5 Tips to Build Wealth in 2023

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12 min
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As the team's Capital Markets Analyst, Jacob conducts market and investment research and assists in the development of business strategy to serve our clients more effectively.
July 25, 2023

The majority of people want to grow their wealth, yet most are unsure of how to do it, or how to do it well.

Before I dig in any deeper, I feel like I should put in this disclaimer. There are no easy fast ways to grow your wealth. Sure, you can win the lottery or become an overnight success but the odds of landing that scenario is pretty much 0%.

There is a much more tried and true way of building wealth, and it involves time, energy, and dedication.

What is Wealth?

I want to take a second to clarify and define what wealth is. The technical definition is an abundance of valuable possessions or money. An abundance of valuable possessions or money.

First, what is an abundance of valuable possessions or money. Does that mean you have more than others? Or does that mean you have more than you need?

Then what is value? Is value simply commas in a bank statement? Or is it core memories of your kids jumping off of your lake cabin dock?

What I, and you, see are headlines like “Floridians Now Need $1,000,000 to Retire” and “If you only have $500,000 saved you won’t retire.”

But those aren’t true statements.

Maybe if you are a completely average joe those statements apply to you, but 99% of people have uniqueness about them that sets them financially apart from the average.

Envy is the enemy of our financial lives. What you really need to find out is what an abundance of valuable possessions or money is for you.  

We often associate wealth with money, assets, or possessions. But is that all there is to wealth? Is wealth just a number on a bank account or a portfolio?

I believe wealth is much more than that. Wealth is not just what you have, but what you do with what you have. Wealth is not just a means, but an end. Wealth is not just a state, but a mindset.

Wealth is the ability to live a life that is meaningful, fulfilling, and aligned with your values and purpose. Wealth is the freedom to pursue your passions, interests, and dreams. Wealth is the opportunity to make a positive impact on the world and the people around you. Wealth is the joy of sharing your gifts, talents, and resources with others. Wealth is the gratitude for all that you have and all that you are.

Wealth is not something that you can measure with a calculator or a spreadsheet. Wealth is something that you can feel in your heart and soul. Wealth is something that you can create, cultivate, and celebrate.

Of course, money is an important part of wealth. Money is a tool that can help us achieve our goals, support our needs, and enhance our lives. Money is a resource that can enable us to do good things for ourselves and others. Money is a reward that can reflect our value, contribution, and impact.

Money can help us create wealth, but it cannot define wealth. Money can buy us things, but it cannot buy us meaning. Money can give us comfort, but it cannot give us fulfillment. Money can make us rich, but it cannot make us wealthy.

Wealth is not about how much money we have, but how we use the money we have. Wealth is not about how much we earn, but how much we save, invest, and give. Wealth is not about how much we spend, but how much we value, appreciate, and enjoy.

Money is a part of wealth, but wealth is more than money. Wealth is a holistic concept that encompasses our physical, mental, emotional, spiritual, and social well-being. Wealth is a personal journey that requires us to discover, develop, and deploy our unique potential. Wealth is a collective vision that inspires us to collaborate, cooperate, and contribute to a better world.

Money is important, but it is not everything. Wealth is everything, and it is within our reach.

The Challenges of Building Wealth

There are several challenges when it comes to building wealth, some are obvious and some are more theoretical, but here are some of the largest pitfalls that Americans have when trying to build wealth.

Living Paycheck to Paycheck

The share of Americans living paycheck to paycheck rose to 63% at the end of 2022, and even if you aren’t living paycheck to paycheck but are close you won’t feel like you are making any progress towards your wealth goal.

Having too Much Debt and/or too High of Fixed Costs

Debt is great in the right doses. Where people go wrong is when people don’t get far enough down the road because they have too much debt.

Debt means monthly fixed payments. When you have $1,500 going towards your mortgage, $500 towards your car, $200 in interest on your credit cards, and $300 towards your personal loan, and are only making $4,000 per month. The math works out that you would have to live extremely lean to keep up that lifestyle just to afford to live, not including building your financial future.

Another fixed cost to be aware of is subscriptions. List out everything you pay for and why. I bet there are some things you can cancel.

Making Unwise Investment or Purchasing Choices

Sometimes something seems right in the moment but ends up costing you a fortune later on. Say for instance you held all your investments in Large Cap Technology stocks in 2022. Sure over the course of the last decade that strategy would have worked wonders for you, but when the tides turn, they turn.

A simple fix would’ve been to diversify and hopefully protect your assets.

Another big one is buying too big of a house or too fancy of a car, or to many cars. This puts you in debt, increases your high fixed costs, and can set you back financially.

Not Feeling Like You Are Making Progress

It takes nearly ten years before your *projected* returns match your contributions at $10,000 per year. That means you have to make it through ten painstaking years of feeling like you are really moving before you can reap the reward of the latter have of this chart.

