When we’re new to the concepts of personal finance, it’s easy to think that the best way to build wealth is simply to spend as little money as possible. Frugality has its place, but when taken to an absurd degree, you may find that it starts to backfire. If you live in rice and beans and powdered milk, you may find that your health suffers or that you at least get painfully bored. If you buy the cheapest car on Craigslist, you’ll find that you’re swamped with repair costs. To build wealth, you have to find a balance between frugality and sensible investment. In other words, you have to spend money to make money.
One of the most important aspects of building wealth is to know how to preserve what you have. There’s no risk-free way to keep and grow your money, but you can get close. Strong investments will at the very least preserve your money’s buying power, and at the most build significant wealth over time. Emergency savings will buoy you and your family in the event that you lose your job or otherwise see your income depleted. Finding the best in life insurance company ratings will put you on track to protect your dependents in the case that you pass on for some reason in the future. All of these methods help build and/or preserve the wealth you’ve worked so hard to accumulate. They could also help you not have to work so hard in the future.
Another important way to build wealth is to invest in yourself. This is the single best way to improve your income potential, and it can also have an enriching effect on your sense of self and well-being. Taking classes, going back to school, learning a new skill, even just taking the time to read helpful and educational material – all of these tactics can improve your mind and hone your skills at growing wealth.
As we discussed in the first paragraph, sometimes you have to spend a little more on durable goods than you would if you just bought the most affordable thing available at any given moment. There are many products which will last for life, or at least a very long time. These will almost certainly cost more than the bargain bin variety, and you’ll enjoy using them a lot more. If indeed the more expensive item lives for the lifespans of several of the cheap versions, you will have saved money in the long run. By constantly looking for ways to save money in the long run, you’ll build greater wealth over time than if you try to save the money all at once on products that don’t actually offer much in the way of value.
Building wealth is hard for all of us, but it can be especially difficult if you are frugal minded. Frugality is essential if you need to control your spending, but you can also build wealth through other methods for which frugality is not a good help.