How to Build Wealth in Canada – Four Ways to Get Ahead

If you're like many Canadians, you are working a job to pay your bills, but you're wondering how you can get out of this grind. There are infinite ways to make money, and we are going to explore 4 great ways how to build wealth in Canada: Increase your Income Reduce your Debt Invest in Assets Build Multiple Income Streams Building wealth is not a short term endeavour, but if you pursue the items outlined in this article, you can compound and build a comfortable financial life. What is Wealth? The first thing to do is define what you mean by wealth. Wealth can come in a lot of flavours, including financial, knowledge, relationships, or health. Too often we think only of the financial aspect, which can result in neglecting the other parts of your life. It's important that you take a holistic view and pursue what's important to you. If the financial aspect is what resonates with you, it's important to take a step back and understand why you desire money. Money is a tool which can be used to achieve freedom, time, status, experiences, or other, and it's important that you understand what you're after. The blind pursuit of money will not be fulfilling, but if you tie it to one of your core values, you will be much better off. With that said, let's talk about the ways you can build wealth: Increase Your Income By increasing your income, the rest of the items on the list become a lot easier. Now one thing I want to highlight, your income is not going to make you wealthy. Rather, what you do with your income is what builds wealth. By just making more money, you are not getting any further ahead unless you allocate that income to wealth-building mechanisms. Making and spending more money will keep you in the same place, or worse, put you further behind. Now how do you go about increasing your income? The primary thing is investing in yourself. Invest in your learning and improvement. In my eyes there are three key ways to do this. The first one is by traditional education. This can be in the form of a degree or diploma, a certification, or a course. It will teach you relevant skills, and prove to your current and future employers that you're deserving of new opportunities. The second one is by being a student of your craft. Within your job, reflect on the things you're doing, highlighting what works and what doesn't. Pursue feedback wherever possible to improve. Finally, it's investing in your own health and well-being. By taking care of your health and stress levels, you will be significantly more effective and productive in your work. Now like I said, once you're making money, to build wealth you need to be focusing on what you're doing with it. Reduce Your Debt Debt is doing the opposite of building wealth. With your wealth, you want to allow it to compound, but with debt it compounds in the opposite direction, costing you money. Now it's important to note that not all debt is bad. Good debt can be a mortgage on your home, student loans for a quality education, or borrowing for business purposes (think a mortgage on a rental property). Bad debt however, is any debt you take on for things you don't need. Think cars, luxury goods, vacations, etc. Ideally you'd never use debt for non-necessities in the first place, but if you do find yourself in this position, reducing this debt should be your primary focus. To reduce your debt, a common approach is to use the snowball method. This is where you list your debts from smallest to largest, and attack them in that order. Once one debt is gone, you roll the payment into the next one. Now for this to work, you need to free up cash - read more here. Though reducing debt won't build your wealth directly, it free up more money to allocate to wealth-building. Now alongside reducing your debt, it's also important that you are investing in assets (The Richest Man in Babylon is a great book on this concept). Invest in Assets To build wealth, you need your money to work for you. To do that, you need to invest in assets. Now what is an asset? According to Robert Kiyosaki's classic book, Rich Dad Poor Dad, "an asset puts money in your pocket." Expanding on this, assets are income-generating items that increase in value over time. The opposite of this is a liability, which will decrease in value and cost you money (think your car). Now what are some asset classes that will help you build wealth in Canada? The primary two are the stock market, and real estate: Build Wealth in the Stock Market Investing in stocks and bonds allows you to purchase a portion of a company, with the expectation that the value will increase with time. You may also get dividends in the process, putting even more money in your pocket! Now regardless of your stock market investing strategy, Canada has advantageous registered accounts to help you save tax on any investment income. The key thing with investing in the stock market is go give it time to compound and grow. Build Wealth with Real Estate Real estate is also a strong asset class, when used for wealth generation purposes. Real estate helps you build wealth in three ways: cash flow, appreciation, and mortgage paydown. Depending on your region, you may have more of one of those things and less of another. For example, where I am in Toronto, appreciation has been high, but cashflow is hard to come by. One thing to recognize is that your primary residence is not an asset (for more info on why, check out Rich Dad Poor Dad), but rather a liability. So you want to prioritize income generating strategies. Real estate investing can come in a lot of forms, (e.g. AirBNB, rental properties, development), so it's important to do your research to see what works best for you. Once you're investing in assets, you can continue to expand by creating multiple income streams. Build Multiple Income Streams To continue to expand your wealth, a great way is to build multiple income streams. Now this can come in a lot of forms, for example blogging, affiliate marketing, dropshipping, gig-economy (e.g. uber), selling goods, or anything else that people are willing to pay for. It's really up to you to find what aligns with your interests, capabilities, and the needs in your market. Building multiple income streams brings various benefits: Not relying on a single source of income (e.g. salary) in case of job loss, and potential for increased earnings Personal fulfillment in the form of building and growing something yourself Challenging yourself to learn a new skill and improve Building multiple income streams will definitely take work, but it will accelerate your pursuit of building wealth in Canada. Conclusion - How to Build Wealth in Canada Canada is a great country to build wealth in, with great opportunity and growth potential. By using the methods this article of increasing your income, reducing your debt, investing in assets, and building multiple income streams, you've got the roadmap to start building the life you want. Having read about how to build wealth in Canada, I want to highlight two things: Building wealth is not going to be fast Building wealth is not going to be easy But by taking steps like this to do the research, you're already on your way to a better future. So now, dive in, take action, and start building your wealth.

How to Build Wealth in Canada – Four Ways to Get Ahead

Like this:

Recent Posts

Subscribe to continue reading

Share this:

Like this:

Recent Posts