How to Accumulate Wealth? These Seven Things Cannot be Ignored

Achieving “financial freedom” is a dream for many people. It means having more choices and freedom in life after attaining wealth, having enough time and money to do the things you love. However, many people find that acquiring wealth is not easy.

Apart from various individual reasons, a lack of understanding about wealth accumulation issues and misconceptions play a crucial role. Financial expert Chelsea Fagan explored some perspectives on her self-media channel, which are worth learning from.

When it comes to wealth accumulation, most people tend to focus on how to save money. But do you really save money? For example, some people spend a long time searching for the cheapest seller with free shipping when buying a few-dollar phone case online. Yet, when faced with an expensive designer bag worth thousands of dollars, they opt to pay in installments even if they cannot afford it upfront. Some people haggle vigorously at the farmer’s market but easily swipe their cards for hundreds of dollars at a restaurant.

To accumulate wealth, what you truly need to focus on are the large expenses, not the few dollars or cents saved after putting in great effort and psychological stress. Don’t “penny wise, pound foolish”! Treating yourself to a luxurious latte at Starbucks every week will not hinder your progress in buying a luxury home.

The most damaging thing to your wallet is desire for consumption, and the main stimulant for that desire is comparison. When you see peers surpassing you in all aspects of life, your initial reaction might be, “I can do that too! I want that too! I must have that!” Consequently, you may end up overdrawing on your future income to “keep up,” falling into an inescapable financial trap.

There is a Russian proverb: “Don’t try to jump higher than your head, or you will end up in dire straits.” The Chinese simply summarize it as “spend within your means.” Be true to yourself, focus on the growth of your wealth, and find happiness through it. Rather than comparing frugality with others, it is essential to retain and accumulate wealth.

Setting a portion of your income for automatic savings can ease the mental burden of deciding whether to save money each time. People tend to have various psychological tendencies like laziness, forgetfulness, and optimism, especially when it comes to cutting expenses and increasing savings. Therefore, setting aside a certain amount or percentage for automatic savings each month can make this challenge much easier.

The ways to accumulate wealth boil down to two points: increase revenue and reduce expenses. However, to successfully accumulate wealth, increasing income is more crucial than cutting expenses. Just like the example of spending hours to save a few cents on phone cases mentioned earlier, investing a significant amount of time and effort in saving small amounts is less effective than allocating it towards increasing income.

This principle is not hard to grasp; spending hours to save $50 monthly is less impactful than devoting the same time to a part-time job or side hustle that earns you $1000 in the same period. Rather than constantly tightening your belt and cutting expenses, focusing on increasing income will make a significant impact. Compared to expense reduction, increasing revenue is the key!

There is a saying: “Men fear choosing the wrong profession, women fear marrying the wrong man,” which encompasses life wisdom. This saying also applies to wealth accumulation and achieving financial freedom. In certain industries, the income tends to be higher, such as technology, finance, and banking, and income, increments, bonuses…all aspects tend to increase with experience. Therefore, selecting the right industry is crucial. If you are just starting out or considering a career change, industries like technology, finance, and banking might be worth exploring.

If a farmer hastily uproots the crops before harvesting due to impatience, the outcome is evident. Wealth accumulation follows a similar logic; investments like stocks and real estate require time for capital growth and ultimately results. Patience, rational analysis, and wise decision-making are especially crucial during market volatility.

It is often said, “Earning the first million is a hundred times harder than turning one million into two million.” This statement holds truth, as a harsh reality is that most millionaires inherit their “first capital” from the previous generation.

However, many self-made billionaires also exist. Therefore, even if you were not born into a wealthy family, understanding certain aspects of wealth accumulation, having a clear mindset in life, and putting in effort and perseverance can still grant you the opportunity to achieve financial freedom.

(The content of this article is for general informational purposes only and is not intended as advice. The Epoch Times does not provide investment, tax, legal, financial planning, real estate planning, or any other personal finance advice. For specific investment matters, please consult your financial advisor. The Epoch Times does not bear any investment responsibility.)