Offensively Building Wealth Through Earnings & Investing

There is no secret formula for building wealth. Simply put, you build wealth by spending less than you make. Then save and invest the difference. Follow these steps and you’ll become rich over time.

Building wealth is like filling a bucket with money. Wealth is generated when the bucket fills up, and there are two levers that control the inflow and outflow of the bucket. 

Pulling the ‘spend less’ lever slows the flow of money out of your money bucket. This is the defensive approach to building wealth.

Pulling the ‘make more’ lever dumps more money into your money bucket.  Earning more money is the offensive way to create wealth.

Building Wealth: How to start

If you’re new to building wealth or early on your path to becoming rich,  start with defense. Without defense or pulling the spend less lever, all of your money will flow out. Worse yet, you may have more money going out than coming in. This is how people accumulate debt.

Track your spending to learn where your money is going. Most people have no idea where they actually spend their money. I use the free Personal Capital app to track my spending and investments.

Create a budget if you don’t have one. You will not become rich doing this, however you will learn if you are saving money or are spending more than you make. Cut out excess spending; odds are some of your spending doesn’t make you happy. Consider changing your spending habits on cable and internet.

Also see: 6 Steps to Saving a 6-figure Net Worth

Offensively Building Wealth by Earning More

Earning more income is the offensive way to create wealth. By earning more, you can save more if you don’t increase your spending. You can save your way to wealth and become rich over time. However, this may take years.

Increasing your earning power improves your ability to save. Investing saved money is like throwing fuel on a burning fire.

Also see: 8 ways to crush it after graduation, in your 20s & beyond

Time is another meaningful factor for building wealth. Most do not reach millionaire status until after the age of 50.  According to a Business Insider article – it takes the typical self-made millionaire at least 32 years to get rich. Planning, bold actions, and dedication will make you a millionaire in 10 years or less. Grant from Millennial Money became a millionaire in 5 years

building wealth

In my early years I focused on spending less to save more. This worked and I saw results. However, I didn’t get the results I wanted. The balance of my bank account went up every month, but not at a large enough rate.

The following example will show why just saving my way to wealth was too slow. Let’s look at three people who all make the same amount of money but have different money habits.

Jake – Makes $50k a year. He doesn’t track his spending or have a budget. As a result, he spends every penny he earns. This life style will not build wealth.

Tom – Makes $50k a year. Tom budgets and lives on $30k/year. This allows him to save $20k every year.

Sally – Makes $50k a year. She also budgets and lives on $30k/year. However, she invests $20k a year.

Overtime, Tom and Sally will become rich. With enough time Tom and Sally will both become millionaires. Tom’s wealth will steadily grow. Sally will build wealth exponentially faster than Tom because she invests her money.

The graph below shows Jake, Tom, and Sally’s wealth over the next 50 years:

Tom builds wealth by saving. He will slowly become rich and be a millionaire in 50 years. Not bad, but why would anyone want to wait 50 years?

Sally builds wealth by investing. She invests in a low cost index fund and earns 8.0% a year. Sally will be a millionaire in 20 years which is 30 years before Tom. During the 20 years it took Sally to become a millionaire she invested the SAME amount Tom saved.

As you can see, Jake will never become rich. Don’t be Jake. Make a budget and save money. Better yet – invest money. The best time to start was 20 years ago. The next best time is today. 

My offensive wealth building plan

I am on an all out offensive like the allies invading the beaches of Normandy. Moving forward, my main focus will be building wealth by earning more income and investing. I can only reduced my spending so much; a life of deprivation doesn’t appeal to me. 

How will I earn more? And what will I invest in?

I accepted a new job offer earlier this year. The pay is considerably more than my last job. The new job came with a large signing bonus too. The extra income allows me to invest more. I am buying low cost index funds every week while continuing to max out my 401k every year. 

Additionally, I am building wealth by investing in real estate and dividend stocks. Saving a million dollars is tough. Investing to reach a million dollar is much easier.

At the end of last year, I bought rental property #4. This property has three units and needed renovating. The building will provide great passive income once I find tenants. The income from my new rental property will go towards saving and investing.

I also started a few new side hustles. My hope is that at least one of the side hustles turns into a new source of income. I like diversifying my income streams and do not want to rely on any one income to fund my life.

What is wealth?

But what is wealth? And why do we chase it? Wealth means something different to everyone. I seek wealth and financial independence because I want to buy back my time, focus on what matters, and leave Corporate America in the dust. I want to travel and volunteer more. I want to check items off my bucket list and spend more time with loved ones.

Building wealth from nothing is possible but, it will take hard work and dedication. I started my twenties in debt. Through side hustling, hard work and investing, I was able to tackle my debt and build a net worth of over $500,000 in 4 years.  My focus on earning and investing more will allow me to become financially indepdent before I turn 30.

Are you focusing on earning more or spending less? Have you ever thought about side hustling, improving your skill set or another cool way to earn more? Spending can only be cut so much. Get out there and earn more.


