There are just three things that need to be done to build wealth over time: Make money, save money, and invest the money as steps one through three. This article addresses every stage in sequential order.

Step 1: Make Money

Despite its seeming simplicity, this stage is the most important for individuals who are just getting started. You've undoubtedly seen charts illustrating how even a modest amount of money put away consistently and allowed to accumulate interest over some time may ultimately develop into a sizeable quantity of money. However, such charts never address the most fundamental subject, which is how to get money in the first place to save.

There are essentially two ways to get money active labor or passive investments. Income that is earned is money that is received for the work that is done, while passive income is money that is received through investments. It's possible that you won't be able to generate any passive income until you've built up enough capital to start investing. If you are on the verge of beginning a career or are considering making a shift in your current line of work, the following set of questions may be of assistance to you in determining what it is that you want to do—as well as the source of your future income:

• What do you enjoy? Doing something that you like and gives you a sense of purpose will help you perform better, but it will also help you develop a career that will last longer and increase the likelihood that you will be financially successful. One research discovered that more than nine out of ten employees said they would be willing to sacrifice a portion of their lifetime earnings in exchange for a higher level of personal fulfillment in their profession.

Step 2: Put Away Some Cash

If you wind up spending all of your money, then having more money won't help you develop wealth. Consider doing one or more of the following four things to put more money away to develop wealth:

• Make a record of all of your purchases for at least one month. You could find it helpful to accomplish this with the assistance of a piece of financial software, but a compact notepad that fits in your pocket might also do the trick. Please keep track of every single purchase you make, regardless of how little it may seem; many individuals are startled to discover where all of their money goes.
• Make a plan for your savings. As soon as you know how much money you can put away each month, you should do your best to stay to that amount. This does not imply that you have always practiced extreme frugality or lived a Spartan lifestyle. If you complete your savings objectives, you should feel free to treat yourself and indulge (within reason) every once as a reward. You'll have more energy and feel more driven to continue your plan.

Step 3: Put Your Money to Work

After you have successfully put some money away, the next step is to invest it so that it will continue to increase over time. (Before you start investing, be sure that you have enough money saved up to cover any unanticipated monetary problems. The accumulation of sufficient funds in a liquid account (such as a bank savings account or a money market fund, for example) to cover at least three to six months' worth of living expenditures is a frequent piece of financial advice.

• There is a wide range of risks and possible rewards associated with the various investments. When it comes to investments, the general rule is that the safer they are, the smaller their future return will be, and the opposite is also true.
• It is a good idea to learn about the many kinds of investments, especially if you are not already knowledgeable about them. Although there are many other types of unusual investments available, most individuals will want to begin with the fundamentals, which include stocks, bonds, and mutual funds.
• The ownership stakes in a company represented by stocks are called shares. When you acquire stock in a company, you become the owner of a small portion of that business. You will profit from any increase in the share price of that firm and any dividends paid out by that business. Compared to bonds, stocks are typically considered to carry a higher level of risk; however, the risk associated with individual equities may vary greatly depending on the company.