The millennial generation is at the point now where they’re starting to think hard about how to build long-term wealth for themselves.

When I was young, I was really bad with money, but now I’ve learned that when it comes to building personal wealth, often the best strategies are the simple habits that, when properly implemented, end up paying off big in the end. The challenge, of course, is that financial responsibility is not always easy when bills are piling up and you feel as though you don’t have the ability to save. But part of building wealth is learning to discipline your spending habits so that you are always operating in the positive — instead of racking up debt.

If building true wealth for yourself is something you’re interested in, these 10 steps will be your foundation for establishing positive financial habits that will move you closer toward your goal.

 

1. Never operate at a loss.

The most simple step toward building wealth that people struggle with is spending less than they make. It might seem ridiculous, but it’s the truth — many people spend more than they make and float the difference on credit cards. They assume they will make more in the future and that it will all “even itself out,” when in reality, the moment they start making more money, the more they spend.

The bad habit stays, and they continuously operate at a loss.

2. Place a tax on yourself.

If the government suddenly increased taxes and forced you to pay an extra $100 each month, you’d find a way to pay it. You would have to. Yet when it comes to saving money, people constantly find ways to rationalize their inability to sock away $100 each month.

Set up an automatic bank transfer so that as soon as you receive your paycheck, a small portion of it immediately goes into your savings account. You should pretend it doesn’t even exist. And a few years from now, you’ll thank yourself.

3. Open an IRA account (to accumulate interest tax free).

One of the best things a young person can do is open an IRA account, which can double as either a primary or secondary savings account. The intention here, however, is that money is not touched until much later in life. If you withdraw from it before the age of 65 you are penalized. The bonus, though, is that your money in an IRA account can grow tax free, which compounded over three or four decades ends up being a lot of money.

4. Don’t play the stock market.

Unless your day job is trader, don’t try to time the stock market. Don’t think you’re smarter than the stock market. Don’t think you know which stocks are going to do well and which ones are going to do poorly. To think that you can do casually what some people make their entire careers is naive and reckless. At best, it’s gambling.

Instead, invest a portion of your money that you’re willing to lose in companies you like and want to hold on to for years to come. It’s best if you make these decisions with a financial advisor, and even better if you purchase these long-term options inside your IRA account. That way, your gains remain tax-free.

5. Build a side hustle.

Even the world’s most successful entrepreneurs have side hustles. According to Warren Buffet, the average millionaire has seven sources of income. Having multiple income streams is just part of the process.

The best thing you can do is figure out what you can provide or offer people that delivers true value. A perfect example is internet famous entrepreneur Sam Ovens, who has made millions selling online courses and consulting business owners.

“The big lesson I learned is that you have to sell something that the market actually wants,” he told The Epoch Times. Simple, but that’s how it should be.

Bonus: If you can refrain from spending your side hustle money and save it instead, you’re in remarkable shape.

6. Always pay off your credit cards.

No matter how entrepreneurial you are, maxing out your credit cards without reliable streams of income to pay them off in a timely manner is irresponsible.

You always want to make financial decisions based on what you’re currently making, not what you think you’re going to make. Wait until you’ve got the money in the door before you go reinvest or spend it. Otherwise, you’ll find yourself drowning in interest payments.

7. Set financial goals at the start of each quarter and year.

When you have a goal, you tend to be more responsible with your money. It’s when you don’t have a goal that it’s much easier to rationalize spontaneous purchases.

At the start of each year, set a big goal for yourself and then break that goal down into three-month increments (quarters) so that you can check on your progress as you go along. These smaller goals are what help the larger one seem more attainable, and will give you a sense as to whether you’re on the right track along the way.

8. Follow the 50-30-20 rule.

Summarized in a great article by Nerdwallet, many financial experts suggest that 50 percent of your income should be spent on needs (such as housing, car payments, food, etc.), 30 percent should be spent on what you want (clothes, nice dinners, etc.) and the remaining 20 percent should be saved.

Especially when you’re young, you’re most likely going to operate closer to 70-20-10, living off 70 percent of your income, spending 20 and saving 10. If you can even follow that, you’re in good shape. But your goal should be to work toward following the 50-30-20 rule.

