How Average Earners Can Build Wealth with Steady Saving and Practical Financial Habits

Key Takeaways

• You don’t need a high salary to build wealth if you save consistently and make saving automatic.
• Limiting lifestyle creep can help you keep more of each raise instead of letting spending rise with income.
• Starting early gives compounding more time to work, especially when invested money is left to grow for years.

A high net worth gives you the freedom to live the life you want—from starting a business to retiring early to quitting a job you dislike without having another one lined up right away. If you’re not earning a sizable salary, though, a high net worth can feel out of reach.

The truth is that you don’t need a high income to have a high net worth. Your net worth, simply put, is your assets minus your liabilities—it’s not how much you earn, it’s how much you keep.

Here’s what you can do to raise your net worth, no matter your income.

Make Consistent Saving the Foundation

With saving, slow and steady is the way to go. Try to make regular contributions, rather than sporadic ones.

Start with an emergency fund. Experts recommend saving three to six months of living expenses. Parking this money in a high-yield savings account will let it earn a competitive interest rate while leaving it easily accessible in case you need it quickly.1

Once you have a cash cushion in place, consistently putting money toward investments can help build your net worth over time, too. Regular contributions to a retirement account or brokerage account give your money the opportunity to grow through compounding and market gains.

If you’re committed to consistently setting aside a portion of your income toward savings goals, you may be surprised at just how quickly the money adds up.

Automate Money Moves and Pay Yourself First

When your paycheck hits your checking account, that money should have a job. Part of it should be redirected to your savings—that is, you should pay yourself first before you spend that money.

You might want to take advantage of tools to automate your money moves. Setting up an automatic transfer of funds to a savings or investment account takes minutes and ensures consistency. You can also set up retirement contributions to a workplace plan, such as a 401(k), that are automatically deducted pre-tax from your paycheck.

These approaches may seem simple or even boring, but they can outperform a more active strategy. They avoid the dangers (and the time commitment) of over-optimizing or constantly tinkering with a portfolio.

Avoid Lifestyle Creep

As you earn more, you may be tempted to spend more. And though you may not notice it at first, that spending will add up. This lifestyle creep will slowly but surely slow down your progress—even potentially diminishing your net worth.2

To combat lifestyle creep, take a good look at how you spend your money. To save as much as possible, you’ll want to keep your lifestyle as it is—or close—even when you get a raise or a bonus. That’s not to say that you can’t celebrate. Just plan ahead, such as striking a deal with yourself. For instance, allow yourself to spend 20% of your new funds but save the rest.

Give Compounding Time to Do the Heavy Lifting

Try to start saving early and let your money grow. Compounding has long been the secret to building a high net worth, and the benefit for those without significant income is that it still works, even with small amounts.3 So put yourself on a long timeline.

Compounding Works For Various Buckets

The longer you can let money that’s earning a return sit—whether that’s cash in a high-yield savings account or money invested for the longer-term—the more that growth can build upon itself.

This requires patience, of course. But taking a measured approach over a period of many years can help you avoid short-term performance chasing, which has the potential to erase progress.

It’s also crucial that you set realistic expectations for how quickly your net worth will increase. Use a compound interest calculator to see how money can grow over time, and remember that this is a marathon, not a sprint.4 Building significant net worth is a project that lasts years or decades that lasts year or decades, not months.