1. Save your money. Saving money is one of the most important skills on the path to wealth. While the saying "a penny saved is a penny earned" is true to an extent, in reality, a penny saved may equal a dollar earned over time if you properly invest your saved money.
Saving money requires one thing — to spend less than you take in. This is easier to do if you have a solid income (which is why investing in education is important), but it is important to remember that it is possible to save money regardless of your income, even if the amounts are small.
Try to start by saving 10% of your paycheck each month. While this is a recommended goal, if this is not possible, simply save what you can, with the goal being to add something to your savings each month.
2. Create a budget. A solid budget is the first step on the path to wealth. It helps you to identify all your expenses, and therefore control and reduce them. This, in turn, allows you to save your money which gives you capital to invest with.
On a sheet of paper or in a word processing document, list all your income for the course of a month in one column. At the bottom, add up the sources to determine a total.
In another column, do the same for expenses. Make sure to include everything. One helpful way to do this is to examine your bank statement and credit card statement. Add all the expenses in the column together to determine the total monthly expenses.
3. Identify areas where you can reduce spending. Look closely at the expense column to find areas to reduce spending. Your goal should be to create more "space" between the total number in the income column, and the total number in the expense column.
One way to do this is to examine the difference between "wants", and "needs". A need is essential, whereas as a want is option. Look to your "wants" each month to find reductions. For example, you may want a brand new phone with a 3GB data plan, while you only need a basic phone with a simple 1GB plan.
Consider looking at your needs as well, and examining how to reduce them. For example, rent is a need, but you may be able to find a more affordable apartment in a cheaper area of town, or downgrade from a two-bedroom to a one-bedroom, for example.
4.Create an emergency savings fund. Before you invest at all, always have an emergency savings fund prepared. Experts recommend having at least three months of living expenses set aside in case of a job loss, medical emergency, or unexpected expense.
After an emergency fund is prepared, you can then focus on using your savings to build your investment portfolio.
5.Take advantage of a workplace 401(k) if you have one. About half of American workplaces have access to something called a 401(k), which is a special plan whereby some money is deducted every month from your check and invested. Often, your employer will match all or a portion of your contribution.
The benefit of a 401(k) is that your money can grow tax-free (normally taxes are charged and collected annually on invested money which makes it grow slower). In addition, money you contribute is tax-deductible. This means if you contribute $5,000, you won't pay income tax on that money.
Inquire at your workplace if a 401(k) plan is available, and make sure to take advantage of it, especially if your employer offers matching contributions. This is an excellent way to get started on a path to wealth