Four Key Components of Wealth Building — And Three Are Free

Focus on simplicity rather than complexity in creating your financial strategy.

Some Thoughts to Initially Ponder

In our search for financial independence, we are constantly looking for the magic formula to reach our goal. Despite many proposed methods for success, the road traveled is deeply personal and is impacted by many variables, both known and unknown. From our social status to our upbringing to our life experiences, our desired outcomes can be achieved in many ways.

Before listing these four components, I want to address a few confounding issues. The first one is our relationship to money and wealth; these questions require more than a superficial response. There are subconscious mindsets that can cloud our true grasp of these concepts. In some minds, wealth is not even considered in a positive light and is even considered evil.

A second concern is our level of money management skills. With financial illiteracy at epidemic proportions, many of us are either ignorant of this subject or overwhelmed by the thought of managing our own financial destiny.

A Personal Formula

What are the key components in wealth building?

1) Money

2) Time

3) Compounding

4) Discipline

Obviously, the accumulation of money is the only component which is not free but is an option for those, who make the appropriate efforts and sacrifices.

The Money Dilemma

There are many strategies to deal with our money worries. On an individual basis, it is our responsibility to find the right system that works for us. Although our income is the most significant part of this equation, there is a tendency for many of us to live beyond our means. The result is more debt, less savings, and no investments.

Some lessons learned on my journey to financial independence have been the following:

1) Pay yourself first — set aside a specific amount of money at the beginning of each month for savings and/or investing.