50 Simple Things You Should Do To Gain Wealth in the Next 5 Years
Anyone who has ever built wealth can tell you their success is the result of many smaller steps made over the course of their life.
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That said, it’s not only possible to improve your financial situation — but also to grow your money significantly and set yourself up for a prosperous future.
“Becoming wealthy in the next five years doesn’t necessarily require winning the lottery or inheriting a fortune. It’s about making wise, consistent choices with the resources we have,” said John Reed, co-founder and editor-in-chief at TestPrepPal.
Here are 50 simple things you should do today to gain wealth in the next five years.
Set Clear, Achievable Financial Goals
According to Reed, you should aim to save a fixed percentage of your income monthly, regardless of how small. This helps you create a habit of saving and ensures you’re consistently building your financial reserves.
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Invest in Your Financial Education
Understanding the basics of investing, and how compounding interest works, can transform your savings into a growing wealth over time, said Reed. For example, investing in a diversified portfolio of stocks and bonds can yield significant returns in the long run.
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Focus On Increasing Your Income Streams
“Whether it’s through advancing in your current career, starting a side hustle or investing in income-producing assets, diversifying your income can accelerate your wealth-building efforts,” said Reed.
Practice Mindful Spending
It’s not just about how much you earn but how much you keep. Practicing mindful spending — differentiating between wants and needs — ensures that your money is working towards your financial goals rather than against them.
Embrace a ‘Pay Yourself First’ Approach to Savings
Prioritize setting aside a portion of your income for savings or investments before handling monthly expenses. Gianluca Ferruggia, general manager at DesignRush, said this discipline fosters a savings culture and can significantly bolster your finances.
Invest In Knowledge of Markets
According to Ferruggia, understanding the markets, financial products and investment strategies can exponentially increase your wealth over a five-year span.
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Leverage Technology Through Automation
Another vital aspect to increasing your wealth in the next five years, Ferruggia said, is to leverage technology to automate your savings and investments, ensuring consistency and taking advantage of dollar-cost averaging.
Create an Irrevocable Trust
“One critical strategy I’ve seen work effectively is the utilization of trusts, not just for estate planning but as a tool for wealth accumulation,” said Marty Burbank, attorney and founder of OC Elder Law.
Set Up a Charitable Remainder Trust
Strategic charitable giving through mechanisms like Charitable Remainder Trusts (CRTs) is another great way to build wealth, said Burbank. Not only does it provide a tax deduction and potential income stream for you as the donor, but also ensures that a significant portion of your wealth is used for philanthropic efforts, aligning your financial growth with your personal values.
Be Savvy About Tax Planning
“My practice has shown that staying abreast of current tax laws and anticipating changes, like those detailed in recent tax bills, can unveil opportunities for substantial savings and investment redirection,” said David Brillant, tax, trust and estate lawyer at Brillant Law.
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Develop a Savings Mindset
Doing so transforms your relationship with money, enabling you to discern between essential and unnecessary expenses. For instance, spending an extra 30 minutes to save $20 on a hotel or flight booking is a worthy investment — unless your half-hour earnings exceed that amount.
Invest in Real Estate
“As a seven-figure real estate investor, I recommend real estate investing as an effective way to build wealth,” said Ryan Chaw, real estate investor and founder of Newbie Real Estate Investing.
“Case in point: In 2016, I didn’t have any investment experience. And today? I’ve been able to retire thanks to my rental properties. Specifically, I buy large properties and rent individual rooms to college students, which maximizes my ROI.”
Optimize the Money You Earn By Starting Small
If you haven’t started your investment journey yet, now’s the time to begin.
David Kemmerer, CEO of CoinLedger, said building wealth requires more than simply earning a high salary — you have to optimize the money you are earning, finding ways to multiply it so that you earn even more.
“If you are just getting started with investing, start small and focus on low-risk investments so that you get comfortable with what you are doing,” he said.
Focus On Eliminating Debt
“You can’t effectively gain wealth if you still have debt you need to repay,” said Carter Seuthe, CEO of Credit Summit.
