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Money Matters: How the experts build wealth

By Jacob Bingham - Special to the Daily Herald | May 27, 2023


If you took a poll asking people how much money they would like to have, the most likely answer would be “more.”

Despite being a goal shared by so many individuals, only a small portion of people achieve the financial success of which they dream. Achieving financial success requires a combination of knowledge, strategy and discipline. And while there is no one-size-fits-all approach to accumulating wealth, we can learn some general principles from experts in the field. These financial gurus have honed their strategies and skills through decades of experience. 

By analyzing their insights and success stories, we can glean a few valuable lessons on how to build wealth effectively. In this article, we will explore the strategies and philosophies embraced by financial experts as a guide for your own wealth-building journey.

Recognizing the power of education and knowledge

“Education is the most powerful weapon which you can use to change the world.”Nelson Mandela

Experts emphasize the importance of education as a foundation for building wealth. Gaining financial literacy and understanding the principles of investing are crucial. As Robert Kiyosaki, author of “Rich Dad Poor Dad,” advises, “The more you learn, the more you earn.” Educate yourself through books, courses and seminars to enhance your understanding of personal finance and investment opportunities. 

Start your financial education with a few books that Warren Buffett recommends to Berkshire Hathaway stockholders:

  1. The Intelligent Investorby Ben Graham.
  2. Security Analysis by Benjamin Graham and David Dodd.
  3. Common Stocks and Uncommon Profits by Phil Fischer.

Hopefully, these books will help you build a baseline of investing literacy and propel you on your path to building wealth.

Setting clear financial goals

“Setting goals is the first step in turning the invisible into the visible.”Tony Robbins

Experts stress the significance of setting clear financial goals to build wealth. Without a clear roadmap and concrete goals, it can be challenging to stay focused and continue to progress. Establish short- and long-term goals that are specific, measurable, achievable, relevant and time-bound (SMART goals):

  • Specific goals take out the ambiguity in the planning process and allow you to establish precisely where you want to end up. 
  • Measurable goals provide quantifiable markers, which allow you to easily see how close you are to achieving your specific goals. 
  • Achievable goals are crucial for maintaining motivation; the more unrealistic your goals are, the more likely you are to fall short and lose motivation. 
  • Relevant goals lay out a clear and accessible pathway to your ultimate goals. 
  • Time-bound goals add urgency and push you to achieve your goals in a timely manner.

By establishing SMART goals, you create a roadmap that guides your financial decisions and motivates you to take action.

Cultivating a savings market

“Do not save what is left after spending, but spend what is left after saving.”Warren Buffett

One common trait among wealth builders is their commitment to saving. They prioritize saving over spending, ensuring that a portion of their income is set aside for the future. As renowned investor Warren Buffett suggests, saving should not be an afterthought but a priority.

Develop a habit of setting aside a percentage of your earnings consistently and consider automating your savings to make the process easier and more disciplined. 

Diversified investments and long-term thinking

“Don’t put all your eggs in one basket.” – Proverb

Experts consistently advocate for diversifying investments as a way to mitigate risk and maximize returns. Benjamin Graham, the father of value investing, emphasizes that “successful investing is about managing risk, not avoiding it.” Investing in a variety of asset classes — such as stocks, bonds, real estate and commodities — allows you to spread risk and benefit from different market conditions. If any one asset or asset class incurs heavy losses, diversification will protect you from complete financial collapse. 

More diversified portfolios are more likely to grow in the long term, largely due to the fact that diversification allows you to keep money in the market for the longest possible period of time and harness the power of compounding. Many wealthy individuals adopt a patient and disciplined approach, holding their investments long-term and allowing them to grow over time. When investing in your future, take cues from the experts and select a diversified portfolio that you plan to hold over the long term.

Leveraging the power of passive income

“Do not work for money; let money work for you.”Robert Kiyosaki

Experts like Robert Kiyosaki emphasize the importance of creating passive income streams to accelerate wealth-building. Passive income refers to earnings generated with minimal ongoing effort, such as rental income, dividends or royalties. By diversifying income sources and building assets that generate cash flow, individuals can break free from the constraints of relying solely on their active income.

As Kiyosaki advises, shift your mindset from only working for money to also allowing money to work for you. Typical sources of passive income include the following:

  1. Investments, such as stock dividends or certificates of deposit.
  2. Asset creation, such as digital products like mobile apps or ebooks.
  3. Asset sharing, such as home or car rentals.

Keep in mind that building wealth requires significant effort, planning and execution that cannot be avoided by leveraging passive income. However, creating passive income streams can help accelerate your wealth-building process. 

Building wealth is a lifelong journey that requires commitment, knowledge and strategic decision-making. While every person’s circumstances and journey will be different, the insights and wisdom shared by financial experts can serve as invaluable guidance along this path. By educating yourself, setting clear goals, saving consistently, diversifying investments, embracing a long-term mindset and leveraging passive income, you can pave the way to financial success. As you embark on your wealth-building journey, remember the famous adage: “An investment in knowledge pays the best interest.”

Jacob Bingham is a project manager at Stage Marketing, a full-service content marketing agency based in Pleasant Grove.


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