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At the core of any wealth building strategy is making sure that you consistently invest your income and live below your means. The easiest way to accomplish that is to act like the tax man and "tax" your income from your paycheck. Unlike the tax man, make sure you never have a chance to spend it.
It is surprising how easy and straightforward this method is to build wealth, yet few people actually do it.
I know what some of you are saying, "There's no way I can save that kind of money." Unless you are unemployed or your income is significantly below the poverty line, I am just not buying that statement. Almost ever person in America that has a paycheck can utilize this method and it is a surefire way of building up wealth.
Here's how this works. You are going to do your normal 401(K) or other retirement contributions. You should be doing these first and at the very least contributing as much money to your retirement as your company gives you as a match. Personally, I would recommend that you put away 10-15% of your income in a retirement account.
Step 1: Setting Up the Account
Once you have done that, you are going to setup a separate account for investment. I would recommend a reputable low cost broker where after a few months of doing this, you can invest into mutual funds. The separate account really needs to be separate. Don't fool yourself by thinking that you can save your money in your bank account and you won't access it. If you don't have an account, go online and you can open one in a few minutes. Below are listed some common ones, sorted by the minimum investment to open an account. As you can see, everyone can have an account even if you don't have any money right now.
Zecco : No minimum, Free/ $4.50 trades
eTrade: $500 minimum (funded within 60 days) / $12.99 trades
Scottrade: $500 minimum / $7.99 trades
Ameritrade: $2,000 minimum / $9.99 trades
Fidelity: $2,500 minimum / $9.99 trades
If you already have a brokerage account, that's great. You'll skip to the next step. It doesn't take very long to open an account, typically 7 - 15 minutes and you will usually need your social security number. Once you have the account setup, you can send in your minimum, if any.
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