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5 Tips for Building Wealth and Living Well

In this age of instant gratification and short attention spans, even the highest earners are having trouble building wealth and saving for the future. A surprising number of NFL players, for instance, end up not on easy street but in bankruptcy court, even though they pulled down millions of dollars during their playing days.

If those highly paid NFL players are having trouble building wealth, what chance do the rest of us have? You might think the situation is hopeless, but that is far from the case. With the right approach and the proper attitude, even workers of modest means can build substantial wealth. Here are five ways to beat the odds and come out on the winning end of the wealth creation spectrum.

#1. Wait Until You Are Rich Before Acting Like You Are

It is tempting to act like you are rich, and the desire to "fake it until you make it" is a powerful one. Even so, living beyond your means and acting like you are rich before you are is a dangerous thing to do.

There will be plenty of time to live it up and act rich once you actually are rich, so ramp down your expectations, live within your means and build wealth for the future. There is no need to show off your nonexistent wealth, so focus benefits, on saving and investing your money instead.

#2. Focus on Saving, Not Just Earning

At the end of the day, it is not how much you earn, but how much you keep and how much you are able to save. Focusing on your paycheck alone will not make you rich but learning to save and invest from an early age almost certainly will.

Given the time and the inclination, even those earning modest paychecks can accumulate substantial nest eggs. On the other end, even the highest earners will end up broke if they continually spend more than they make.

#3. Pay Yourself First

If there is one thing you can do to build wealth for the future and set yourself up for success, it is adopting a pay yourself first strategy. The pay yourself first model provides a number of unique but interrelated benefits, and adopting it is a key prerequisite for building wealth.

The beauty of the pay yourself first model is it forces you to live below your means. By treating your saving and investing as just another bill to be paid, you force yourself to live on less than you make. Whether you pay yourself 10% of your earnings, or start out with just 1%, you are creating a habit that will last a lifetime.

The pay yourself first model also creates the kind of consistency that is key to building wealth. Once you adopt this powerful model, you will invest month after month and year after year, no matter what the market is doing.

#4. Invest Consistently and Do Not Try to Time the Market

It is tempting to time the market, but it is also nearly impossible to do. If it were easy to time the highs and lows of the stock market, every investment advisor would be rich and every broker would have their own private island.

If you attempt to time the ups and downs of the market, you need to be right not once but twice. You obviously need to call the top of the market, but you also need to know when to get back in. This type of timing is nearly impossible, and investing consistently makes far more sense.

If you invest consistently and adopt the pay yourself first model, you actually benefit from the ups and downs of the stock market. When the market takes a tumble, the money you put in goes further and buys more shares. When stocks are soaring, the same amount buys fewer shares. This dollar cost averaging is a powerful tool, especially when you are investing over several decades.

#5. Give Your Kids the Tools Then Need for Success

If you have a family, you want to give your kids the best of everything, but the best gift you can give them is your knowledge. Setting your kids up for success will give them the tools they need to live independently, and that is good for your finances and theirs.

It can be tempting to give your kids everything they want and bail them out when they get in trouble, but these financial crutches could actually cripple your children. If you want to build wealth and give your kids a gift, teach them to stand on their own - and pass on the financial lessons you have learned along the way.

Building wealth for the future is not an easy thing to do. If wealth creation was easy, everyone would do it, and everyone you know would be rich. If you want to beat the odds, you need to take a different approach, and the five tips listed above can help you get started.

This award was issued on 12/01/2023 by Five Star Professional (FSP) for the time period 03/13/2023 through 09/29/2023. Fee paid for use of marketing materials. Self-completed questionnaire was used for rating. This rating is not related to the quality of the investment advice and based solely on the disclosed criteria. 6,515 New Jersey-area wealth managers were considered for the award; 462 (7% of candidates) were named 2024 Five Star Wealth Managers. The following prior year statistics use this format: YEAR: # Considered, # Winners, % of candidates, Issued Date, Research Period. 2023: 6,606, 407, 6%, 12/1/22, 3/21/22 - 10/18/22; 2022: 6380, 431, 7%, 12/1/21, 4/12/21 - 10/15/21; 6123, 459, 7%, 12/1/20, 3/30/20 - 10/23/20; 2020: 6210, 480, 8%, 12/1/19, 3/1/19 - 10/16/19; 2019: 6097, 477, 8%, 12/1/18, 3/21/18 - 10/12/18; 2018: 4383, 415, 9%, 12/1/17, 2/21/17 - 10/12/17; 2017: 3868, 664, 17%, 11/1/16, 2/25/16 - 10/7/16; 2016: 4143, 626, 15%, 11/1/15, 4/15/15 - 10/16/15; 2015: 5063, 672, 13%, 12/1/14, 4/15/14 - 10/16/14; 2014: 3315, 646, 19%, 12/1/13, 4/15/13 - 10/16/13; 2013: 4049, 733, 18%, 12/1/12, 4/15/12 - 10/16/12; 2012: 1312, 400, 30%, 11/1/11, 4/15/11 - 10/16/11.
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*Winners appearing on this page do not pay a fee to be considered or to win the Five Star Award. Professionals with a digital profile have paid a promotional fee.
Wealth managers do not pay a fee to be considered or placed on the final list of Five Star Wealth Managers. The award is based on 10 objective criteria. Eligibility criteria - required: 1. Credentialed as a registered investment adviser (RIA) or a registered investment adviser representative; 2. Actively licensed as a RIA or as a principal of a registered investment adviser firm for a minimum of 5 years; 3. Favorable regulatory and complaint history review (As defined by FSP, the wealth manager has not; A. Been subject to a regulatory action that resulted in a license being suspended or revoked, or payment of a fine; B. Had more than a total of three settled or pending complaints filed against them and/or a total of five settled, pending, dismissed or denied complaints with any regulatory authority or FSP's consumer complaint process. Unfavorable feedback may have been discovered through a check of complaints registered with a regulatory authority or complaints registered through FSP's consumer complaint process; feedback may not be representative of any one client's experience; C. Individually contributed to a financial settlement of a customer complaint; D. Filed for personal bankruptcy within the past 11 years; E. Been terminated from a financial services firm within the past 11 years; F. Been convicted of a felony); 4. Fulfilled their firm review based on internal standards; 5. Accepting new clients. Evaluation criteria - considered: 6. One-year client retention rate; 7. Five-year client retention rate; 8. Non-institutional discretionary and/or non-discretionary client assets administered; 9. Number of client households served; 10. Education and professional designations. FSP does not evaluate quality of services provided to clients. The award is not indicative of the wealth manager's future performance. Wealth managers may or may not use discretion in their practice and therefore may not manage their clients' assets. The inclusion of a wealth manager on the Five Star Wealth Manager list should not be construed as an endorsement of the wealth manager by FSP or this publication. Working with a Five Star Wealth Manager or any wealth manager is no guarantee as to future investment success, nor is there any guarantee that the selected wealth managers will be awarded this accomplishment by FSP in the future. Visit