5 Ways To Build Wealth Working 40 Hours a Week

A rock star salary does not guarantee wealth — and neither does putting in 50, 60 or more hours every week. Whether you earn a little or a lot, when you blow it all, it’s all gone.

The good news is that for every spendthrift who squanders a fortune, there’s a regular person with a regular salary and regular hours who gets rich by living small, saving diligently, investing wisely and embracing an attitude of frugality and financial restraint.

A six- or seven-figure salary doesn’t always lead to a six- or seven-figure net worth, but real wealth is within reach with the income that you’re pulling in right now if you use it — and don’t use it — wisely.

Whether you earn $30,000 a year or $300,000, you’ll wind up living check to check if you don’t take a steady inventory of what’s coming in and what’s going out.

If you want to live rich, build a foundation of financial accountability by creating a household budget.

“A budget is a roadmap for spending within given income thresholds,” said Brad Biren, an executive officer with Iowa Insurance Division.

There’s no shortage of money management apps that make budgeting easy and intuitive, including:

• YNAB (You Need A Budget)
• PocketGuard
• Goodbudget
• Honeydue

Luddites, of course, can use an old-fashioned spreadsheet or go really old-school by taking pen to paper.

Your boss might not give you an investment banker’s bonus, but you hopefully get the occasional raise. It’s human nature to spend more when you earn more — all those shiny things that were just out of reach before, after all, are now yours for the taking.

If you let your lifestyle grow with your income, however, you can earn a king’s ransom and never get rich — there’s no shortage of broke pro athletes who are living proof of that.

“As people earn more money, they find ways to spend it,” said Brian Davis, a real estate investor and founder of SparkRental. “Bigger homes, more upscale cars, more dinners out, more high-end travel. It’s a well-documented phenomenon known as lifestyle creep.”

Once you stop funneling money into the slow, steady drip of lifestyle creep, you can channel it instead into your savings — and your future of wealth and security.

“One thing you can do to ensure your standard of living doesn’t rise while your savings [do] is to increase your automatic investments as your income rises,” said Matthew Robbs of Smart Saving Advice. “So if you get a raise of 5%, take a portion — I would personally take half of the raise — and put it towards your savings/retirement goals.”

Robbs said to think about saving as spending money on your future self’s high standard of living in retirement, instead of the instant gratification of whatever you would have spent that money on today.

With the pervasive message that wealth is just one house flip or hot stock invesment away, it’s easy for slow, steady, long-term investors to take their eye off the ball. The truth, however, is that when it comes to investing — making money with money — the tortoise almost always beats the hare.

“It can be tempting to invest in high-risk ventures or to try and make quick profits by buying and selling stocks or property,” said Michael Miller, CEO of VPN Online. “Unfortunately, these investments often don’t pay off.”

Warren Buffett is just one of many investing wizards who think that the best way to turn a little into a lot is to buy a simple ETF and contribute to it regularly over time.

Whether you earn five figures or nine, the best thing you can do is to train yourself to stop looking at money as paper to be traded for stuff, but instead, as a tool to build wealth and security.

Understand the line between needs and wants — you don’t have to live like a pauper, but if all wants become luxuries in your mind, you’ll buy far less stuff that you know you could do without.

Prepare yourself for the future by building an emergency fund, paying off your debts and saving for retirement instead of splurging on every want that comes along.