The wealth-building pyramid

How to get started with building wealth

A pyramid divided into four sections. The bottom, and largest section, is labeled foundation. The next layer is labeled assets. The next layer is labeled estate, and the top layer is labeled share.

Foundation

The foundation layer is cash flow. Before someone can truly begin building wealth, he or she must consistently generate enough income to handle month-to-month expenses. It’s also a good idea to have enough savings set aside to cover at least three to six months of living expenses, in case of a financial emergency.

Assets

Once the cash flow foundation is in place, you can begin to invest in assets — investments, such as real estate or stocks. To build wealth, the value of what you own (assets) needs to be more than the amount you owe to others (liabilities). Investing in assets that appreciate (go up in value) over time can allow you to retire with a comfortable lifestyle at some point in the future.

Estate

The next layer is your estate, the wealth you’ll pass on to your family and other beneficiaries. If you’re a business owner, this could include your business.

Share

At the pinnacle of the pyramid are your legacy goals, or your philanthropic goals — the many positive ways you might share your wealth by giving back to your community.

Note: Remember that your wealth-building pyramid needs a solid foundation — a foundation you provide by being a good money manager, establishing credit, and managing your finances wisely.

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