Our very own Marcus Holzberg, CFP® was recently featured in an article from Forbes. In it, he shared his insights that while investing can be a great way to build wealth, saving as much as you can on top of having a sound investment strategy will supercharge building wealth and securing your financial future.
There is an age-old discussion about the difference between being rich and being wealthy. One simple way to differentiate between the two is in how you manage your money. In this sense, being rich is synonymous with extravagance and flashy possessions as status symbols. Conversely, being wealthy means having financial security, stability, and a balanced lifestyle. Wealthy individuals typically follow a set of core principles, which you can learn more about in our blog post, 9 Essential Financial Moves That Actually Make a Big Impact. But whether you are in the early stages of your financial journey or further along looking to strengthen your finances, these three strategies can help set you up for long-term success.
1. Spend Less Than You Earn
It may sound like overused guidance, but one of the first rules of wealth-building is spending less than you make. Even with a high income, you cannot build wealth if you spend it all. Practicing the discipline of saving, regardless of your income, greatly impacts your financial security for the long term.
As Marcus Holzberg, CFP®, shares in the article:
“Investing is a fantastic way to build wealth, but it will likely only get you part of the way there. Understand your income and expenses, and find ways to cut out things you don’t really need so you can save as much as you can.”
To help with your savings plan, it is a good idea to automate your savings. You can implement the ‘pay yourself first’ philosophy – when you receive your paycheck, save some money for yourself first before paying for expenses. This helps you stay disciplined, minimizes emotionally charged decisions that can tarnish your objectivity, and keeps you on track to meet your goals.
2. Invest Early and Consistently
By investing early, your money will have more time to benefit from the power of compound interest. Even starting small is a positive step in the right direction, but staying consistent is key.
One excellent way to begin is to utilize your employer-sponsored retirement plans (such as 401(k)s), especially if your company offers matching contributions. Employer contributions are effectively free money that can significantly boost your retirement savings.
Maximizing your employer benefits, generally, is a great way to build wealth. Company benefits make up slightly less than a third of the average employee’s total compensation. Do not rush through picking your benefits every November or when you start a new job. If you do, you could miss out on some great opportunities that are available to you. Take your time to ensure you are maximizing them.
3. Own a Home
The third strategy the article highlights for building wealth is owning your own home. Homeownership has a longstanding track record of being a cornerstone to becoming wealthy in America.
By putting your housing costs toward an asset rather than paying rent, your wealth grows with age and can help accelerate your wealth more so than had you remained a renter. With homeownership, you take control of your residential choices as opposed to potentially being forced to move out one day. It also offers tax benefits.
With high property values and higher interest rates than just a few years ago, the barrier to entry for buying a home is challenging. However, with today’s variety of financing options and first-time buyer programs, like FHA and USDA loans, entering the housing market may be more accessible than you think and is certainly worth the effort.
Building wealth is not about hitting a home run, even though the occasional home run will help; it is about playing the long game. By making steady, informed choices and being disciplined with your strategy, you, too, can create a financial foundation that grows over time.
To learn more about strategies to build wealth and secure your financial future, check out the article here in Forbes featuring Marcus Holzberg, CFP®.
If you have questions about your financial plan and working with a financial advisor, check us out. You can schedule a complimentary, no-obligation call with us here!
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About the Author
Holzberg Wealth Management is a family-owned and operated financial planning and investment management firm based in Marin County, CA. As your financial advisors, we serve you as a fiduciary and are fee-only, so we never receive commissions of any kind. We help individuals and families like you in the greater San Francisco Bay Area and virtually nationwide with the financial decision-making process to organize, grow, and protect your assets.
** This writing is for informational purposes only. The author and Holzberg Wealth Management do not guarantee or otherwise promise any results that may be obtained from using this report. No reader should make any investment decision without first consulting their financial advisor and conducting their own research and due diligence. These commentaries, analyses, opinions, and recommendations represent the personal and subjective views of the author and do not constitute a recommendation, offer, or solicitation to make any securities transaction. The information provided in this report is obtained from sources that the author believes to be reliable. External links to third parties are being provided for informational purposes only. Holzberg Wealth Management is not affiliated with the third-party websites linked to, unless otherwise explicitly stated, and does not constitute an endorsement or approval by Holzberg Wealth Management of any of the third party’s products, services, or opinions.