Certified Financial Advisor

3 Tips to Build Wealth from a Certified Financial Advisor

How can you build wealth? It’s a topic that’s at the front of most people’s minds. But it’s also a topic of heated debate. Since so many people promote “get rich quick” schemes, it’s hard to trust what actually works when it comes to building wealth. When you find a certified financial advisor who can help you create a strategy to build wealth, you’ll be on the right track.

As a leading financial management firm with qualified, professional certified financial advisors on staff, we’re taking a dive into this popular topic. The steps are simple, but they need to be followed carefully. Here are our best tips on how to build your wealth and secure your future.

Breaking Down the Path to Wealth

It certainly seems simple, but the road to wealth is not an easy one. It basically boils down to this. In order to achieve financial wealth, you need to do the following:

  1. Make money. If you want to even think about putting money away, you need to be making money first. And you need to make enough to cover your financial obligations and have something left over to invest or save. A long-term source of income needs to be sufficient enough to cover your day-to-day expenses and have money left over at the end of the month for investing.

  2. You need to save. Once you’ve developed an income that covers the basics of your budget, you need to create a savings plan. A proactive savings plan will help you save or invest your money rather than blowing it on unnecessary expenses at the end of the month.

  3. You need to invest. While savings is a great way to build wealth, investing your money will be the best course of action to build wealth. But you need to invest the right way.

Tips for Building Wealth from a Certified Financial Advisor

Now that we’ve broken down the simple steps, let’s dig a little further. We talked to one of our most successful financial advisors. She uses this simple equation for building wealth.

Savings= Income-Spending

Step 1: Make Money

This seems so obvious, but it’s the most fundamental step of building wealth. Anyone who has worked with a household budget knows that it’s important to save a little each month to invest in your future. But, in order to save, you need to make enough money first. Does your long-term income source bring you enough money to save?

While it’s important to cut unnecessary spending if you want to build wealth, you can only cut costs so much. Once you’ve brought your expenses down to the bare minimum, you should look for ways to make more money.

Are you good at your job? Are you being paid the salary or wages you deserve? Is there a supplemental position you can apply for to make more money?

There are two types of income professionals in the financial industry consider. Earned income comes from what you do for a living. It’s the money you make from your job. Passive income comes from your investments. For the purpose of building wealth, let’s focus on earned income.

Earned Income

Here are four things to consider when you think about what you’d like to do to establish a long-term income source.

  1. What do you enjoy? Studies show that people who truly like their career or job will succeed financially. That’s because you will perform better if you enjoy what you do.

  2. What are you good at? Consider what you do well. Do you have a special talent? Did you go to school and receive certification or accreditation in a certain subject matter? When you find something you do well, it’s easy to use your talents to earn a living.

  3. Consider what positions pay well. Once you figure out what you like to do and what you’re good at, find positions that meet your financial needs or expectations.

  4. How will you get there? Determine if there are any educational requirements you need to pursue your options.

Following this guideline for choosing the right way to earn income will set you on the path to building wealth. Be open-minded but remain proactive. Don’t expect the right option for you to just fall into your lap. You should also continue to evaluate your financial situation annually and shift your gears as necessary.

Step 2: You Need to Save

Once you start making enough money to cover your financial obligations and enjoy your life, you need to start saving. This is where most people fall short. You’re covering your financial obligations and living comfortably, but you don’t seem to have enough money left over to save. This is most likely because you’re spending your leftovers on things you want. When your wants exceed your budget, there will be no room to save appropriately to build wealth.

Get your budget on track with these steps!

  1. Track your spending for a month. Use a financial software application or program to do this. Categorize your expenditures. Be aware of your spending habits and identify areas where you need to show more control.

  2. Buckle your belt. Break down your expenses into wants and needs. For example, you need a roof over your head, food on your table, and clothes on your back. But, do you really need to go out to dinner every weekend? Explore ways to cut down your spending. Maybe you need to start bringing lunch to work every day or stop splurging on that $5 latte from Starbucks.

  3. Adjust your budget. As your life changes, so will your financial obligations. You may have a new baby and need to pay for daycare. Reassess your budget on a yearly basis to make sure you are on track according to your current living situation.

  4. Build a cushion. Unexpected expenses can do a number on your financial situation. You should really have enough savings to cover 3-6 months of living expenses in the event of an emergency or financial setback. We can’t control things like job loss or health problems. You should always have an emergency fund, just in case!

The best way to start saving is to break down your current spending habits. What do you really need to spend money on and what do you simply want to spend money on? A few dollars saved here and there will eventually add up. Keep in mind that this doesn’t mean you can’t go out and enjoy your life once in a while. But, taking the family out to a special dinner once a month is going to be much better for your finances than doing it every week.

Step 3: Invest Wisely

Once you know you’re making enough money and saving enough money, it’s time to invest. But you need to be sure you are investing the right way. If you want to truly build wealth, you need to build a sizable portfolio. This means you need to take on risk. But you need to determine what level of exposure is right for your family.

Talk to a certified financial advisor to assess your situation. Build an investment policy statement. Determine your return and risk objectives. Take into consideration your current financial situation. What is your income? What are your expenses? Do you have financial goals? Then determine the appropriate asset allocation for your family.

Your advisor will put together a combination of cash, fixed income, equities, and alternative investments. It’s important to find a wealth management team that works for you. With a wide variety of options, choosing the right fit may be difficult. While it could take time, the time you invest in picking the right team for you will be well worth it.

Remember, there’s really no such thing as getting rich quick. Building wealth takes time, planning, and careful consideration. You’ll need to analyze your situation each year and readjust as your life changes. With the right team behind you, you can build wealth and enjoy yourself in your retirement years.

When you build wealth the right way, the rewards will be well worth it. For more information on building wealth, get in touch with one of our certified financial advisors.

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