Those who want to seize control of their financial destiny don’t point to inflation or economic setbacks and make excuses. They seek the knowledge and tools to overcome obstacles and chart their own course. If you want to generate substantial and sustainable wealth, this resource is for you. Unlike similar pieces, though, we won’t just list five investment options and call it a day.
Let’s explore five uniquely different steps you can use to lay the groundwork for long-term wealth generation. From mindset techniques to spending habits and financial goals to diversifying your portfolio— and yes, some investment insights, too—here are five ways you can take control of your financial future.
1. Cultivate Your Leadership Skills
When you think of building wealth, skipping right to the money-making part is tempting. However, making money and generating wealth are two very different things. Someone half-heartedly working a minimum-wage job is making money. They are not generating wealth.
Wealth generation requires a higher mindset that looks beyond individual dollars and cents. It doesn’t seek to exchange physical labor and precious time for a larger number of dollars per hour. To truly generate sustainable wealth, you must gain the confidence and discipline to guide your finances. In short, you must become a leader.
Corporate keynote speaker and metaphysical master Erin Patten is well-versed in the area of leadership development. Patten points out that wealth, as a concept, isn’t restricted to money. It applies to overall well-being and your mental, emotional, and spiritual condition.
To truly generate wealth on a successful level—and not lose yourself in the process—you must develop your leadership strengths in a few key areas:
- Know yourself: What are your strengths? What are your limitations?
- Know your why: Why are you generating wealth? What is your end goal?
- Commit to discipline: Self-discipline won’t just keep you on track toward financial goals. It will help you know when to rest and recharge.
If you want to generate wealth for months, years, and even decades on end, you must start with yourself. Cultivate a mindset that is able to think clearly, make sound, informed decisions, and equally understand when to go all in on an opportunity, when to steer clear, and when to rest.
2. Use Goals to Guide You in Generating Sustainable Wealth
The desire to generate wealth is common. It’s also nearly impossible to define without further input and clarification. To put it another way, “generating wealth” isn’t an end unto itself. It is a means to an end.
So, what is that end? The wealth that you accumulate over time must have some kind of objective if you want to avoid becoming an Ebenezer Scrooge type obsessed with nothing but counting your coins.
If you want to effectively create lasting wealth, you need to set goals to guide you. A thoughtful objective can help you make decisions. It serves as a North Star that keeps you moving in the right direction.
Time-Bound Wealth Goals
The question is, what kind of goals do you set when it comes to generating wealth? Everyone likes to point to the SMART goals concept—and it’s wise to make your goals specific, measurable, achievable, relevant, and time-bound. When it comes to money, though, you really want to focus on the “T” part of that acronym.
For example, you don’t want to invest in a long-term real estate position as a way to generate some cash for a vacation in a few months. At the same time, you don’t want to chase the latest meme stock craze or cryptocurrency launch if you want to generate wealth that lasts for fifty years.
The investing experts at Charles Schwab provide some advice on how to set time-based goals in a financial setting. They establish three stages:
- Near-term (or short-term) goals are within 2 years.
- Medium-term goals are within a three to 10-year window.
- Long-term goals are a decade or more in the future.
You want all of these in mind when considering building sustainable wealth. What wins can you invest in right now? A short-term option could be setting aside money to invest from each paycheck.
What medium-term wealth-generating tactics are available to you? Perhaps there is a promising stock investment on your radar. Is there a business idea or some other long-term play that you can begin to plan for? Integrating short-, medium-, and long-term tactics is a key step in creating a sustainable wealth generation plan.
3. Cultivate Smart Spending Habits
There are two aspects to cultivating wealth that lasts—building new wealth and preserving existing wealth. The former is usually the focus, but often it is the latter that can undermine a potential fortune in the making.
This is where smart spending habits come into the picture. The way you spend your money has a direct impact on how much wealth you can generate. With that in mind, here are a few tips to begin reigning in any loose spending:
- Build a better budget: If you’re thinking of building sustainable wealth, you likely already have a budget. But is it tailored for saving and investing? If not, consider going over things and updating your current budget to reflect your new financial goals (see step 2).
- Follow the 80/20 Rule: If you aren’t sure how to adjust your spending, start with the 80/20 Rule. Save 20% of your income as a starting point and see if you can increase it from there.
- Skip recurring optional expenses: ESL Federal Credit Union points out that avoiding that $3 splurge on a daily cup of coffee can add up to $1,095 in savings in a single year!
There are countless ways to develop better spending habits in addition to these. What matters is that you do your research and find the areas where you can quickly and effectively make a difference. As you curb your spending and find yourself sitting on larger lumps of cash, don’t be idle. Begin planning how you can invest that money as a way to build long-term wealth momentum.
4. Maximize Your Earning Potential
As you gain control over your spending, also consider ways you can increase your income. If you’re working a full-time job, evaluate if you’re making a reasonable salary. If you find your compensation package is lagging behind industry standards, consider asking for a raise or shifting to a company that will pay you better.
Even if you can’t improve your primary salary, there are many ways to make additional money. From affiliate marketing to Airbnb, freelancing to mystery shopping, consider how you can maximize your earning potential.
Remember, if you improve your income in the name of building lasting wealth, every dollar you earn is worth more than its current value. It is another piece of your investment puzzle that can continue to work for you, generating passive wealth for years into the future.
As you assess your earned income potential, remember step one. Stay in that leadership mindset. Look for easy opportunities that yield the most income without hurting your health or well-being due to unreasonable increased effort. Finding that balance of a sustainable maximum earning potential isn’t easy. It takes wisdom as well as hard work.
5. Diversify Your Investments
As you integrate steps one through four, you’re going to begin having more money on hand. This is a critical first step. We’ve all heard the classic saying: It takes money to make money.
As you find yourself with more money to invest, though, you’ll discover that choosing where to invest is more difficult than you might think. You could follow Warren Buffet’s famous advice and just ride with the S&P 500.
However, that is a slow, limited path to wealth. Your best bet is to look for a variety of passive income options and then diversify your savings. You can spread out your investments in a few different ways, including:
- Keeping some cash on hand.
- Choosing only quality companies, stocks, and other investment vehicles.
- Looking to areas like real estate along with traditional stock and bond options.
- Keeping risky investments like cryptocurrency to a minimum.
By diversifying, you spread out your risk. This ensures that if one area of the market is hit harder than usual, your entire portfolio won’t feel the full impact of the downturn.
The Challenge of Building Lasting Wealth
As you consider ways to build lasting wealth, make sure to stay holistic in your approach. Don’t blindly follow lists of potential investments or quit your job to start a half-baked company.
Sustainable wealth comes from consistent, thoughtful wealth management and decision-making. Start with that all-important leadership mindset. Set short-, medium-, and long-term financial goals. Cultivate smart spending habits and maximize your earning potential. As you invest and build your wealth, stay diversified.
If you can approach generation with a consistent, thoughtful plan in place, you can begin to build a personal fortune that can last well into the future. The only question, then, is figuring out what you’re going to do with it.