 

9. Surround yourself with financially responsible people.

Nothing breeds financial success like hanging out with people who have already attained it. This means finding people older than you that you can learn from and also making sure that your group of friends is comprised of people who share similar financial goals. It can be difficult to adhere to financial disciplines when you’re spending time with spontaneous spenders.

A great way to learn about the art of finances is to find a family friend who can mentor you throughout the process — someone who has achieved their own financial success. If you show an earnest interest in learning how to build the same for yourself, chances are someone will be happy to help. A willingness to learn goes a long way.

10. Judge yourself over the year, not the month.

While it is important to keep a tab on how you’re doing month to month, it’s far more important to judge success over longer periods of time. A year is a good indication of your financial practices. Some months might not be great (things happen), others might be wonderful.

But what’s important is that, come the end of the year, you saved at least 10 percent of your income. Otherwise, if nothing is being saved, how do you expect to build true wealth for yourself?

Start your own service business by following this advice:

1. Ensure That People Will Pay for Your Service

This sounds simple, but it is critical to your success. There must be a need for what you do in your community. Do plenty of market research, understand and learn from your competitors, and learn as much as you can about the people—your future clients—in your town or community you plan on marketing to.

2. Start Slow

It may not be the best idea to quit your job and jump into your new endeavor head-first. If possible, consider first offering your services on the side while you still work a full- or part-time gig. This allows you to evaluate your market and get a feel for what it takes to run the business. Plus, you can slowly build your clientele until you are generating enough business to make your new venture a full-time job.

3. Be Realistic About Your Earnings

An experienced CPA in a high-income area could easily earn six figures in the first year. A dog groomer, not so much. Upon starting up, you might barely break even. Early on, you might even spend more money than you take in. Before doing anything, create a budget and ensure that you have enough savings to support the business and yourself until you start turning a profit.

4. Draft a Business Plan

Whether you decide to start slow or go at it full-steam, spend some time writing a complete business plan. Doing so will give you a realistic assessment of how much money you will need to start the business and how much money you can expect to generate in the first few years. But be aware that once the business has started, your business plan will need to be updated and changed to fit reality. You may find that the money you actually make is only half of your projections. As such, make sure your plan addresses these possibilities.

5. Put Your Finances in Order

Once you know how much you need to start the business, figure out how you are going to obtain the funding. Can you turn to your savings? A family member? Or will you need to get a loan from a bank or an investor?

6. Learn Your Legal Requirements

Check with your local government to obtain the proper permits and licensing for your area. In addition, apply for any certifications and licenses required for your industry, field and locale.

7. Get Insurance

It’s worth the cost to protect yourself and your business. Many providers offer insurance to small business owners, so shop around and find one that you can afford.

8. Educate Yourself

Part of this will be done in your business plan, but it is up to you to take your time and go further. Many people put pressure on themselves to start a business as soon as possible, as if success was determined by speed to market. In reality, the people that often succeed take their time and really learn about their industry, business and market. Find out where, how and why your type of business is successful, and find out where it doesn’t work. Is it a business that will need to scale in order to turn a profit, and if so, do you have a plan to do so? Ask as many hard questions as you possibly can, and then go out and get the answers.

9. Market Your Services

To make it big, you must promote your services. You can start small, for example, by ensuring that your information is correct on Yelp and in the Yellow Pages. In addition, hang signs in local shops with the owners’ permission, post your services on Craigslist, and offer current clients discounts for referring you to others. Then, as you build your client base, create a website, take out ads in the local paper, and even consider direct-mail pieces and T.V. and radio ads.

10. Don’t Do It Alone

One of the biggest traps that entrepreneurs face is getting lost in the details and the day-to-day tasks. Anyone who has started a successful business will tell you about the people that helped them succeed, just as everyone who fails will have an “if I only knew” story. The best way to combat this is to surround yourself with people that have more experience and are wiling to help you succeed. Mentors are invaluable not just at the beginning, but also before the beginning and well after. Make sure you seek them out and nurture those relationships.

11. Commit

Getting your business off the ground can be an extremely difficult proposition, especially if you are working another job. So be ready for the rigors of business ownership. Make sure that you have the dedication and energy to push through the hard times. Entrepreneurship is not for the faint of heart, but this is also one of the reasons why it can be so rewarding.