow your wealth.
“The digital age has made entrepreneurship more accessible,” said Percy Grunwald, personal finance expert and the co-founder of Compare Banks. “Having a side business can change everything by providing a second, possibly passive source of income.”
As that business expands, it has the potential to generate significant revenue, he said, and these commercial incomes frequently come with tax advantages.
To help you consider options where you can best use your skills, talents and capabilities, always take the market demand into account. Ask yourself what are you best known for both personally and professionally. What is something other people are constantly turning to you for help with? This likely will help you define possible avenues.
If you want to sell professional services, for example, consider freelance opportunities like writing or tutoring. Or if you’re more into setting up a product-based business, you can try creating an ecommerce store. The point is to invest in a side hustle that will help you reach that five-year financial benchmark.
As Grunwald noted, “Accumulating money quickly involves balancing maximizing revenue with minimizing expenses. Accelerated financial growth can be set up by researching entrepreneurial opportunities, being frugal with spending and negotiating a greater salary.”