25 powerful tips to build wealth (If you want to be better with money, read this)

5 min readNov 1, 2022

By Andrew Lokenauth

25 powerful tips to build wealth (If you want to be better with money, read this):

1) Always consider opportunity cost. If you make $20/ hour:

• that night out isn’t $300, it’s 15 hours of your time, or 2 days of work

• that car isn’t $50,000, it’s 2,500 hours of your time, or 357 days of work

Time is your most valuable asset, don’t waste it

2) Surround yourself with mindsets which to help you grow, not hold you back. Create a network of friends who discuss opportunities to make money, not just spent it.

3) Get your credit score in order. Having a good credit score makes life a lot easier and will save you thousands! The higher your credit score, the more likely you will be approved for a loan. Your score helps lenders assess how much of a risk you are, in terms of paying back your line of credit. If you are a high risk, you will have a hard time finding a lender to let you borrow money.

4) Avoid lifestyle creep. Just because you start making more money, doesn’t mean you should spend more money. Making more money doesn’t fix poor spending habits. Increasing your lifestyle expenses without increasing your income will causes expenses to build up in the long run.

5) Health is wealth. Many costly problems are caused by poor sleep, lack of exercise or bad nutrition. Medical bills are expensive and can add up.

6) Who you choose to marry marry is one of the biggest financial decisions of your life. A mistake can cost you a lot of money. Making the wrong decision can cost you time, peace and legal fees.

7) Material possessions are not a sign of wealth. Material things won’t make you a happier person.

8) Pay-off & eliminate high-interest debt. Consumer debt delays wealth creation & hurts your ability to invest in your future. Consumer debt robs you of your future, because you are using money you earn today to pay, off things from your past.

9) Establish an emergency fund to cover 3–6 months living expenses, for unexpected events. Everyone needs an emergency fund so that you have access to money in a pinch. The best option for an emergency fund is a High Yield Savings Account, you earn interest while the money sits.

10) It’s not about how much you make, it’s about how much you save and invest.

11) Don’t buy liabilities to look wealthy, buy assets to become wealthy. Invest in assets so that they replace your liabilities over time

12) Create multiple steams of income from a side-business or side-hustle, so that working 40+ hours a week becomes a choice, and not an obligation. Create multiple sources of income, because only having one, is one away from zero.

13) Increase your income with a side hustle or business. Many income generating hobbies or skills that people can learn can be replaced by scrolling though social media for hours. Create multiple sources of income so that you get paid more than 26 times each year

14) Always use strategic tax planning to maximize your income. Tax code has 75,000 pages on legally avoiding taxes, use tax law to your benefit!

15) Find ways to reduce expenses. The quickest way to increase income, is to reduce expenses.

16) Be more frugal & spend less than you earn. By being frugal you are being more resourceful with money. Being frugal is prioritizing your spending on what is important to you in life.

17) Budget to know where your money goes, and make a plan to reduce expenses. Creating a budget can help you better track your money. Not having a budget can make it difficult to know where you are spending your money, or difficult to have control over your spending in general.

18) Invest for your retirement. Retirement isn’t an age, it’s a number in an investment account. Investing for 20 years may be hard, but being old & broke will be a lot harder. A Roth IRA is a very powerful way to save for retirement, and allows your money to grow tax free. With a Roth IRA, you are not taxed on capital gains or dividends while your investments grow in the account, and not taxed when you make a withdrawal at retirement!

19) If you don’t know where to start investing, buy an Index Fund that tracks the S&P 500. You can have over $1.3 million when you are 60, if you invest $100 a week ($400 a month) into an S&P 500 index fund at 25, which historically earns about 11% ear year, on average.

For example, if you invested $10,000 in an S&P index fund, and contributed $10,000 a year for 20 years, you would have invested a total of $210,000 cash, but this amount would have grown to $793,275 based on the S&P 500’s historical records of an 11% rate of return compounded.

20) Real estate is a great investment vehicle. Renting only provides shelter, but owning provides numerous benefits such as:

• Build equity

• Provide tax incentives

• Create cash flow which will increase your income

• Appreciate in value which will increase your net worth

21) Educate yourself on personal finance & investing, and your wealth will grow in abundance. Being financially literate will change your life

22) A car is a depreciating asset. If the cost of your car payment higher than your credit score, you don’t need it. Don’t overspend on an expensive car, just to go to a job you hate.

23) Don’t buy “too much” house! If you take on too high of a mortgage payment and fall behind, you risk foreclosure. If you take on too high of a rent payment, and can’t keep up, you risk eviction. You could end up homeless from overspending on housing.

24) You can’t “save” yourself to wealth, you must invest. Everyday your money sits in a bank, you are losing money. With inflation over 8%, you lose half the value of your cash in 10 years.

The richest 10% of Americans own 90% of all stocks, the bottom 90% own 10% of all stocks.

25) Create financial goals & hold yourself accountable. Figure out what you want and align your actions to your goal. Create a strategy and maintain a long-term mindset.

The secret to building wealth is:

• Find ways to increase income (with investments, side hustles/ side business)

• Find ways spend less than you earn (by being frugal/ budgeting)

• Invest the difference

It’s not about how much you make, it’s about how much you save & invest!

What would you add?

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I write TheFinanceNewsletter.com for 50,000 subscribers. My expertise comes from real-world knowledge, sharpened by 15 years working on Wall Street and Banking.