In this model it would take you 27 years before you would save your first million 20 years before you would save your first half a million.

And what are you doing during those 20 to 27 years. Are you saving every penny you can, because that may not be the best thing for your physical life and your mental life.

Not Understanding How to Realize Value

Have you ever heard of the law of diminishing marginal utility? It's a fancy economic term that basically means that the more you have of something, the less you value each additional unit of it.

For example, if you are hungry and you eat a slice of pizza, you will enjoy it a lot. But if you eat another slice, you will enjoy it a little less. And if you eat a third slice, you will enjoy it even less. And so on, until you are full and you don't want any more pizza.

This concept applies to money and wealth as well. The more money you have, the less you value each additional dollar.

For example, if you have $100 in your bank account, and you receive $10, you will be happy. But if you have $10,000 in your bank account, and you receive $10, you will be less happy. And if you have $1,000,000 in your bank account, and you receive $10, you will be even less happy. And so on, until you have so much money that you don't care about any more money.

So, what does this mean for your personal finance and wealth?

It means that you should not chase after money for the sake of money. It means that you should not sacrifice your happiness, health, relationships, and passions for the sake of money.

It means that you should not spend your money on things that don't bring you joy or value. It means that you should use your money to achieve your goals and fulfill your needs, not your wants.

The law of diminishing marginal utility also means that you should be grateful for what you have.

It means that you should appreciate the value of each dollar you earn and spend.

It means that you should recognize that money is a tool, not a goal. It means that you should focus on the quality of your life, not the quantity of your money.

Five Ways to Help You Build Wealth in 2023

Now let’s get into how you can build wealth in 2023. Keep in mind that this will not get you $1,000,000 within the year but rather put you on the right path to where you want to be.

Track your Income and Expenses

If you want to build wealth, you need to have a clear picture of your financial situation. That means knowing how much money you earn, how much money you spend, and how much money you save or invest. Tracking your income and expenses is the first step to achieving this goal.

Tracking your income and expenses helps you to:

  • Understand your spending habits and identify areas where you can cut costs or increase income.
  • Set realistic and achievable financial goals and measure your progress towards them.
  • Plan for the future and prepare for unexpected expenses or emergencies.
  • Avoid debt or pay off existing debt faster.
  • Save more money and invest it wisely to grow your wealth.

Make a Budget

One of the best tools to track your income and expenses is a budget. A budget is a plan that outlines how much money you expect to earn and spend in a given period, usually a month or a year. A budget helps you to:

  • Allocate your money to different categories, such as housing, food, transportation, entertainment, etc.
  • Prioritize your needs and wants and make trade-offs accordingly.
  • Stay within your means and avoid overspending or under-saving.
  • Track your actual income and expenses and compare them to your budgeted amounts.
  • Adjust your budget as your income, expenses, or goals change.

A budget is not a one-time thing. It is a dynamic and flexible tool that you need to review and update regularly. You can use various methods to create and manage your budget, such as:

  • Pen and paper: You can write down your income and expenses on a notebook or a spreadsheet and do the calculations manually.
  • Apps and software: You can use apps or software that automatically track your income and expenses, sync with your bank accounts and credit cards, and provide reports and charts.
  • Envelope system: You can divide your cash into different envelopes for each spending category and only use the money in each envelope for that purpose.
  • 50/30/20 rule: You can allocate 50% of your income to your needs, 30% to your wants, and 20% to your savings and investments.

Whatever method you choose, the key is to be consistent and honest with yourself. Tracking your income and expenses and creating a budget may seem tedious or daunting at first, but it is worth the effort. It will help you to take control of your money, make smarter financial decisions, and achieve your wealth-building goals.

Automate your Finances

Automating your finances means setting up systems and processes that automatically handle your money for you, without requiring your active involvement or intervention. For example, you can automate your finances by:

  • Setting up direct deposit for your income, so that your money goes straight to your bank account without you having to cash a check or transfer funds.
  • Setting up automatic transfers for your savings and investments, so that a portion of your income goes to your savings account, retirement account, or investment account every month or every paycheck.
  • Setting up automatic payments for your bills and debts, so that your rent, mortgage, utilities, credit card, student loan, or car loan payments are deducted from your bank account on a due date or a schedule that you choose.
  • Setting up automatic alerts and reminders for your financial tasks and goals, so that you get notified when your balance is low, when your credit score changes, when your budget is off-track, or when you reach a milestone.

Automating your finances helps you to:

  • Save time and energy that you can use for other productive or enjoyable activities.
  • Reduce stress and anxiety that comes from worrying about your money or forgetting to pay a bill or save for a goal.
  • Avoid fees and penalties that result from missing a payment or overdrawing your account.
  • Improve your credit score and reputation that depend on your payment history and utilization ratio.
  • Increase your savings and investments that grow with compound interest and market returns over time.
  • Achieve your financial goals faster and easier that depend on your savings rate and investment performance.

