The 5 most popular ways Americans build wealth—and how to get started
It doesn’t matter how they define, many Americans want to see themselves as rich.
More than half of the Americans – 57% – believe that they will be richer than their parents, Latest LendingTree Survey 2,000 US adults. However, the Financial Services Company found that more than 20% of it does not use common strategies to create a reserve.
According to LendingTree, the most popular five -reserve development strategy that Americans currently use:
- To have a house: 36 %
- Savings for retirement: 33 %
- Deposit money to online savings account: 29 %
- Investment to the stock market: 24 %
- Working with a financial advisor: 17 %
Those who aim to increase their own reserves can use a combination of strategies throughout their lives. And it’s okay: “Not someone [wealth-building] The methodology that works better than the other, “Adrienne Davis, certified financial planner Zenith Asset PartnersHe tells CNBC that he’s doing this. “He doesn’t fit all of them.”
How to start building
Davis usually tells his customers. Start to contribute to “as early as possible” to retirement savings. The reason for this is that even if you do not contribute to a high percentage of your income, more time in the market gives your money not only your first investment, but a longer time to grow through the compound interest in your returns.
It can be an easy way to start contributing to employer -supported 401 (K). Usually you contribute to pre -tax income, that is, you will not owe tax until you withdraw money in retirement. Contributions also reduce your taxable income for the year you invest.
For 2025, individuals under the age of 50 can contribute to $ 401 (K) up to $ 23,500 and add more $ 7,500 years old and over.
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Although many companies will present a match for your contributions to 401 (K) or other plan supported by the employer, it is worth contributing, even if it is not yours. However, you can take advantage of compound interest and tax advantages.
And even if you do not contribute a lot at first, it is useful to enter the habit of putting money regularly for savings and investments, the money expert and the self -made millionaire Ramit Sethi said to CNBC before.
“If you are in your 20s, even if your earnings are not so high, you have an incredible opportunity to adjust your habits correctly.” He said. “As your earnings increase in your 30s and 40s, you can increase this number.”
Cover your bases first
Although it is great to start investing in the future, Davis first proposes to cover your financial bases. Including Building the emergency fund and paying high -interest debt.
In order to enlarge your rainy day fund, Davis encourages customers to start by opening a high -efficiency savings account and automatically contributions from salary checks. Experts often recommend saving three to six -month expenses if you lose your job or face an unexpected injury or car repair.
Davis, you should contribute to your retirement savings when creating your emergency fund. Save for retirement means missing this valuable compound interest.
During this period, you may not be able to maximize your pension contributions, but Davis recommends that a employer match in 401 (K) contributions to those who still take a full match to win a full match.
And if you have debt, do not forget to create your savings. “Interest payments may potentially disability,” Davis says.
It may also be useful to work with a CFP or other financial consultant that can help you find the right reserve development strategy for your unique financial situation. “Professionals of the study with a financial advisor is that you are an expert who can guide and suggests about your financial plan,” Davis said. Says.
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