No one wants to be broke. Everyone would like to have money, yet it’s amazing how many people don’t actually educate themselves about how to build wealth! I get it, knowing where to start can be overwhelming. It’s easy to feel like you need a lot of money or financial expertise to build wealth, but that’s not necessarily true. With the right mindset and habits, anyone can start building wealth, no matter their income or financial situation.

As with anything, wealth creation can be broken down into small steps and habits that when done consistently over a period of time, will transform your life. Building wealth is a lifelong journey. It all starts with taking action and building momentum in the right direction. Whether you’re just starting out on your financial plan or looking to improve your situation, there are some key things you can do to start you on your journey. In this guide, we’ll cover key steps you can take to start building wealth, with clear actions to take for each topic. If you’re dedicated, patient and have the right mindset and strategies, you can start your path toward financial freedom today, regardless of your current situation!

Create a budget

One of the most important things you can do to start building wealth is to create a budget. A budget is simply a plan for how you will spend your money each month. By creating a budget, you can make sure that you are spending less than you are earning, which is the first step in building wealth.

To create a budget, start by listing all of your income and expenses. This will help you understand how much money you have coming in and going out each month. You can do this using a spreadsheet, an app, or even just a notebook. Once you have a good idea of how much you are spending each month (and on what), you can create a budget by allocating your income to different categories. These may include bills, transportation, food, and entertainment. You’ll also be able to identify areas where you can cut back on spending. For example, you might be able to reduce your grocery bill by meal planning or cut back on eating out. I’m not saying you HAVE to sacrifice the things you enjoy, but it’s important to know where your money is going! Make sure to allocate a portion of your income to savings and investments (more on that later).

Once you have created a budget, the key is to stick to it. This may mean making some sacrifices in the short term, but the long-term benefits will be worth it.

• SMALL STEP 1: Start by listing your income and expenses for the month.
• SMALL STEP 2: Identify where you are spending your money and adjust as necessary for your desired budget.
• SMALL STEP 3: Use a budgeting tool or app to track your spending and adapt your budget as needed.

Pay off high-interest debt

High-interest debt, such as credit card debt, can be a major obstacle in your efforts to build wealth. These debts can quickly spiral out of control, making it difficult to make progress on your financial goals.

If you have high-interest debt, it is important to make paying it off a priority. One way to do this is to use the debt snowball method, where you pay off your smallest debts first, then move on to your larger debts. Another strategy is to transfer your high-interest debt to a lower-interest credit card or personal loan. This can help you save money on interest and make it easier to pay off.

Paying off debt is an important step to building wealth because it frees up your income for other things. You could put this money towards investing or saving for a down payment on a house instead.

• SMALL STEP 1: Start by making a list of all of your debts, including credit card debt, student loans, and car loans.
• SMALL STEP 2: Prioritize your debts based on the interest rate.
• SMALL STEP 3: Start by paying off the debt with the highest interest rate first, while making minimum payments on the rest. Once you’ve paid off the highest interest debt, move on to the next highest interest debt.

You could use the budget you created in the previous step to make sure that you are making regular repayments where required.

Build an emergency fund

An emergency fund is a savings account that you can use to cover unexpected expenses, such as a car repair or medical bill. These unexpected expenses can quickly derail your financial goals. Having an emergency fund is important because it can help you avoid going into debt (or raising your stress levels) when these unforeseen expenses arise. This can give you peace of mind knowing that you’re prepared for unexpected costs and provide you with a cushion in case of an emergency. This will allow you to avoid dipping into your long-term savings or investments.

To start building an emergency fund, set a goal for how much you want to save. A good rule of thumb is to have at least three to six months’ worth of living expenses. This may sound a lot, but can build up over time. Starting today means that even if something happens unexpectedly before you reach your goal, what you have saved at that time will still soften the blow.

Once you have set your goal, start setting aside money each month into a separate savings account. You can also automate your savings by setting up a direct deposit or transfer from your pay check into your emergency fund account.

• SMALL STEP 1: Set a savings goal for your emergency fund.
• SMALL STEP 2: Set up a separate savings account specifically for your emergency fund.
• SMALL STEP 3: Start setting aside a portion of your income each month. You could automate through direct deposit/transfer or do this manually.

Start investing now

Investing is one of the best ways to build wealth over the long term. Different types of investments can offer tax advantages and compound interest, which can help your money grow over time.

It is important to diversify your investments to reduce risk. This means investing in a mix of stocks, bonds, real estate and other assets. Ideally you’d allocate your investments across both low risk and high risk categories. How you do this often depends on your risk appetite.

The key to successful investing is to start early and be consistent. Even small amounts of money can grow significantly over time with the power of compounding. Don’t try time the market, no one knows for sure what is around the corner. Rather focus on starting your investment journey asap and be consistent with when you invest your money so that any volatility is neutralized over the long term.

If you’re not sure where to start with investing, consider working with a financial advisor who can help you develop an investment plan. They can build something that aligns with your goals and risk tolerance. As a first step, educate yourself through books, blogs and mentors so you know the right questions to ask.

• SMALL STEP 1: Do your research! Get a good understanding of what the different investment categories are and what the associated risk and rewards are for each investment type.
• SMALL STEP 2: Decide on how much of your income you want to budget towards regular investment. 10% of your income is usually a good number to put aside to begin growing your portfolio, but everyone’s situation is different. The key is to ensure at least some of your money is put aside each month to start working for you as soon as possible.
• SMALL STEP 3: Be clear on your risk appetite and how much of your money you want to invest in each category type. This should not be something based on emotions. The higher percentage of your investment fund that you put into higher risk categories, the more comfortable you need to be with the potential of losing that money. Try to diversify and balance across high and low risk so you get the upside of high risk investments but cover yourself with the low risk investments. Decide whether you want to first see a financial advisor to help you develop a plan. If so, make sure they aren’t incentivized to sell you on certain products.
• SMALL STEP 4: Get started yourself. There are plenty of tools you can use to start investing immediately. Research which tool or apps are reliable and don’t have hidden costs or fees, and get started on your investment journey today!

