1. Lose your ego - A lot can be gained from losing the desire to be accepted by the elite, society or the Jones' next door. Most people can easily amass a fortune over their lifetime from what they would spend on new TVs, gadgets, cars, when the items they currently own are more than suffice. The hard truth is, if you're on a lower/middle class income, it's almost impossible to accumulate wealth if your spending money to keep up with the Jones'. If this is a problem for you, a focus on industry, independent thinking and frugality should be embraced; these are the true means to wealth and virtue.
2. Buy a used car 5-10 years old - The shelf life and quality of the automobile has increased dramatically over the last decade. Any auto built after 2002, if properly cared for, should yield several more years of driving. Stressing value and fuel economy, I particularly like the mid-2000s Toyota Corolla; at this time in the auto industry, Toyota was a runaway leader in quality and fuel efficiency. In Canada, I see several Corollas $4000-$7000 with less than 100k kilometers. I would also recommend a manual transmission, which generally is cheaper/last longer, and be sure to keep up with oil changes and maintenance to assure a longer shelf life.
3. Invest Regularly - Man is forever tempted by get rich quick schemes or the rush of a gamble. However, the real way to wealth is ironically through steady, slow and diligent investing. Sure, you could get lucky as a gambler and get rich, but the odds are not in your favour. Practically speaking, saving a small amount for the long term every time you get your income check is a great way to automate your savings plan. The benefits are mainly habitual; for someone who may not be very good at saving, it allows them to stick to a simple plan that is much easier then selective investing.
4. Realize Wealth Is Possible - Very simply, if you save $500 per month for 30 years and you happen to get the 10% return that stocks have had over the last 100 years, you would have a cool 1.1 million dollars of invested assets. 30 years seems long, but picture yourself in 30 years; now, wouldn't it be great if you had a million dollars, where ever you are picturing yourself? You certainly would not regret what you started 30 years before.
5. Buy Stocks - I alluded to the average long term return of stocks earlier. Stocks continue to be the best asset class to invest in over the long term. The alternative is investing in bonds, which historically have yielded a 5% average annual return as opposed to a 10% long term return for stocks. The 4-5% advantage from stocks makes all the difference if you plan to accumulating wealth.
6. Save on Groceries - Changing your eating habits from snacks, frozen foods and soda pop, to nuts, whole oats and fruits and veggies, can easily save you a surprising amount of money. Let it be known that man can have a healthier diet whilst spending far less than the average person; it would be wise to practice this, and invest the money you would have otherwise wasted on unhealthy food.
7. Adopt a Healthy Lifestyle - By living healthier, you have a better chance of accomplishing your wealth accumulating goals. Firstly, you hopefully will not die young, for obvious reasons. Secondly, you can save a lot of money by eliminating the destructive health practices in your life. A man's vice, such as, but not exclusively, alcohol, drugs and smoking, can easily support a million dollar wealth building plan. Lastly, being healthier can instill in a person new found motivation and increased self-esteem, which can help in embracing the independent thinking necessary to build wealth over the long term.
8. Avoid Debt - Any debt, especially high interest credit card debt, is disruptive to a successful financial plan. For example, even if you saved diligently and were good enough to get a decent return in stocks, the 20% annual interest on credit card debt effectively cancels out any returns. The prudent method is to pay off all your debt before you begin saving. Debt should never be used for consuming purposes, and is best applied to promote more industry and wealth accumulation; only then is debt justified. As a beginning investor, debt should be avoided entirely.
9. Rent and Save - Renting can be a useful situation for the diligent investor. Generally, rent is cheaper than a mortgage and property tax payment and has far less 'out of nowhere' maintenance costs. Young investors should not rush into home ownership. Because of the initial monthly savings from paying rent, a diligent person can save the extra money for the long term and begin to build up a savings, aside from a down payment on a house.
10. Own a house - Although I believe it's important not to rush into home ownership, owning a home is still a great investment as well as a rewarding personal experience. Eventually, diversifying into home ownership makes sense from any investing standpoint. With regards to home ownership, be aware of what you can afford and do not consider anything that's not comfortably within your price range. Home ownership should be a joy, not a stressful event every month to make sure you come up with the money for your mortgage payment.
11. Embrace Frugality - Frugality is not a new idea. One of the founding fathers of America, Benjamin Franklin, wrote that "industry and frugality are the true means to wealth" when he was a teenager working as an apprentice at his brother's print shop. Some ideas are timeless and still very relevant today, such as this. It's easy to lose a sense of frugality in our consumption driven society, yet the ones who can embrace this idea are sure to prosper ahead of their neighbours.
12. Invest Wisely - Know yourself. If you're not interested in doing research on investments, then invest passively in index funds. If you are a more enterprising investor, gain as much knowledge as possible and stick to what you know and understand. I recommend a passive, conservative style with a very long term time horizon (10yrs - forever). Trading to me is not a sustainable strategy over the long term. To keep up a good trading schedule is rigorous and simply costs money. For the retail trader, they rack up excessive trading fees and are prone to underperformance over the long term.
13. Save More - Becoming more successful in building wealth is not always about choosing the best investments. One can speed up the process of wealth creation by just simply saving more money. As I gain more experience investing I realize that building wealth is less about intricate techniques used in the stock market and more about just saving more.
14. Reinvest Dividends - The dividends that you will receive from your investments should be re invested into more of the investment. Over time, this creates a snowballing effect by taking advantage of compounding interest.