4 Simple Steps to Building Your Wealth

Sometimes it feels like every man and his dog has some kind of advice on how to become wealthy.  Just ask one question about wealth, or money, and the internet gods will blast you with every conceivable way to get rich quick!

Years ago a mentor of mine said to me, “be careful who’s advice you listen to”.  If it is to do with wealth, the question is, are they wealthy?  If not, then is their advice based on anything meaningful?  Or are they simply flogging the latest ‘get quick rich’ trend?

I consider myself wealthy (by my standards), and remember that is a very subjective term.  Wealth to me consists of much more than just money in the bank!  But I have managed to retire early, by 50, so we did manage to do a few things right 😉

So, what advice would I give my younger self?  Simple!

Four Simple Steps to Wealth

There are really 4 simple steps to becoming wealthy!

• Work Smart
• Live Conservatively
• Save Hard
• Invest Wisely

If you simply start with these 4 steps you will be amazed the difference they can make.  Small steps lead to massive results. 

Let me explain why….

Step 1: Work Smart

The simple truth is you will never get very far in anything without hard work.  Yes, there are people out-there pushing ‘short-cuts’.  They say, “Why work hard when you can do this instead?”

But you only get access to the so-called short-cut if you pay them money.  So really the short-cut they are promoting is to rip people off with false advice dressed up as the latest trend.

Look at anyone that is truly wealthy, and it has come from hard work.  Even those that look like an overnight success, really came from years of grinding.

So, my first piece of advice is to simply work hard at whatever it is you choose to do.  But not just that – we should say work “smart”.

There are people who just work hard and grind for years but never achieve the results they are after.  So, we also need to be smart about how we go about our work.

Maximise Your Income

What we are trying to achieve here is to maximise our income over the longer term.

Perhaps you are still in school and have an idea of the profession or industry you would like to be in.  You need to work hard to achieve the highest results, to get best jobs that pay the most.

Perhaps you already have a job.  Now your focus should be to maximise your earnings.  Is it a promotion you need, or a slight change in career direction?

You need to understand what path you need to take to increase your income.  What additional skills or knowledge do you need and how can you get them.

The company you work for clearly pays some people more than you.  Your goal is to find out why and work to fixing that!

Always Add Value

Here’s a piece of advice that will always serve you well – always, always be looking for ways to increase your value.  In other words, how can you add more value to your work, and become a more valuable person to those who you serve?

If you are employed in a job, how can you add value to your place of work.   What would it be that would help you stand out?  Something that your management will think, wow, now that is special.

You need to be looking to leave your workplace better each day because you showed up.

I am always amazed at how his level of work ethic is missing in most people these days.  The attitude is more about ‘how can I work as little as possible without being found out?!’  This guarantees your income will simply not change, and over time go backwards.

You will always be rewarded for hard work and adding value.  The reward might not come from where you expected, but it will come!

Key Actions

• Look for ways to maximise your income – take that over-time when you can!
• How can you add value to your work, to make you stand out?
• What exactly do you need to get that promotion?

Step 2:  Live Conservatively

Most people don’t realise how indulgent and wasteful our modern lives have become.  This is why step 2 is learning to live conservatively or frugally. 

I am not suggesting you need to live like a hermit or stop doing the things you enjoy most.   What would the point of living be then?

But I am saying you need to make clear and conscious decisions about where you are spending your money and why. 

Practise Conscious Spending

Way too often we spend all our money (and more) on things we simply don’t need.

It’s not really our fault – I mean it is so easy to fall for all the advertising tricks that bombard us every day.  Not only are there so many new ways to get advertising messages in front of us, but the methods and tricks used border on simple brainwashing.

How many times do you have some form of screen in front of you each day (hint: this may also be where your money is going???!).  It could be a phone, tablet, laptop or TV.  In many cases it will be more than one screen at a time. 

Now overlay all those screens with social media, where we have shared our most intimate details of our lives.  We have become the perfect target for all forms of deeply focused and aggressive marketing and advertising.

Feeling down…this will make you feel better.

Feeling lonely…try this.

Feeling overweight….we have the perfect solution.

Feeling tired…simply order your food direct to your door.

Want to keep up with your friends…you need the latest gadgets.

It never, ever stops – 24×7, 365 days.  No breaks, no holidays, no down time.

If you have a dollar, there is someone to grab it.

Where Does Your Money Really Go?

As our income grows over time, there is always something to spend the extra dollars on. 

It should be easy to make a list of all the things in your life you really could do without, that is costing you heaps!

