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5 Keys to Building Wealth

Building wealth is one of the most important ideologies in society.  Unfortunately, many people fall victim to living beyond their means and overspending.  While budgeting properly in order to save money is one of the keys to building wealth, there are other factors involved that still elude many individuals.  Surely there are many strategies one can partake in, instead we'll keep it simple and break down 5 Keys to Building Wealth.

1. Get Paid To Do Something You Love

In today's society there's a lot of opportunity available for people to do what they love to do as a profession. The Internet has provided individuals with an entrepreneurial spirit with the ability to market their products and services in a way relatively cheap manner, and with you a huge reach.

Of course, it's not as simple as having a good idea. Having a hard-working and dedicated attitude goes a long way. However, if you have the right mindset, it's very possible to use the Internet to created a virtual store, allowing business owners to thrive without having to pay for a brick and mortar store. The idea is to work smarter and not harder. Make use of your connections and with the right plan you can wind up making a living doing what you really want to do.

 

2. Save Your Money

This sounds obvious, but the concept is still neglected by many Americans who try to live beyond their means. Instead of trying to keep up with the Kardashians, try and save 20% of your paycheck. If you can't manage to do 20%, then start with 10% and see if you can't at least do that.

The idea here is to control your money, and not let money control you. The temptation to buy the latest trends and high priced items is real, but when that fad is over you'll just find yourself caught up in a vicious cycle all over again. If you have enough disposable income to afford these price inelastic products then more power to you. If not, then you may want to think twice before spending that wad of cash on that fancy handbag.

 

3. Put Your Savings To Work

If you've been saving your money, then you're on the right path to building wealth, and now it's time to put that money to work. In order to make your savings grow you'll want to start investing it logically. One of the most common ways Americans invest their money is in a 401k account. A 401k plans typically include matching employer contributions, tax-deferred earnings, and investment options. The money that comes out of your paycheck and into a 401k account happens before income taxes are deducted, which also means that you'll be paying less taxes at the end of the year.

Investing in real estate is one of the oldest and most lucrative ways of investing your savings. Fix and flip, as well as buy and hold properties are a great way to turn a profit. Recently, national real estate investors have found success in real estate crowdfunding. For example, Patch of Land offers many investors a 10-18% return on many of our investment opportunities. No matter how you invest your money, make sure that you perform your own due diligence so that you'll make the most out of every dollar.

 

4. Understand The Difference Between Bad Debt & Good Debt

Living debt-free is one of the biggest challenges for Americans these days, and with credit card offers constantly bombarding us in the mail, it's hard to avoid bad spending habits. However, understanding the difference between bad debt and good debt is key to helping yourself stay debt-free and also establishing a good credit score and solid line of credit.

Bad debt items include credit cards, particularly store credit cards, which carry high-interest rates. Most Americans enjoy the fact that they can buy now and pay later, but all that does is increase your total balance over time and just delay paying it in full altogether. Meanwhile, the disposable and durable items you purchase with your credit card lose value and will not help you build wealth in the long-run.

Good debt includes mortgages, real estate loans, school loans, and business loans. These are considered good debts because they represent investments that create value in the long-run. Generally, buying a home, or refinancing, to rid yourself of excessively high rates is also considered good debt. This concept is the same for generating debt to buy high-return stocks, bonds and other investments.

Related: Can We Balance The Distribution of Wealth in This America?

5. Set Your Goals High

One of the most underrated keys to success when it comes to building wealth is to set your goals high. Don't underestimate the power of positive thinking!  You must believe that you will not become a victim of the economy, or succumb to the pitfalls of societal pressures to live beyond your means. It's sad, but true that too many Americans live check-to-check and will remain stuck in a rut because they've developed bad spending habits over time. However, it's not too late for you! Follow these rules to building wealth and you'll be in a better position than if you didn't. Even if you're not currently able to live out your dream job, the least you can do is save your money, invest it wisely, and stay away from bad debt. On top of that, if you're confident and set your goals high, you'll find yourself building wealth and setting precedence for your future generations.

 

Are there any other keys to building wealth that you'd like to share?  Please leave us a comment and let us know what's made you successful.



If you want to learn more, take a look at some of the most commonly asked questions we receive about real estate crowdfunding on a daily basis and find out why so many people are crowdfunding real estate projects across the country with Patch of Land.
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