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Principles of Building Wealth
By JOHN GILBERT
Building wealth is a goal that many people aspire to, but it can often seem like an overwhelming task. It takes time, effort, and discipline to be successful with this goal, so don’t be lured by get-rich-quick schemes and too-good-to-be-true opportunities that can send you down a dangerous path.The good news is that there are principles and strategies that can help anyone build and preserve wealth over the long term. And, the earlier you start putting these into practice, the better your chances of success.

Below, we have outlined several key principles for building wealth, including setting goals and developing a plan, investing in education and skills, managing debt, saving and investing, protecting your assets, understanding the impact of taxes, and building a strong credit history. In this article, we will take a closer look at each of these principles and how they can help you achieve your financial goals.KEY TAKEAWAYS
Building wealth over time is a matter of following three basic steps and sticking to them.
The first step is to earn enough money to cover your basic needs, with some left over for saving.
The second step is to manage your spending so that you can maximize your savings.
The third step is to invest your money in a variety of different assets so that it’s properly diversified for the long haul.1. Earn Money
The first thing you need to do is start making money. This step may seem elementary but is the most fundamental one for those who are just starting out. You’ve probably seen charts showing that a small amount of money regularly saved and allowed to compound over time eventually can grow into a substantial sum. But those charts never answer this basic question: How do you get money to save in the first place?

There are two basic ways of making money: through earned income or passive income. Earned income comes from what you do for a living, while passive income is derived from investments. You may not have any passive income until you’ve earned enough money to begin investing.If you are either about to start a career or contemplating a career change, these questions may help you decide on what you want to do—and where your earned income is going to come from:What do you enjoy? You will perform better, build a longer-lasting career, and be more likely to succeed financially by doing something that you enjoy and find meaningful. In fact, one study found that more than nine out of 10 workers said they would trade a percentage of their lifetime earnings for greater meaning at work.
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What are you good at? Look at what you do well and how you can use those talents to earn a living.
What will pay well? Look at careers using what you enjoy and do well that will meet your financial expectations. One good source of salary information, as well as the growth prospects for various fields, is the annual Occupational Outlook Handbook published by the U.S. Bureau of Labor Statistics.
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How do you get there? Learn about the education, training, and experience requirements needed to pursue your chosen career options. The Occupational Outlook Handbook has information on this, too.