“So, create a strategic plan for debt repayment so that you aren’t simply making the minimum monthly payments, as that will only increase the amount of time you remain in debt. If you can’t pay it all back at once, readjust your budget so that you can direct more money toward your payments in order to pay off the debt sooner.”
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Never Stop Learning and Growing
“I’ve advised clients to take courses, attend workshops and dive into books in their field,” said Rhett Stubbendeck, finance and insurance expert at Leverage Planning. “It’s crazy how boosting your knowledge and skills can skyrocket your value and open up new opportunities.”
Don’t Put All Your Eggs in One Basket
“I’ve seen clients start side hustles or invest in real estate and stocks for extra cash,” said Stubbendeck. “Having multiple income streams can give you that financial security you’re looking for.”
Building Connections Is Key
“Get out there, attend events, join online communities and make those meaningful connections,” said Stubbendeck. “You never know when someone can get you an amazing opportunity or collaboration.”
Open a Brokerage or Investing Account
According to Jake Hill, finance expert and CEO of DebtHammer Consolidation, many financial institutions offer brokerage and other investment accounts that you can open with no minimum balance, so investing is more accessible than ever.
Prioritize Saving for Retirement
Your retirement savings will continue to grow over time, helping you live a financially comfortable life in the future, said Hill. “The sooner you prioritize those savings, the more wealth you can build over the long term.”
Create Your Own Digital Product
“On YouTube, every day you can find new faces unveiling their courses and making big money,” said Liz Hutz, owner of Cash Home Buyers Georgia. “Learn some skill set [that] has demand in the market. Create your products and build your digital presence. Simultaneously, you will get fame and public awareness.”
Hang Out With Successful People
Your friends should be more experienced than you and have a higher expertise level. Successful people can offer valuable advice, insights and connections that can help you reach your goals.
Buy Used Cars
There are many makes and models of dependable cars that will provide years of reliable service. When you buy used, you avoid losing as much money to depreciation, and you can use your savings to build your wealth.
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Set Up an Emergency Fund
Experts say it’s wise to build an emergency fund containing three to six months’ worth of living expenses to avoid future debt from unplanned costs. This can help protect you from an unexpected financial crisis.
Try a Low Spend or No Spend Challenge
Consider cutting down or cutting out spending in a specific category of your life, such as takeout, movie nights out and shopping for items you don’t need. This will help you save up more money, which you can invest in other things.
Focus On Location
When it comes to real estate, location is key, said Paige Robinson, owner of House Buyers. “Look for properties in up-and-coming neighborhoods or areas with strong economic growth. These areas are likely to see an increase in property values, which can lead to a higher return on your investment.”
Be Strategic and Patient
“It may take time for your investment to pay off,” said Robinson, “but with careful research and smart decision-making, you can see significant returns over the next five years.”
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Maintain a Consistent Investment Strategy
Experts agree that over the long term, it helps ride out market fluctuations and captures growth opportunities. Prioritizing early and regular investing is key to building substantial wealth over the next five years and beyond.
Avoid Unnecessary Expenses
Cutting back on unnecessary expenses is a key factor in wealth building, according to Linda Chavez, founder and CEO of Seniors Life Insurance Finder.
“This means limiting extravagant purchases and focusing on your long-term financial goals. By avoiding unnecessary expenses, you can save more money and put it towards investments that will help grow your wealth,” she explained.
Stay Disciplined and Consistent
Building wealth takes time and discipline, said Chavez. “It’s important to stay consistent with your finances and stick to your budgeting and saving goals. Avoid unnecessary splurges and stay focused on long-term financial success.”
Measure Your Progress
Use digital finance platforms and apps like YNAB or Fina for managing personal finances. Keeping track of your net worth and all accounts in one place can help you stay on top of your financial health, make informed decisions and identify investment opportunities.
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Create a Budget
Creating a budget is the first step towards gaining wealth. It helps you understand where your money is going and allows you to make necessary changes to save more. List all your sources of income and expenses and allocate a specific amount for savings.
Pay Off High-Interest Debt First
High-interest debt can eat into your income and hinder your wealth-building efforts. Start tackling it by paying off any credit card debt or loans with high interest rates.
Always Ask for a Pay Increase
Finding a higher-paying job or negotiating where you work will always pay off in the long run, when you get paid what you’re worth. Gaining more money immediately increases your income, which is the cornerstone of accumulating wealth.
