Simple Steps Towards Building Wealth

Everyone wants financial independence. It's practically universal - we all crave the security and freedom that come with being able to handle emergencies, invest in our future, and enjoy life without anxiety over money. Yet, for something so widely desired, it's often hard to achieve.

Our intentions say, "I need to save more and spend less," but behaviors sometimes say otherwise. The good news? Building wealth is not about complicated formulas or secret insider tips from an influencer or infomercial. For most people, it's about spending wisely, saving what's needed for near-term goals, and investing the rest.

But a simple approach isn't always an easy one. The tricky part lies in adapting principles to your unique situation. What can you do to spend wisely? What avenues do your job and life situation offer for savings? And what do you do when unexpected expenses make things more difficult than you thought they'd be?

This week, our goal is to offer practical steps you can take to move closer to your financial goals. By the end of the week, you'll be introduced to issues ranging from taming your debt to recognizing the mental barriers that can trip you up.

We'll cover topics including:

Why Spending Matters

It's one thing to set a big target - like saving for a down payment or wiping out a loan - but the smaller, everyday decisions either build up to those milestones or block our progress. So, the first thing we'll do is show you how to audit your spending. This way, you can spot the subtle ways money trickles out of your bank account: that extra streaming service you don't really watch, the subscriptions you forgot to cancel, or the takeout habit that's quietly eating into your paycheck.

It's tough to fix what you haven't noticed. But once you see how an extra ten or twenty dollars a week can add up, you can consider using that cash toward something that truly serves your future - like paying off a credit card faster or padding your emergency fund.

The Value of Reducing (and Preventing) Debt

All debt isn't bad - few could afford major life milestones like higher education or buying a home without it. However, other forms of debt, especially high-interest credit card debt, can make it challenging to progress in other parts of your financial life.

The average household today has over $10,000 in credit card debt. Assuming no additional debt is incurred, and the debt's repaid over five years, that $10,000 actually costs around $19,000 to repay - that's an extra $9,000 that could be saved, invested, or spent on other priorities that bring lasting value.

Few people plan on racking credit card debt, but emergencies happen. That's why an emergency fund can be valuable in building long-term wealth. For example, if you can cover an unexpected $1,000 car repair without needing to pay it off for months using a credit card, your cost is $1,000 (not the $1,200, $1,400, or more it could be including credit card interest).

Using the Tools You Already Have - Automatically

Whether you want to save an emergency fund, save for a downpayment on a home, or save for retirement, anyone with a bank or credit union account already has tools that can help.

Take automatic transfers, for example. It's easy to set up an automatic checking to savings transfer each pay period. You can choose whatever type of savings account that's appropriate to your situation, but the key is setting up the transfer. If the money isn't in your checking account, then you'll be less likely to spend it. This is what "paying yourself first" is all about.

Also, many employers match contributions to retirement plans, but a surprising number of people don't take full advantage of it. And even if your employer doesn't, there are other tools you can use for savings, many of which offer tax advantages. For example, anyone with income can open an Individual Retirement Account through your existing bank or credit union - or you can set one up online.

Your Future Self

Another idea we'll cover is the importance of thinking long-term. It's natural to focus on what we need today. But when we cater only to "today," it's too easy to ignore the future we want. That's where long-term thinking becomes such a helpful tool.

So we'll discuss why feeling at least a little disconnected from your future needs is normal and offer ways to reorient your perspective. Because when you picture your life in ten or twenty years - and see the benefits of having a well-funded retirement or a paid-off mortgage - you may find more motivation to make wealth-building a top financial priority.

The Takeaway

This week is about taking action. It's easy to read advice or listen to an influencer talk about money moves they've made. It's another thing to alter your own financial life.

As the philosopher Lao Tzu famously said, "The journey of a thousand miles begins with a single step." But once you commit to that first step - maybe it's making an extra payment on a high-interest credit card or setting up a small auto-transfer to your savings - it becomes easier to follow through with the next step. And the next.

You won't become a millionaire in seven days, but you will have a framework to continue growing your money over the days, weeks, and years to come.