Building sustainable wealth requires planning and strategies.

We all want to make more money and amass more wealth – that’s why you’re here reading this article. Yet while most of us went through college and got ourselves a pretty decent job, many of us still struggle to save money and move past “living paycheck to paycheck”.

Most people are not generating enough income to move into the “wealthy” bandwagon. After all, if you have to work to meet your monthly financial needs, you’re not wealthy.

Even if someone is earning a six-figure income, he/she isn’t necessarily wealthy. Being wealthy in our definition is to have enough money and assets to preserve your current lifestyle without having to work to do so.

3 Main Strategies to Wealth Building

First, let us examine the really simple 3-steps method to generating wealth – make it, save it, and invest it. Proven and effective.

Strategy 1 – Make More Money

This is a no-brainer. When we are thinking about generating wealth, this is the first step. How will you be able to make enough money not only to cover your daily expenses, but have enough surplus to put into investment vehicles and building long-term wealth?

If this is a struggle to you, ask yourself a few questions:

• How much do I make now? Can I get a raise?
• Is this enough to cover my expenses and invest in order to generate wealth?
• What can I do to improve my situation?

If you don’t have another avenue of generating more income, you have to leverage on another resource you have – Time.

Spend some time everyday building another income stream to help yourself diversify and generate extra income every month.

Strategy 2 – Saving Money

Now that we’ve covered making more money, let’s move on to saving it. Once you get your extra income rolling in, it can be very tempting to increase your expenditure proportionally. DON’T.

Many people convince themselves that they don’t have enough to save, but this is rarely the case. If you have a budget, look through it and see where you can trim the fat. If you don’t, you need to track your spending for at least 1 month and see where your money go. Most likely there are unnecessary purchases here and there.

Build a realistic, written budget and follow it like your life depends on it. Pay yourself (save up) first before you spend the remaining. Sell things you don’t need on Ebay and Craigslist and save up the proceedings.

If long-term wealth is your ultimate goal then the financial whims of today can be shoved to the backseat.

Strategy 3 – Investing Money

Investing your hard earned money requires a bit of research and gut check. Do you have expertise in any investment strategy? What is your risk tolerance level?

I’m a firm believer of low cost index investing. I’m no expert when it comes to picking the winner stocks, so a broad coverage index investing with low cost combined with dollar cost averaging strategy suits my need. In my case, I take the “slow and steady” way of investing and building wealth.

Some people may be more well versed in real estate investing, such as flipping or, buying and holding properties to build equity, while making a profit from the rents collected. Some people may even be expert in arts and antiques investing.

The point is, if you have expertise in an investment vehicle and feel comfortable with it, go ahead. If you have no clues when it comes to investing, researching how index funds work can be a good start.

4 Additional Strategies to Building Sustainable Wealth

You need additional strategies to stay wealthy.

Building wealth is one thing, but maintaining it is another. It takes skills and discipline to stay wealthy and grow wealthier as time goes by. Below are 4 additional strategies that keep you going year after year.

Strategy 4 – Be Financially Compatible with Spouse

Your biggest obstacles to building wealth are no other than yourself, and your spouse. Too often, dating couples and married couples alike have very different money management philosophies and definition of wealth building.

One may be geared towards saving and investing, while another may tend to earn and spend it all. One may plan towards early retirement, while another may be knee deep in debt.

You want your spouse to be in the same boat as your are. If you want to stay out of debt, he/she can’t be shopping secretly behind your back and charging a credit card you don’t even know existed.

If you spouse doesn’t have the same goals as you, talk to him/her and work out an agreement. Have a written budget and make small, achievable goals together, such as saving up $1,000 emergency fund.

A house divided against itself cannot stand. Involve your partner and build wealth together.

Strategy 5 – Stay Out of Debt

With just a few exceptions, debt is usually a form of bondage that enslaves the borrower. Imagine your life without owing anything – your student loans, car, house, all paid in full. No personal loans and credit card debts to pay.

Like what you see? If you want it bad enough, you will make extinguishing your debts a number one priority and find ways to do it.

It’s entirely possible. Did you know that 1 in 3 families in the United States do not have mortgage against their properties? In other words, their house has been paid for fully. They also do not have any other major debts that slow them down.

Most people are also surprised that 1 out of 25 households in the United States is a millionaire. This is an impressive figure and many of these millionaires do not stay in upper class residential areas or drive a sports car. They became millionaires using the tried and true way – earn more money, stay out of debt, save money, and invest.

Strategy 6 – Stay Frugal

Don’t be fooled into believing that you have built so much wealth that you can never deplete it. It can be very tempting now that you have more allowance than ever.

This may not happen to those who have built their wealth with discipline and perseverance, but people who won millions in the lottery often lose it all due to that mentality.

Even with a great wealth, you still need to budget like a regular middle class family. You need to maintain the budget that got you wealthy in the first place.

You may have more wiggle room in your budget now and can afford a luxury item or two, but you have to remember to stay frugal and not to overspend.

If you find yourself start breaking into your savings to purchase unnecessary luxury items, you have to cut back and exercise some discipline.

Strategy 7 – Never Liquidate Your Asset When You Still Have Income

Once you have invested your money as capital, consider it locked away. As long as you still have income, be it active or passive income, do not liquidate your assets to cover your expenses.

Assets appreciate over time, while your cash depreciate due to inflation. If you are struggling financially, then you may have gone too far in your spending habits and you need to pull back.

Your consumption habits should evolve only under one condition – along with your wealth. If you want to increase consumption, make sure you have more money invested in appreciating vehicles than before.

The Bottom Line

Income and wealth, while related, should not be treated the same. Many of us can earn more income the same cannot be said for wealth building.

When charting your path to building wealth and attaining financial freedom, consider the strategies listed above and get started. Building wealth is 20% knowledge and 80% action. Success only come to those who take actions.