7 Steps To Wealth On Your Own Income
If you’re handling life financially on your own, these steps will help you toward real wealth:
1. Save money first
Learning to keep money consistently is foundational to wealth-building. This is the first step.
If you have little or no savings right now, decide to keep a percentage of your income as soon as you’re paid (e.g., 10%).
Transfer that savings into a shared savings account, preferably one that earns interest like a money market account.
Determine how long it would take to save up $1,000 doing this consistently. Target your first savings goal to $1,000 and increase the percentage to achieve it faster.
2. Control spending to protect your savings
Learning to control your expenditures (using money that leaves your checking account) is just as foundational as saving. This is the second step.
Create a budget using the remaining income after saving (e.g., 90% or less if you’re choosing a more aggressive savings rate).
Review expenses, find leaks, and cut unnecessary expenses (e.g., unused subscriptions, overlapping services).
2b. Pay off consumer debts fast
Skip this step if it does not apply to your life. Consumer debt, like credit cards, student loans, car loans, medical debt, personal loans, and HELOCs, is detrimental to wealth building. Get laser-focused on completing this step with everything you can, so you can move to the next step as fast as possible.
Avoid passive strategies like consolidation that stretch payments out.
Choose an aggressive payoff method:
Debt Snowball (best for behavior and momentum; not the best money saver)
List debts by smallest balance to largest.
Pay minimums on all but the smallest.
Throw all extra cash at the smallest until it’s gone.
Roll that amount into the next smallest, and repeat.
Debt Avalanche (best for saving money; harder to execute)
List debts by highest interest rate to lowest.
Pay minimums on all but the highest-rate debt.
Throw all extra cash at that one until it’s gone.
Roll that amount into the next highest-rate debt, and continue.
Pause all investments, including retirement contributions, to unlock extra income and apply it to your debt.
Set a debt-free target date and post your payoff progress somewhere in the house to show progress.
Say no to new consumer debt, period, moving forward.
3. Protect what you’ve built
Now that you’ve freed up your income, build an emergency cash fund with at least 6 months of expenses in an account that yields interest.
Avoid risky money moves like crypto or day trading until you have at least a $1,000,000 net worth and the amount to risk is relatively small (e.g., $500).
Review your insurance coverage, such as health, home, and auto, and fill in the gaps.
For big financial decisions, get advice from a trusted financial coach or fee-only advisor.
Give yourself time to think before committing (e.g., days for reasonably small choices, months for major ones).
4. Multiply your savings
List existing retirement, brokerage, and savings accounts.
Choose a set amount or percentage to invest regularly.
Automate your investments into simple, low-cost index funds.
Stay consistent, even when growth feels slow.
5. Own and pay off your home
If you’re buying a home, go through each step with caution and seek advice from people you trust with this experience - financing, touring, negotiating, and closing.
Save for the down payment from your budget.
Create a plan to pay off the mortgage as fast as reasonably possible.
6. Secure your future
Consistently invest in retirement accounts. Think 401ks and Roth IRAs.
Maintain your 6-month emergency fund by replenishing what you withdraw.
Get appropriate insurance plans in place, like health and disability, and term life if you have dependents.
Set up simple estate plans, like creating a will, adding beneficiaries to your wealth-building assets (e.g., retirement accounts), and add a health care proxy and power of attorney in case of an emergency.
7. Increase your earning power
Once you're stable, build additional income streams like side work, creative endeavors, etc.
Keep your skills sharp and continue exploring new career opportunities with higher pay.
Explore further education or certifications as long as it can be paid for in cash.
If you’re consistent and intentional with these steps, you’ll lower money stress, gain control, and build real, lasting wealth.
Check out these 9 steps to building wealth and trust as a couple.
Reach out if any questions come up and I’ll see how I can help.
justin@wealthandwisdomcoaching.com
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