How to Become Wealthy

Have a goal. Saving money for its own sake does not work. Start by defining what you mean by becoming wealthy. Does it mean having a net worth of $150,000 in ten years and $500,000 in 20 years? Being able to afford a vacation home or retirement in Italy? You decide.

Set a dollar amount to save each month. Some people use a percentage of their gross income, such as 5% or 10%. Others use a flat dollar amount, such as $200. Neither be too demanding (trying to save $500 each month on a $40,000 income) nor too undemanding (deciding to save $5 a month). Others start with the goal (such as $500,000 in 20 years) and then decide how much to save each month to get there.

Be disciplined. The key to becoming wealthy is consistency -- sticking with your savings plan month after month after month. Make a conscious effort to start saving money. Make choices and be willing to say NO! to impulse spending.

Pay yourself first! Don't pay all your bills each month, with the intention of saving what's left. Instead, set aside the first dollars from each month for yourself. Put a bill to yourself in the bill box, with a due date, and pay it faithfully each month.

Decide where to put your money. Many people set up a savings account at their local bank or credit union and make deposits each month. (Later, as the money builds, it can be transferred into higher-yielding financial vehicles.) Others arrange direct deposits from their paychecks or make e-transfers to investment and other accounts.

Take advantage of today's competitive financial vehicles. Select accumulation vehicles with the potential to pay a competitive rate of return. This also means you should utilize tax-favored programs, such as annuities, IRAs and your 401(k) plan at work for your long-term goals.

Track your progress regularly. Some people chart their wealth accumulation on a graph. This kind of feedback is important, so you can see how, each month, your financial strength is steadily growing.

Watch your money grow. The keys are consistency in saving, time and the "magic" of compound interest. If you save $40 a week, or roughly $2,000 a year, and that money averages an 8% return, it will grow to nearly $100,000 in 20 years. But in 30 years, it will be nearly $245,000.

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