Build multiple streams of income

Building multiple streams of income can help you build wealth faster and provide a safety net if you lose your primary source of income. Increasing your income, along with smart investments, are the key ways to accelerate your way to financial freedom.

There are many ways to build multiple streams of income through side hustles, including:

• Starting a side business
• Investing in rental property or offering your place on AirBnB
• Selling products online
• Freelancing or consulting

When building multiple streams of income, it’s important to choose opportunities that align with your skills and interests. This will make it easier to stay motivated and committed to your side hustle.

• SMALL STEP 1: Identify ways you could increase your income, such as negotiating a raise, taking on freelance work, or starting a side hustle. Identify which area you want to pursue. Consider the skills that you already have so you can play to your strengths. You should always be on the look-out for new opportunities.
• SMALL STEP 2: Take action. Sign up to a freelance website and create a profile. Do some research to benchmark your salary and put forward a case for a pay rise.
• SMALL STEP 3: Upskill yourself through courses, Youtube videos, mentors or research so you can increase the amount of money these new streams are generating.

Network and build relationships

Do you hate networking events and the effort required to go to seminars or ‘social meetups’ with people you barely know? Me too. I actively avoid them most of the time. I don’t enjoy the forced conversation. BUT, relationships are vitally important to getting ahead. Who you surround yourself with has the biggest influence on how you think and behave. Finding people who share your values or have achieved what you want to achieve will help open your mind to new strategies, connections and experiences you may otherwise not have had.

It doesn’t have to be formal networking events, but you should try to actively get involved socially in the areas you’re interested in. Whether that’s finding people who share the same hobbies; corporate or skill based events; or chatting to people while waiting for a coffee. You never know where you may strike up a relationship that could accelerate you towards your goals. You may learn about new opportunities, find someone who has a skillset complementary to yours, or find a new strategy or mentor to learn from.

The key is to have an open mind and focus on learning and growing yourself in the area you’re interested in. Hanging out with like-minded people can have an incredibly positive influence on your progress and motivation. Building a strong network can help you find opportunities that you wouldn’t have discovered otherwise.

• SMALL STEP 1: Seek a mentor in the field you’re interested in and ask if they will help you. The right mentor will cut out years of potential mistakes and set you on the right path. Choose wisely. Focus on connecting with people you can learn from who have what you want.
• SMALL STEP 2: Get confident and comfortable speaking to people you don’t know. This comes through practice. Make it fun by having a clear goal for an event you’re attending so you’re not just there for the sake of it. Try gamify the experience somehow between you and a friend who is also at the event. Basically do whatever you can to focus less on the awkwardness and realise that at the end of the day, everyone else feels the same way. No one is going to judge you for being friendly or on what you actually say.
• SMALL STEP 3: Attend industry events, join online communities, and connect with like-minded professionals on LinkedIn. Or just be more social in general. Don’t be afraid to reach out to people for advice.

Invest in your education

Investing in your education is essential for avoiding the rat race. The market is constantly changing, and having up-to-date skills and knowledge can make you more valuable. This is relevant to the corporate world, freelancing or taking advantage of new business opportunities. You should allocate time to learn and upskill yourself as a daily or weekly habit.

• SMALL STEP 1: Identify an area where you would like to improve. This should be selected purposefully. What value will this area add to your life if improved?
• SMALL STEP 2: Consume knowledge about this area. Read books, watch videos, read blogs, go to industry events. Build a solid foundation in the area you’re interested in.
• SMALL STEP 3: Subscribe to and read email newsletters of outlets you think are valuable. This will keep you up-to-date on new trends, insights, and potential wealth making opportunities. Block out some time each week to read through these and continually build your knowledge-base.

Don’t pay more tax than you need to

You hear it all the time: “Rich people should pay more tax!”. The interesting thing about this statement, is that wealthy people usually do pay a lot of tax. One of the reasons they have managed to get as wealthy as they have is because they make it a priority to not pay more tax than they need to.

Paying taxes is an essential part of being a responsible citizen, but paying more tax than necessary only hurts yourself. By taking the necessary steps you can reduce your tax liability and keep more money in your pocket. One of the most effective ways to do this is by understanding the tax laws and regulations that apply to you. This includes familiarizing yourself with deductions and credits that you may be eligible for. These may include charitable donations, education expenses, or home office expenses. If that all sounds too hard, you can also consider consulting with a tax professional or using tax software to ensure you’re maximizing your tax savings.

• SMALL STEP 1: Do some research to get a foundational understanding of how tax laws are setup in your region. Personally, it’s not something that I think is worth trying to understand in an advanced way, but you should be familiar with the world of tax.
• SMALL STEP 2: Find a tax professional to assist you with lodging your tax returns. It is amazing how even with the most basic of income streams, professionals are able to find pockets of deductions that put more money back in your pocket. The more complex your income becomes, the more I recommend finding a tax professional you can trust to help take care of you. Most of the time you’re able to make deductions on using their services in your tax return for the following year.

After reading this guide, you now have some key pillars and, more importantly, some clear actions to take that will help you take the first steps in your wealth building journey. Gaining wealth is not a selfish endeavour. Financial freedom allows all people who achieve it to allocate their time in the way they want to. This could be enriching their family life, giving back to less privileged people and communities, or solving the next big problems of the world. All without the strain of financial stress. I started Small Step Growth for these exact reasons, to help people achieve their potential and live a fulfilling life. I hope to continue to be by your side on your journey up the mountain.