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If you are not rich, you may be wondering how you can become rich at different times in your life. Building long-term wealth generally means making smart financial decisions, such as prioritizing consistent investments and debt repayment.
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What is not included is spending money on things that have no lasting value. How can you know which purchases are holding you back from building wealth?
luxury goods
This includes designer clothes, expensive watches, vintage cars, and other expensive status symbol items.
“Purchasing luxury items you can’t afford can put a huge strain on your finances. Karen Coffi Capital ManagementCullen recommends focusing on building wealth by investing in assets that appreciate in value over time, such as stocks and real estate.
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impulse purchase
Impulse purchases can be lottery tickets, shopping after a hard day at work, or anything else you might buy when you get a little emotional. These add up over time and can put a strain on your finances. A better approach, according to Cullen, is to focus on developing a solid financial plan and sticking to it.
rent
“Renting may seem like a more affordable option to own a home, but it can be more expensive in the long run,” says Cullen. “Whether it’s buying a home or investing in a rental property, focus on building wealth by investing in real estate.”
high interest debt
People who want to build wealth but have credit card debt, payday loans, or personal loans may find that paying high interest rates eats up these efforts quickly. .
To avoid high-interest debt, Cullen recommends living within your means, budgeting, and paying off outstanding debt as soon as possible.
overpriced financial instruments
“Financial products such as annuities, whole life insurance, and high-fee mutual funds can promise high returns, but often carry large fees that can erode the returns,” said Cullen. I’m here.
If you don’t want to invest in these products, but want to grow your wealth, consider low-cost index funds or exchange-traded funds (ETFs), says Cullen. They are inexpensive and offer diversified exposure to the stock market.
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