Start a Side Business
One of the best strategies to accumulate wealth rapidly is to raise your income. To position yourself for success, you should begin investing your time and talents in a side project to increase your revenue.
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Develop a Financial Plan
It’s essential to have a clear and well-defined financial plan. This should include your short-term and long-term goals, as well as the steps you need to take to achieve them.
Live Below Your Means
To live below your means, you may have to make sacrifices, such as downsizing your home or car, cutting back on dining out and entertainment, and avoiding unnecessary purchases. However, these sacrifices will be worth it in the long run, as they will help you save more money for your future goals.
Stay Focused On Your Goals
Picture yourself on a journey, and you’ve got a clear destination in mind. That’s what setting financial goals is all about. Take a moment to think about what you want to achieve in the next five years — whether it’s buying a home, paying off debt or saving up for a big trip.
Strike a Balance When Budgeting
Budgeting might sound boring, but it’s like giving yourself a roadmap to success. Take a look at your income and expenses, and figure out where you can cut back to save more. Remember: it’s all about finding that balance between enjoying life and planning for the future.
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Automate Your Savings
Saving money can be as easy as ordering takeout when you set up automatic transfers from your checking account to your savings or investment accounts each month. That way, you’re putting money aside without even thinking about it.
Be Smart About Spending
Everyone has weaknesses when it comes to spending — whether it’s eating out, shopping or fancy gadgets, it’s important to rein it in and focus on what’s really important. Try and look for ways to cut back on non-essential expenses and put that money towards your goals.
Diversify Your Investments
Experts note that diversification is key in building long-term wealth. Instead of putting all your money into one investment, spread it out across different types of assets, such as stocks, bonds, real estate and even businesses. This helps minimize risk and can lead to higher returns over time.
Consider House Hacking
Ryan Barone, co-founder and CEO of RentRedi, said house hacking involves renting out a portion of the home you live in, typically extra bedrooms.
“But also consider house hacking with a twist, where you can get creative by renting out other parts of your home, such as garages, attics, storage or parking spaces. This allows you to begin collecting rent without needing to make an initial investment,” he said.
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Invest in Multi-Space Rentals
Barone also recommended investing in rentals other than living spaces, like salons, storage units, parking lots, garages and even mailboxes. “These rentals generate less income than a house or an apartment, but owning and renting out more units can add up to a nice sum of money each month.”
Embrace a Landlord Mindset
“Consider that becoming a landlord is no longer a complicated, time-consuming hassle,” said Barone. “With plenty of robust property management software platforms available that can do most or even all of the work for you, renting any type of property can be a truly passive source of income that can generate wealth with little to no effort.”
Stay Informed
The financial world is constantly evolving. Staying informed about market trends, investment strategies and economic indicators can help you make more educated decisions about your finances.
Open a High-Yield Savings Account
Do you have money in a savings account or other place where you can park your money? One of the biggest things you can do right now in 2024 is to review where that money is parked, and if it is earning less than 5% APY, consider moving it into a high-yield savings account that earns significantly more.
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Educate Yourself in Risk-Taking
There is risk in fixing and flipping houses, but you could make $10,000, $30,000, $50,000 or more — or you could make nothing or even lose money, which is the risk. Educating yourself on your options and learning how those options work can help you balance your risk.
Leverage Your Skills By Freelancing or Consulting
By leveraging your skills through freelancing or consulting, you can generate an extra $1,000 monthly. These strategies not only secure your financial future but also empower you to grow your wealth over time.
Set SMART Goals
This involves setting Specific, Measurable, Achievable, Relevant and Time-bound goals. Loren Paul Fiffik, wealth manager at Confluence Financial Partners, recommends not simply “saving and investing,” but rather, determine how much you’d like to have in five years and save and invest the specific percentage of your income every month that gives you the best chance of achieving your goals.
Remember To Stay Resilient
Every successful investor needs to have a well thought out plan accounting for variables and forks in the path, said Fiffik. “When life throws those inevitable ‘punches,’ having a strategy that you can visualize and believe in will help you stay on course rather than straying from it.”
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