31 thoughts on “Offensively Building Wealth Through Earnings & Investing

  1. I’m glad to say I’m finally focusing on both! I ignored the income side of the equation for a long time, but finally realized I can’t frugal my way to FI with my current salary. My second job is sadly so necessary, but at least for the most part that sacrifice of my weekend tends to be fun!

  2. Not gonna lie, I totally read the word “offensively” as meaning it would bother people instead of offense vs defense. This immediately made me more interested in reading about the strategy haha, not sure what that says about me…

    Anyhow, I think these are great points. It’s easy to focus on recommendations to cut spending because there’s a lot of commonality there across different people, but upping income is absolutely an important tool and has the advantage of no real cap on how far you can go if you’re willing to work smart and hard.

  3. I loved that focus. I think way too many in this community spend more time than they should on learning to live on peanuts when they might double or triple or 10x their income with more career focus or becoming self employed.

  4. Agree. Earning more is the way to go. Learning to life on less while you develop the skills to earn more is also important, as you point out. The key is not to inflate lifestyle. Congratulations on the new job – and the $500,000 net work in four years…that puts me to shame and we are in the same city and I am way older than you. Nice work!

    • Thank you for reading. You are spot on – avoid lifestyle inflation. Also, thank you for the kind words. Try not to compare your progress to others. Everyone has a different starting point and end point. Each journey will be different as well. Someone is always out performing us. We all need to learn to be content with our situation.

  5. I really like your approach to focusing on earning more. If we all earn the same X% on investments, it simply comes down to having more invested in terms of increasing your wealth to get to FI. Also, there is a limit to how much you can cut out of expenses and no limit on earnings!

    I wish more people would think big, like you do!

  6. My strategy is to grow income/build wealth until I reach $500k net worth. (Before I started making money I learned how to live frugally in grad school, so I’ve got the not spending money thing down.) Now, as I near $500k, I’m planning on slowing down, working a job I love, and not stressing about adding to my savings bucket. Even if the market corrects soon, I have a good amount of shares ready to grow as the market will climb again soon.

    • This is a great view! I love your mind set on this. Getting to $500k gives you a HUGE base and a lot of flexibility. I hope you find an enjoyable and leisurely job to finish your journey.

  7. Keep storming those beaches like you’re doing. You’ve now got the beachhold and can progress inland!!
    War analogies….

    You linked to that article about becoming a millionaire by 50. With your strategy and your age, you’ll hit it by 35 easily the way I see it. Kudos!

  8. Great stuff!

    I love how you kept this simple and to the point. That’s the way personal finance needs to be taught. Most people get terrified when they here the word “invest” because things pop into their head like Wall Street, fancy 3-piece suits, complex mathematical equations, etc., and they think it’s to complicated for them.

    By simply reducing your costs, increasing your income, then investing the difference through low cost index funds, most can retire as millionaires.

    Congrats on landing your 4th rental property! The fiancée and I are going to begin saving for our starter home this year.

  9. This is a terrific article. Focusing on increasing earnings is probably far more realistic for most of us in the FIRE community. You can only cut expenses so much. I got divorced about 5.5 years ago with a negative net worth, and through a combination of reasonable spending (middle class standard of living), investment returns (thank you great bull market!), and significantly increased earnings, I have accumulated almost $1.5 million in my different investment buckets (index funds, dividend stock portfolio, savings, and real estate). Hard, hard work and taking a few risks has really paid off. Happy investing!

    • Thank you for the kind words. That is also a truly amazing accomplishment on your part. Send me an email – I’d love to learn more

  10. The amazing thing is just how valuable earning a little bit more money can be. We live in probably the easiest time ever to earn extra money. A little bit extra here, a little bit extra there, and suddenly, you can have a huge nest egg.

  11. Something to ponder…does the FIRE lifestyle choice/goal self select for people who are somewhat less excited about their work (and thus eager to leave it) and thus the very people who are less likely to earn promotions and higher salaries that come with them? It’s almost the opposite of a workoholic, it’s someone who believes in “work to live not live to work”. I think I’m in the fortunate boat of a convert from being very career driven into my early 30s, able to get my income from work quite high, a quarter mil per year, then discovering that my investments since my early 20s are really starting to take off. Between savings and stock market returns (my only investment), we increased our net worth by 700K in the past 15 months. So that can get me to the RE level if I want to do so. But so many people seem to be on this path with their careers stuck in 1st gear, and as a result see focus on the expense side of the equation as the path of least resistance. Again, something to ponder.

  12. Great post – earning is such an important factor, especially since getting the spending down really doesn’t take that long. The more you earn, the faster you can reach FI or the better lifestyle you can have along the way – your choice.

  13. I wish I made my money work for me much harder over the last 10 years! I only truly focused on dividend paying stocks last year and WHAT A DIFFERENCE!
    As a note, keeping expenses down is a little harder when you have kids.
    Great post!

    • The important thing is that you are aware and focusing now.

      Great point about kids; I imagine they are expensive and unpredictable.

      Thanks for reading.

    • Mostly just DCA. Buying bi-weekly or monthly may mean missing some dips. I know my method is a bit extreme but it’s also automated.

  14. Pingback: Offensively Building Wealth ⋆ Camp F.I.R.E. Finance

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