• Food delivery services (how lazy have we become!)
• Gym memberships (only works if you actually use it!)
• Streaming services (how many do you really need?)
• Takeaway food and coffee (remember home-made lunches from left-overs?)
• New clothes (how much can you really wear?)
• Etc, etc

Then there is the big stuff like,

• New iPhones, TV’s, laptops, iPads etc
• New cars
• Overseas holidays
• Or worse, an over-sized house!

How can you possibly get ahead?

This whole process impacts us in so many insidious and horrible ways.  We think, if I can just get that promotion, get that raise, then everything will be better.  I’ll be able to “get ahead”, pay off my debt and maybe save a little.

But it never happens.  There is always something to soak up the extra cash.

Stop the Leakage!

A mentor of mine once said, you must stop the leakage.  Simply put, you must spot and stop the things that drain your money away.

There are so many things that we allow into our lives, that we really DO NOT NEED.  We may buy them because of some promise to make us feel better, but it is always short lived (at best).  I mean how many things have you bought and had buyer’s remorse immediately after?!

So how do you fix this? 

Understand where The Money Goes

Make a list of your monthly expenses.  Decide which ones you could easily do without and turn them off now!

Before making any large purchases wait at least a week (or three).  Make a solid list of the reason why you need the new phone/car/holiday etc etc and have a look at the alternatives (like staying with the current model that does 100% of what you really need).

Look for cost-free ways to fill those gaps in your life (a walk along the beach, with a home-made coffee costs nothing).

That mindset shift to living more conservatively will have an amazing impact on your life! 

The more conservatively you live, the more cash you have.

The more cash you have, the more you can save and invest.

The more you cut expenses, the less you need to save to achieve financial freedom.

The more conservative your lifestyle, the longer your wealth will last.

Key Actions

• Make a list of where the money goes each month.
• Turn-off the expenses you really don’t need.
• Find simple cost-free ways to enjoy your leisure time.

Step 3: Save Hard

Now that you have adjusted your lifestyle and stopped the leakage, you will find yourself ‘freeing’ up cash.  Instead of having ‘too much month at the end of the money’, you now have ‘spare cash at the end of the month’.

So, what do you do with this extra cash?  Not spend it – which is what most people would do!!!!  And that is why most people are poor.

No!!!  You save it!  How is it the very thing that our parents and grandparents etc told us, has fallen out of fashion.  “Remember to save for a rainy day”, that would say.  And yet we never do.

Well not anymore!  Now that you are living a more frugal lifestyle you will have at least a little cash that may be burning a hole in your pocket.

So save it silly!!!!  Don’t spend it like 99% would do – save it and move into the 1% that become truly wealthy.

Set up a Budget and Automate Things

Fairly quickly you will begin to know where your money is going and how much you should have left over at the end of the month.  I strongly suggest you run a simple budget process, so you do know this and can track it.

Set up an automatic transfer to a separate savings account every month, at the beginning of the month!!!!  Get the money out of your sight before you have the chance to spend it.  Pretend like it never existed in the first place.

This is how you get ahead.  This is how you start your wealth journey and never look back.

You will start to see how steps 2 and 3 tie together.  The more conservatively you live, the more cash you free-up.  The more spare cash you have the more you can save. 

Speed Things Up – Make a Game of It

For my wife and I it became a game to see how far we could push it and have fast we could accelerate our savings.

Now when you get that promotion, or pay rise, it can go directly into your savings and speed things up even more.  You begin to realise that you do not need to expand your spending to be happy.

In fact, the reverse becomes true.  The more your savings grows, the more relaxed you become.  You begin to feel bullet proof.  No matter what life throws at you, you know you can handle it.

Key Actions

• Take your free cash and save it – don’t spend it!
• Set up an automatic savings account, and deposit at the start of each month before the expenses come out.
• Keep working on reducing your expenses and increasing your savings.

Step 4:  Invest Wisely

Now I would never advocate to simply ‘save yourself rich’.  Unfortunately, simply putting money in the bank will never ultimately get you there.  The tiny savings interest rates from banks these days are quickly lost to inflation.

You really need to invest all that cash to really accelerate your wealth. 

Now where should you do that – well that is not for me to say.  I am not a financial advisor, and everyone’s circumstances and paths are different.

You should always seek out professional advice that matches your unique circumstances.

The best I can do here is say what I have done, and what I would do if I were again.

Keep Things Simple

My best advice is to keep things simple.  It is so easy to get caught up in all the weird and wonderful ways to become rich.  And believe me – there is absolutely no such thing as a getting rich quick.

