9 simple ways you can build wealth

The most important thing to know about building wealth is that you (yes, you!) can achieve it. This is great news if you think that all wealthy people have enormous salaries. The truth is, how much you make is often less important than what you do with it. Many people with ordinary paychecks have created generational wealth. So can you—and the best time to start is now!

Just follow these simple ideas, keep at it, and you’ll be amazed at what can happen over time.

1. Learn, Learn, and Learn Some More

The first step in wealth-building is simply to make a habit of learning about money. You’re already on the right track because you’re reading this! Familiarize yourself with terms like income, expenses, net worth, passive income, and financial independence. Dive into financial books, podcasts, TED Talks – soak it all in.

2. Create a 50/30/20 Budget

There are lots of ways to make a budget, but having one is essential—make a plan, implement it, and stick to it. If you’re not sure how to get started, try the 50/30/20 plan. It’s a simple and effective budget that works like this:

• 50% for essential expenses (rent, mortgage, food, healthcare, car payment)
• 30% for non-essentials (shopping, vacation, entertainment)
• 20% for savings and investments

This breakdown helps you see where your money is going so you can make “course corrections” as needed. Spending too much on food? Try eating at home more often. Not saving enough? Doing what you can is better than doing nothing, but keep an eye on it and look for opportunities to make small increases.

3. Reduce Debt

If you’re serious about building wealth, tackling debt is like a financial detox. Paying off high-interest debt first is your smartest move. Got a credit card with a sky-high interest rate? Focus on that first while making minimum monthly payments on others.

And of course, think twice before taking on new debt. Most of us will always carry some debt for things like mortgages or maybe a car, but for non-essentials, it’s worth learning to wait for things you want.

4. Automate Your Savings

Setting aside savings from every paycheck is a lot easier if you don’t have to remember to do it. Set up recurring automatic contributions to a savings account and the work is done for you. You can’t forget, and you won’t be tempted to skip a month. This approach ensures consistent saving without feeling the pinch. Farmers & Merchants Bank offers a range of savings accounts tailored to your needs.

5. Build an Emergency Fund

Life throws curveballs, so you need a backup plan. Enter the emergency fund. This not the same as your savings and investments, which you plan to use one day for retirement or other major life events. Instead, the emergency fund is like a spare tire—you always want it handy, but you hope you’ll never need to use it! But if you do, it will keep the rest of your plans intact so you don’t have to take on hasty, high-interest debt. Set aside three to six months of expenses. Yes, this will take time, but don’t feel bad; just keep working at it. And if you have to tap into it when the unexpected happens, don’t feel bad—that’s what it’s there for!

6. Keep Your Credit Healthy

Maintaining healthy credit is essential for favorable interest rates, insurance premiums, and major purchases like a home. Pay bills on time, use only a fraction of available credit, and avoid frequent or simultaneous credit card applications.

7. Invest

Investing is a fundamental wealth-building strategy. Thanks to compound interest, the earlier you start, the more your money multiplies. Farmers & Merchants Bank offers Traditional and Roth IRA accounts, providing avenues for long-term financial growth.

8. Build Equity in Your Home

Owning a house adds so much to your sense of security, permanence, accomplishment, and a happy home life. For most people, it’s also their single biggest investment—and the foundation of long-term net worth. Meeting regular mortgage payments over time reduces principal and increases equity. FMB home equity loans and lines of credit give you more ways to leverage your home’s value.

9. Consult a Financial Advisor

Feeling lost or just want a pro’s opinion? Chat with a financial advisor. Ensure they prioritize your unique financial situation and avoid red flags such as promises of short-term returns or pushing unnecessary products.

By incorporating these strategies into your financial plan, you’re laying the groundwork for a secure and prosperous future. Remember, wealth-building is a journey, not a destination. Roll up your sleeves, put in the time, and watch your financial goals materialize. You’ve got this!