7 Simple, Free Moves Guaranteed to Make You Richer

Ignore the naysayers: People of moderate means really can leverage their dollars to build wealth. Some of the most effective tactics don’t cost a dime.

Some of us think wealth is unattainable. Hard work is expected, but building a fortune isn’t on our radar of possibilities.

We believe the rich will get richer, and the rest of us will stay right where we are — unless, of course, we slide backward.

But such pessimism is unwarranted. It may not happen overnight, but people of moderate means can and do leverage their dollars to build wealth over time.

The best news? Some of the most effective tactics for achieving wealth don’t cost a dime.

Here are seven crucial steps to getting richer over time.

1. Set a goal

It isn’t enough to simply say, “I want to invest in real estate.” That’s more of a pipe dream than a goal. You need to create a road map to get you from here to wherever it is you want to be.

For example, if you are considering investing in real estate, take concrete steps to learn more about what it will take to reach your goal. Such steps might include:

  • Educating yourself about the local rental market, such as learning about current vacancy rates and how much rent you can charge per month.
  • Determining how much money it will take to get your dream off the ground.
  • Figuring out how long it will take to set that cash aside.
  • Researching avenues that can help you achieve your dream, such as  buying foreclosed properties at auction.

2. Create a budget

Create a budget that will get you to the goal you have set. Figure out how much you pay for necessities — a mortgage or rent, your monthly food bill, and other such costs — as well as optional purchases you make each month.

Then, subtract any extras — for example, keep basic cable but eliminate pay-per-view movies. Or, budget for a month’s worth of groceries but drop all but an occasional night out for a restaurant meal.

Once you know your true expenses, subtract that figure from your take-home pay. That should give you a better idea of how much you will have available to save for your wealth-related goal.

3. Track expenses

Budgeting is important, but your spending estimates may not be as accurate as you think. Check your numbers by tracking expenses for at least one month. This will show you exactly where your money is going.

Once you start tracking your daily expenses, you might be surprised to find that $300 a month is dribbling away on small, inconsequential purchases — apps, lunches out, magazines, music downloads — that you previously overlooked.

Decide to cut such purchases in half, and you’ll have an extra $1,800 a year for your wealth-building goals.

Our friends at PowerWallet can help you both track expenses and find ways to reduce costs. Note that this doesn’t have to mean massive deprivation — instead, it is simply a smarter use of available funds instead of blindly pitching dollars at wants and needs.

4. Live below your means

Once you have a viable budget in place, stick to it closely as possible. Put any savings away for retirement or in another type of investment portfolio.

This doesn’t mean you can’t ever have fun again. But you have to weigh the opportunity cost of each splurge. The more you live below your means now, the wealthier you are likely to become in the future.

5. Nix any debt

If you have money left over each month, you definitely should save it — unless you have debt. In that case, it often makes more sense to use any “extra” money to pay off current obligations instead of saving or investing it.

Remember, living according to the “minimum payment due” philosophy is guaranteed to keep you in shackles. Instead of merely paying the minimum, pay as much as you can toward your bills so you never have to pay interest again.

Once the debt is gone, your new budget should keep you from falling back into the red.

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