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" data-orig-size="1733,1300" data-image-title="pexels-photo-534229.jpeg" data-orig-file="https://smallivy.com/wp-content/uploads/2024/08/pexels-photo-534229.jpeg" data-image-description="" class="wp-image-24522" width="1733" data-medium-file="https://smallivy.com/wp-content/uploads/2024/08/pexels-photo-534229.jpeg?w=300" role="button" data-permalink="https://smallivy.com/2024/08/04/three-habits-to-grow-your-net-worth/pexels-photo-534229/" alt="" height="1300" data-image-meta="{"aperture":"0","credit":"","camera":"","caption":"","created_timestamp":"0","copyright":"","focal_length":"0","iso":"0","shutter_speed":"0","title":"","orientation":"0"}" data-large-file="https://smallivy.com/wp-content/uploads/2024/08/pexels-photo-534229.jpeg?w=723" tabindex="0" />Photo by Pixabay on Pexels.comPeople try to make growing wealthy sound complicated. They talk about complex business deals and special connections. This makes growing wealthy seem outside of the capabilities of normal people unless they win the lottery and get lucky.
But the truth is that growing wealth is actually really simple. It just takes the right mindset and the ability to follow through. Today we discuss the three habits that will allow you to grow your net worth.
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Want to learn the secrets to investing and really turbocharge your returns? Check out the second book in The Small Investor series, Investing to Win. This book presents 40 years of investing experience. Someone starting with zero knowledge of investing and the stock market could take this book and learn all that they needed to invest and do well. It would also be useful to someone who has invested and traded stocks for a while but who is really not getting the kind of returns desired.
Investing to Win
Habit 1: Make more money
People who grow wealthy are always looking for way to make more money. They first look at careers they can do that pay well and get the training needed to get into those careers. This may mean taking college classes and getting a degree. But it can also mean going to a trade school, getting into a mentorship arrangement with someone in that field, or even just studying and practicing skills on their own.
If you are already working a job, you might see if you can pick up more hours where you are or find a second job to add to your income. But you should also see if there are positions at your workplace where you could make more money with the right experience. Can you work your way into a management job? Are there some special skills that your employer needs that you could learn? And if there isn’t and positions at your work or if they are filled and probably will be for a long time, are there other workplaces that do have something where you could make more money?
SmallIvy Book of Investing: Book1: Investing to Grow Wealthy
Another option is to start a side hustle that could turn into your full time gig. For example, the construction trades are paying really well right now. If you become skilled in doing things like tiling and carpentry, you could make a lot per hour. You could start out doing a few projects in your home (and making your home better while you do it). You could then take pictures of your work and put them on social media or print and hand out some cards in your neighborhood or on bulletin boards some businesses have to advertise your skills. These are jobs you could do after or before work.
If you do good work and get a few recommendations, this could turn into your fulltime job with more people wanting you to build something for them or do tiling for them than you can do. If you are successful enough, you could even hire others on to help do some of the grunt work while you focus on the highly-skilled portions of the job.
A final possibility is to go to college or a trade school to learn needed skills. Many companies will even pay for you to go to school if you’re learning skills that are useful to them. With so many online college classes now, you can probably find a way to earn a degree while you continue to work your day job.
(If you’d like to learn more about how to decide how much you should put in different types of assets, Sample Mutual Fund Portfolios gives lots of information and examples of how to make allocations for all sorts of different goals, including retirement.)
Habit 2: Spend less
Growing wealthy involves getting the most out of every dollar. Even if you don’t have a superstar salary, you can grow your wealth if you can find money to save and invest. The secret is to find ways to get everything you need but to spend less for those things.
Obviously things like looking for sales helps. If you can time your purchases for things that can wait until they go on sale, that helps as well. You just need to make sure you aren’t buying things just because they are on sale, but that they are things you truly need and would buy in any case.
You can also find cheaper ways to get things. Bring your lunch from home and spend a couple of dollars instead of going out to eat and spending $15. Brew a cup of coffee before you go to work and use the office coffee machine instead of stopping for a latte every day. A big one is to buy a used car and pay just $5000 in depreciation each year instead of $10,000. These are all choices you can make that will free up cash that really aren’t huge sacrifices.
A final habit is to save up and buy things for cash instead of buying them on payments. This does four things for you:
- You have extra cash so you rarely, if ever, pay late fees and overdraft charges.
- You avoid interest payments.
- It allows you to negotiate better prices since you’re paying cash.
- While you are saving, you are earning interest on the money you have.
This means that even if you make the same amount as someone else, you will have more money to spend. They will be losing some of their money to fees and interest. You’ll be receiving interest on your money. Plus you’ll get better prices for the things you buy.
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Habit 3: Invest
As mentioned with Habit 2, investing creates more income for you. If you have more income, it means that you can grow your net worth faster. If you create a feedback loop where you use the extra income you receive through investing to make more investments, your wealth can grow very quickly.
People who grow wealthy invest constantly. They have their retirement account contributions maxed out. They are buying stocks and bonds in brokerage accounts and sending money into mutual fund companies. And they are buying rental real estate and using the rents they receive from those properties to pay off the loans on them. Even if you’re just putting a little away with each paycheck, get in the habit of investing if you want to grow wealthy.
Don’t know how to invest? Check out The Smallivy Book of Investing for a great primer. It gives you all the information you need to start investing and managing your wealth.
Have a question? Please leave it in a comment. Follow me on Twitter to get news about new articles and find out what I’m investing in. @SmallIvy_SI
Disclaimer: This blog is not meant to give financial planning or tax advice. It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.