Remember what we covered before around advertising.  Well, it applies here as well.  When you start researching investments and wealth creation you will be smashed with ads. 

Buy this and make 1,000% return….

There’s never been a better time to invest in crypto…

Learn to trade with the world’s best trader….

This is the time to invest in (add whatever hair-brained latest trend here!)….

Remember the NFT’s (non-fungible tokens) craze?  These arrived off the back of the Bitcoin/cryptocurrency trend.  People spent tens of thousands of dollars on things that didn’t even exist! 

Talk about the Emperor’s new clothes!  They are now absolutely worthless.

Many of these trends fall into the ‘greater fool theory’ – meaning there needs to be a person sillier than you to pay more than you did to leave you with a profit.  At some point the fools disappear and everything collapses.

What Investments to Consider?

Keep things simple and consistent, and watch your wealth grow over time.  I know it sounds boring, but it is the best way I know to succeed.

If you want to know what investment strategy we used to grow and accelerate our wealth then check out this article.

For me, I really like Exchange Traded Funds, or ETF’s.  There are way too many details around ETF’s to go into here, but I strongly recommend doing your research and gaining a better understanding of them.

In simple terms, ETF’s take groups of assets and bring them together for you to invest in one place.  It might be a group of companies, like the top 200 companies on the stock market.  Or it could be a particular industry sector, like mining, or tech/AI etc. 

Or it could be a global market, like ‘emerging’ economies, think China, India etc.

So instead of having to buy all those individual stocks separately, you can invest in a range of stocks by purchasing one ETF.   With 3 or 4 ETF’s you can create a very diversified portfolio, increasing your probability of reasonable growth while reducing your risk.

Why do I like ETF’s?

In summary ETF’s provide the following;

• They allow you to diversify across almost any industry, company, or market you like. 
• They are simple to access and reasonably easy to buy and sell.
• Your money isn’t locked into something you can’t access if needed.
• You can create a well-balanced portfolio easily.
• You can easily setup an automatic recurring investment plan.

As a starting point you can find out more about ETF’s here.  Take your time and gain a better understanding of your options.

Key Actions

• Put your saved cash into solid investments, like ETF’s.
• Make it automatic, so again you don’t need to think about it, or worse spend the money.
• Avoid any and all get rich quick trends – they simply DO NOT WORK!  Especially over the longer term.

And remember to seek professional advice, tailored to your investment!

Bonus Step:  Invest in Yourself

A final piece of advice I would add to this (a bonus step if you like), is to simply invest in yourself!  In fact, this could be the most important step of all.

See, the above steps are incredibly simple really.  But making them so simple, means they are also simple to ignore.  Days drift by and the simple things are ignored; you remain just as far from your wealth goals as ever.

Old habits kick in, you live to the full amount of your income (and more).  Your personal debt grows, while your wealth shrinks.  Then one day you wake up 10, 20 years later and think “if I’d only started 20 years ago….imagine where I’d be now!”.

Change How You Think

While the above steps are simple, they require you to change.  Change your approach to things, change your spending habits, change your attitude to money….and most important change your mindset.

So, the biggest step forward and the biggest gift you can give your future self, is to work on you.

The three books I would recommend to start are;

1. Think and Grow Rich, by Napoleon Hill.
2. The Richest Man in Babylon, by George Clason, and
3. Rich Dad Poor Dad, by Robert Kiyosaki.

Read these three books and I guarantee you will start to see things completely differently.

And for a little check-up from the neck-up listen to this;

The Strangest Secret By Earl Nightingale

• The Strangest Secret, Earl Nightingale (Spotify)

If you listen to this every day for a month your whole thinking will begin to change, and the possibilities for your future completely open up. 

4 Simple Steps to Wealth – Summing Things Up

I could write heaps of articles and 1,000’s of words on why people are still broke.  In most cases people wake up wishing things will change, while then going about their day exactly the same as the days before.

The key point I wanted to make here is that things don’t need to be hard.  These four simple steps can make a huge difference to your wealth and lifestyle, if they are embraced and practised every day.

1. Work Smart – expand your income.
2. Live Conservatively – reduce your expenses.
3. Save Hard – focus on how much cash you can put aside every month.
4. Invest Wisely – build your wealth over time.

And if you commit to working harder on yourself than anything else, then these steps will become a breeze.

That’s it. What are your steps to wealth you have tried? Let me know your thoughts below!

Cheers