Automating your finances does not mean that you can ignore your money or stop learning about personal finance. It means that you can leverage technology and systems to simplify your money management and optimize your financial outcomes. You still need to review and update your automation settings periodically, monitor your financial progress, and make adjustments as your income, expenses, or goals change.

Automating your finances is one of the best habits you can adopt to build wealth. It will help you to take advantage of the power of automation, consistency, and compounding. It will also help you to avoid the pitfalls of procrastination, distraction, and temptation. It will make your money work for you, not against you.

Create a Plan

A financial plan is a comprehensive document that outlines your current financial situation, your future financial goals, and the strategies and actions you will take to achieve them. A financial plan can cover various aspects of your personal finance, such as:

  • Income and expenses: How much money you earn and spend, and how you can increase your income or reduce your expenses.
  • Savings and investments: How much money you save or invest, and how you can optimize your savings rate or investment returns.
  • Debt and credit: How much money you owe or borrow, and how you can pay off your debt or improve your credit score.
  • Insurance and protection: How much money you need to protect yourself and your loved ones from unexpected events or risks, and what types of insurance policies or products you need.
  • Taxes and estate: How much money you pay or save in taxes, and how you can minimize your tax liability or maximize your tax benefits.
  • Retirement and legacy: How much money you need to retire comfortably and securely, and how you can plan for your retirement or leave a legacy for your heirs.

A financial plan helps you to:

  • Clarify your financial goals and priorities, and align them with your values and vision.
  • Assess your financial strengths and weaknesses, and identify your opportunities and threats.
  • Create a realistic and actionable roadmap to achieve your financial goals, and track your progress and performance.
  • Make informed and confident financial decisions, and avoid costly mistakes or regrets.
  • Adapt to changing circumstances and situations, and update your financial plan accordingly.

A financial plan is a living and evolving document that you need to review and revise regularly, at least once a year or whenever there is a significant change in your life or finances. You can create and manage your financial plan by yourself, or you can hire a professional financial planner or advisor to help you.

A financial plan is one of the most valuable assets you can have to build wealth. It will help you to take control of your money, make the most of your resources, and achieve your financial dreams.

Professionalize your Plan

Professionalizing your financial plan means hiring a qualified and trustworthy financial planner or advisor to help you create and manage your financial plan. A financial planner or advisor is a professional who has the education, experience, and credentials to provide financial advice and guidance to clients. A financial planner or advisor can help you to:

  • Analyze your financial situation and goals, and understand your risk tolerance and preferences.
  • Design a customized and comprehensive financial plan that suits your needs and wants, and covers all aspects of your personal finance.
  • Implement your financial plan and execute the strategies and actions that are recommended for you.
  • Monitor your financial plan and evaluate your results and outcomes, and provide feedback and suggestions for improvement.
  • Update your financial plan and make adjustments as your life or finances change, and help you cope with financial challenges or opportunities.

Professionalizing your financial plan can have many benefits for you, such as:

  • Saving you time and energy that you can use for other productive or enjoyable activities.
  • Reducing your stress and anxiety that comes from managing your money or making financial decisions.
  • Increasing your confidence and satisfaction that comes from having a clear and realistic financial plan and achieving your financial goals.
  • Improving your financial literacy and awareness that comes from learning from a financial expert and having access to financial resources and tools.
  • Enhancing your financial performance and results that comes from having a professional and objective financial advice and guidance.

Professionalizing your financial plan does not mean that you can delegate your money or responsibility to someone else. It means that you can partner with a financial professional who can support you and empower you to make the best financial decisions for yourself. You still need to be involved and engaged in your financial plan, and communicate your needs and expectations to your financial planner or advisor.

Professionalizing your financial plan is not a necessity, but a choice. It depends on your personal preference, situation, and budget. You can professionalize your financial plan partially or fully, or you can do it yourself. However, if you decide to professionalize your financial plan, you need to do your research and due diligence to find a reputable and reliable financial planner or advisor who can meet your standards and expectations.

Professionalizing your financial plan is one of the best investments you can make for your financial future. It will help you to leverage the expertise and experience of a financial professional, and optimize your financial potential and opportunities. It will also help you to avoid the pitfalls of bias, emotion, or ignorance, and overcome your financial challenges and obstacles. It will make your financial plan work for you, not against you.

About us
Fjell Capital is a leading wealth management firm designed to deliver results for people who desire to be excellent with their finances. Starting at $125/month and a 0.75% asset management fee you can work with Fjell Capital. No asset minimums. Learn more about Fjell Capital here.
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