- Save smart by investing more
According to Nigerian financial expert Olúwatósìn Olaseinde, this is the key to financial freedom.
“The inflation rate as of December 2018 was 11.44%, which is 0.16% higher than the November rate of 11.28%," she explains. “This means that inflation (or the general price of goods and services) increased again by 0.16%. You might hate numbers, but trust me, this one affects you in real life. If you just save your money this year, the value would have reduced by next year, you would not be able to buy as many things with the same amount That’s a loss When you invest your money, it grows.”
She adds, “Invest only in ventures that are equal or higher rate than the inflation rate.”
American personal finance advisor and entrepreneur Ramit Sethi recommends investing about 20 percent of your income to build wealth over time.
“On average, millionaires invest 20% of their household income each year. Their wealth isn’t measured by the amount they make each year, but by how they’ve saved and invested over time,” he wrote in his New York Times best-seller, “ I Will Teach You to Be Rich .”
- Create multiple sources of income
Another tried-and-true way to build wealth is by creating multiple sources of income. It's a lot easier to become rich by increasing your earnings than by depending on just your savings.
You can make more money by adding a side hustle to your main job. You can start a business based on your talents and interests, improve the skills you already have or learn new ones. Just focus on finding good ways to make more money.
- Cut back on your expenses
Spending less than you earn means you have more money to invest or save. Ways to spend less include cutting out recurring subscriptions for things you rarely use, lowering your housing expenses by moving to a more affordable apartment or getting roommates. You could also eat more home-cooked meals instead of eating out.
After interviewing over 150 millionaires, John, who runs a personal finance blog called ESI Money and does not share his last name online, concluded that controlling your spending is a great way to build your wealth.
"Developing a spending self control is vital to becoming wealthy and a budget is the best tool for doing so," John wrote. "Even if it's just for the first few years of your financial journey, develop and live on a budget at least until you know you can manage your spending impulses."