Wealth Building Basics

Wealth doesn’t start with a hot stock tip or a complex strategy. It starts with mastering a few simple habits. Consistency is the key, and simplicity works best. Small, steady actions, repeated month after month, build lasting wealth.

1. Save 20–30%

This is the most important step. Saving 20–30% of your paycheck is like paying rent to your future self. It builds breathing room and opens doors for investing later. Discipline today creates freedom tomorrow. The highest savings rate you can achieve the better.

2. Set a Simple, Achievable Goal Every Year

Progress sticks when you give yourself a clear target.

For example, if you have $10,000 in savings, aim to reach $17,000 within 12 months. The goal should stretch you but still feel realistic. Hitting milestones like this creates momentum and builds confidence year after year.

3. Avoid Credit Card Debt

Credit cards are convenient, but carrying a balance is destructive. In 2025, the average APR is over 24%.

If you’ve got balances, pay them off immediately

4. Keep Housing in Check

Housing is your biggest expense, and it’s easy to overreach. A simple rule: keep your mortgage at no more than 3× your annual income. If you earn $60,000/year, keep your mortgage below $180,000.

If you rent, keep rent at no more than 30% of your income. For example, if you make $60,000/year, rent should be under $1,500/month. Less is better — aim for 20% if you want to save aggressively.

5. Invest Consistently

Saving protects you. Investing grows you. The earlier you start, the more compounding works in your favor.

Over the past 50 years, the S&P 500 has averaged about 10% a year. Even modest investing adds up: put away $500/month starting at 25, and you could cross $1 million by retirement.

Max out your available retirement plans (IRA, 401k.) After you have done that, start investing through a financial planner or on your own in low cost diversified funds. Do not day trade.  

6. Understand How Compound Interest Works

Compound interest is hard to picture. Take time to master the concept.

Compound interest is like a snowball rolling downhill. At first, it’s small and slow. But give it time, and it grows bigger and faster until it’s unstoppable.

If you invest $10,000 at 10% annual growth, it doesn’t just add $1,000 each year. By year 10, it grows to about $25,900. By year 20, it’s worth around $67,000 — more than six times your starting amount, without adding another dollar.

7. Avoid Gimmicky Insurances

You need solid protection: health, disability, and homeowner’s insurance are essential.

Life insurance? Only if you have dependents (kids, spouse, or family who rely on your income). If nobody depends on your paycheck, you don’t need it.

Skip extended warranties, overpriced phone insurance, or pet insurance bundled with credit cards. Most are casino bets dressed up as financial products. Put that money toward real savings instead.

8. Review Statements Monthly: Stop the $9.99 Leaks

Once a month, spend 10 minutes scanning your bank and credit card statements. You’ll spot charges you forgot about — streaming subscriptions, memberships, or sneaky fees.

Even $9.99 here and $14.99 there adds up. Cancel what you don’t use and redirect those dollars to your future self.

9. Keep Cars & Boats in Check

Cars and boats look flashy, but they’re wealth killers. They lose value the moment you buy them.

Never spend more than 0.5× of your annual income on depreciating toys. Less is better. If your yearly income is $60,000, your vehicle should be worth no more than $30,000.

10. Track Net Worth and Cash Flow

If you don’t measure it, you can’t improve it. Numbers don’t lie — they show whether your habits are working.

Net worth is everything you own minus everything you owe. Update it every six months to see if you’re making progress.

Cash flow is how much you spend, save, and invest. Understanding this tells you whether your money habits are moving you forward or holding you back.

A simple spreadsheet or app is enough. Track both, review them regularly, and you’ll always know if you’re moving closer to wealth — or drifting further away.

Building wealth has less to do with chasing the next hot investment — and more to do with avoiding obvious mistakes. Mastering these basics may not feel exciting, but wealth isn’t built on excitement. It’s built on consistency and discipline.

These are the same principles we value as a business: consistent, disciplined habits that compound into long-term results.