How to Build Wealth: 6 Steps to Start

Boosting your net worth usually takes some time. While there isn’t one single money move that will magically increase your wealth overnight, there are steps you can take to gradually move in the right direction. It’s all about playing the long game — and being intentional when managing your finances. 

Here are six steps to get you started.

Step 1: Set your financial goals

It’s tough to chart a path forward if you don’t know where you’re going. Setting financial goals is important to building wealth because it gives you benchmarks to work toward. Your goals will be shaped by what matters to you most, but here are a few examples of common financial goals:

• Paying off debt

• Topping off your emergency fund

• Buying a home

• Funding your kids’ college education

• Enjoying a comfortable retirement

• Starting a business

The time horizon for your goals will probably vary, and you might have multiple financial goals at once. Retirement may be decades away, but you might want to have a down payment for a house within the next five years. It’s a balancing act, but what matters most is making a realistic plan for reaching your financial goals.

No matter what your end game is, think about how you can break big money goals down into smaller, actionable steps. 

Step 2: Save your money

Establishing a healthy emergency fund is a common money goal — and with good reason. Think of it as your safety net. It’s there to catch you the next time you run up against a financial emergency, big or small. That could be anything from an unexpected car repair to a surprise medical bill to a sudden change in your employment status. Whatever life throws your way, a solid emergency fund can help see you through.

Many financial experts recommend saving three to six months’ worth of expenses, but you might want to set your sights higher if you have irregular income or work in a turbulent industry. An adequate emergency fund is a key part of building wealth. Without it, you may have to rely on credit cards and loans to manage financial hiccups.

Here are some tips to consider that may help you pad your savings:

• Track your expenses to reduce overspending.

• Park this cash in a separate savings account to help curb temptation and prevent you from dipping into your savings for non-essentials.

• Create a budget and stick with it.

• Choose a dollar amount to put into your savings each month and automate the transfers.

• Direct cash windfalls like tax refunds and work bonuses to your emergency fund.

Step 3: Invest your money

We can’t talk about building wealth without talking about investing. The goal is to increase your net worth and help your savings keep up with inflation. Despite popular misconceptions, you don’t need a ton of money to start investing — and you don’t have to be an expert on the stock market. 

One way to invest more is to set up a regular line item in your budget, so you are making sure to "pay yourself first." With Acorns, you can set up a Recurring Investment with as little as $5 — even small amounts invested over time can add up.

Step 4: Pay down debt

Debt can be a big-time wealth killer because it eats into your earnings. Money you could put toward saving or investing is instead going to open balances and interest fees. As of the end of 2022, the average credit card APR was over 19%. 

Step 5: Save for retirement

Making slow, steady progress toward a big ticket item like retirement can be a good way to go. The sooner you start, the more time your money has to benefit from the potential of compounding.

Try our compound interest calculator to see for yourself!

Step 6: Increase your income

Picking up a side hustle can certainly pay off, but advocating for yourself in the workplace is huge. Pay transparency can go a long way in getting paid what you’re worth. 

As you move through your career, be sure to do your research and consider all relevant data points on salaries being paid for your position. That information can put muscle behind your salary negotiations. If requesting a pay raise, prove you’re worth it and point to concrete ways you’re bringing value to the company. Increasing your income over time can be a key part of growing your wealth.

Stick with it

It can take time for all these moving parts to come together, but stick with it. The longer you stay committed to growing your wealth, the more likely you’ll be to see the fruits of your labor. And remember that none of this is set in stone. You can course-correct along the way so that your financial plan is always aligned with your goals as they grow and change along with you.