Do you want to build your wealth, but don’t know where to begin? Building wealth can seem like a tall order. It’s hard enough to pay the bills, but plenty of people build their fortunes from humble beginnings.

John D. Rockefeller got his first job as an assistant bookkeeper making only $16 a month. Today he is recognized as the most successful business tycoon in American history. You might not become the next Rockefeller, but you can take the right steps to build your wealth. You just need the right plan, and you need to stick to it.

Wealth creation boils down to these four essentials:

Stick to your goals Eliminate debt Increase income Start saving

By following these tips, you can gain financial freedom and enjoy a wealthy retirement.

1. Stick to your S.M.A.R.T Goals for Wealth Creation

The path to wealth creation can be difficult. But setting goals will help you keep your eye on the prize. The acronym S.M.A.R.T is helpful. Let’s break it down letter by letter:

S stands for specific .The more specific the goal, the more likely you are to achieve it. These are 3 important questions to ask yourself: What are my goals? Why do I want to achieve them? Who are the people involved in my goal? To succeed in wealth creation, you must address the specifics.

M stands for measurable . A measurable goal has a clear definition of success, or in other words, a target. You either hit the target or you don’t, there is no in between. Rather than saying “I want to be rich!” try setting a fixed number you can strive for.

A stands for agreed upon . By including other people in your goals, you may be more likely to achieve them. For example, if you are married and planning your retirement, your spouse is included in those plans. Agreeing upon goals with other people holds you accountable. Accountability is vital to keeping with your goal of wealth creation.

R stands for realistic . It is great to dream big, but it is better to set realistic goals. If you set a goal that is unrealistic, it becomes easier to give up on. But if you set an achievable goal, you are more likely to find ways to make it happen. The difference between a realistic and an unrealistic financial goal could be a simple tweak. For example, saving $10,000 is realistic, but you might need two years instead of one to achieve that goal.

T stands for time frame . By setting a goal with a time frame you add a sense of urgency. Deadlines motivate people to be more intelligent with their time. Time management is a crucial aspect to achieving your goal of wealth creation.

2. Eliminate Debt

Taking on debt reduces your ability to build a nest egg. In a perfect world, you should steer clear of all debt. But some expenses, like education and medical bills, are necessary. Here are a few strategies that can help you eliminate your debt.

Stop the bleeding. If you pay most of your income to creditors, then the first step towards recovery is to stop adding debt. Some people find that the best way to stop adding debt is by only using cash. That way you cannot spend more than you own. Create a new budget. After you’ve put the credit cards away, it is time to reconsider how you are spending the money you have. The 50-20-30 rule of budgeting is a great guide. Put 50% of your income towards fixed expenses like mortgages, rent, and car payments. Put 20% into savings. And put 30% towards all other living expenses. That 30% zone is where you have to be honest with yourself about what you really Climb down the debt ladder. With your new budget it is time to start paying off debt. You have to decide whether you’d like to apply the payments evenly across all your accounts, or pay off the account with the highest interest rate. If you choose to pay off one account with high interest rates, make sure you can also make the minimum payments on your other accounts. Once you pay off the account with the highest interest rate, start paying off the next account. Eventually you will pay off all of your debt.

3. Increase Income

The most obvious aspect of wealth creation is increasing your income. There are two forms of income: active and passive. Active income is income received from performing a service. Anybody who has a job receives active income. Passive income is income received from enterprises in which a person is not actively involved. Passive income could be earnings from a rental property, dividend stocks, or money in accounts accumulating interest. Wealth creation requires a hybrid of active and passive income. Or as Warren Buffett famously said, “If you don’t find a way to make money while you sleep, you will work until you die.”

Active Income

You can increase your active income by earning a raise. In order to increase your income, you must increase your value as an employee. What are you offering the company? As your value goes up, so does your pay. Follow these rules to increase your value and increase your active income.

Meet expectations. Before you start trying to add a new skill, make sure you are doing what is expected of you. Talk to your manager to ensure that you are on the right track. You might discover work expectations you were not aware of. Find areas to excel in. Determine a list of areas in which you could improve and focus your efforts there. Be sure to consult with your manager because if you are going to put more effort into something you want to choose the right area.

Passive Income

There are so many different ways to accumulate passive income. But some are better than others. For example, a savings account accumulates interest at such a low percentage that the returns are negligible. The best way to increase your passive income is through the stock market.

Investing is the biggest key to building your wealth. You can grow your wealth exponentially by investing in the stock market. Many people find investing to be intimidating. As a result, only 54% of Americans own stocks. Don’t let unfamiliarity prevent you from making money in the market. Get educated about investing here, and start building your wealth today. Dividend stocks offer a steady stream passive income. Most companies pay out a share of their earnings to their shareholders. Those payouts are called dividends, and they can provide you with a steady income. Most dividend companies pay their shareholders quarterly. So, if you space out your dividend payment dates you can meet your expenses throughout the year. For more information about dividends, check out our “What are Dividends?” Owning real estate is one of the oldest forms of passive income. The real estate market always experiences ups and downs, but for the most part real estate is a great way to generate long term returns. Once you have reliable tenants you can expect a steady income stream.

4. Start Saving

You will only make so much money in your life, that is why you need to make the most of every dollar. Brigham Young is noted for saying “If you wish to get rich, save what you get. A fool can earn money; but it takes a wise man to save and dispose of it to his own advantage.” It is important to save what you earn, but how you save is even more important. To maximize your saving efficiency, follow these easy steps.

Establish your short term and long term savings goals. As mentioned earlier in the article, goal setting is vital to wealth creation. Even more important is sticking to your goals. That is what separates the person who dreams and the person who achieves. Aim to save at least 15% of your pre-tax income every year. Take full advantage of employer matches to your retirement plan. Most employers offer 401k matching programs. It is vital that you take full advantage of these programs and put as much towards your retirement plan as is financially responsible. Supercharge your savings with tax advantaged accounts. Tax advantaged accounts refer to any type of account or plan that is either tax-deferred or tax exempt. For example, IRA’s and 401k’s are tax-deferred accounts while Roth IRA’s are tax exempt.

These four guidelines will apply to many of the big financial decisions in life. Sticking to your goals, eliminating debt, and adding more income will help you in the long run. But those everyday purchases add up too. The smaller purchases are equally as important as the big ones when it comes to wealth creation. Start by only making purchases of necessity, not desire. Stop going to Starbucks and Chipotle. Make your own coffee, prepare your own dinner.

Now you have the keys to wealth creation!

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