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Being in the top 1% of earners in the U.S. is something many of us can only dream of. A big house, fancy cars, lavish dinners and extravagant vacations are just a few parts of what most imagine life in the 1% to be — and yet rising inflation and stubbornly high prices aren’t making it any easier for us to achieve that wealthy status. Indeed, the level of wealth needed to be a member of this exclusive group is extraordinarily high.
Fortune recently reported that, nationally, households earning more than $652,650 are considered the wealthiest. Although, in some states, you need much more money to be considered a member of the 1%, sometimes 20-30% more. For example, these six states require far more than $652,650 to be among their wealthiest residents, according to SmartAsset:
- Connecticut: $952,902
- Massachusetts: $903,401
- California: $844,266
- New Jersey: $817,346
- Washington: $804,853
- New York: $776,662
With the exception of Washington, these states also have some of the highest tax rates for top earners, all over 26%. To be considered wealthy in, say, Connecticut, you’ll need to earn a whopping $300,252 (31.5%) more than the national average of $652,650 to be considered wealthy.
If those numbers don’t daunt you, there are ways to attain them. Here are five methods to growing your wealth so you can join the 1%, too.
Set Up Automatically Regular Deposits to Your Savings Account
Setting up automatic deposits from your checking account to your savings account is a simple way to build your wealth without thinking about it. You can set a certain day of the week for the funds to be transferred to your savings account and have the transfer day coincide with your regular payday. Whether weekly, biweekly, bimonthly or monthly, setting the transfer days to be on the same days you’re paid means you won’t miss the money. It’ll be as if the money was never in your checking account in the first place and you’ll watch your savings grow and compound over time.
Start Investing Early and Often
Investing early and often is key when it comes to building significant long-term wealth. By investing in a diversified mix of conservative investments, higher-risk stocks, mutual funds and ETFs with a solid history of long-term growth, you can grow your wealth (slowly but surely) over decades. Investing your money is one of the smartest things you can do to ensure a bright and wealthy financial future for you and your next of kin.
Contribute to Your Retirement Account Regularly
Consistent and automatic contributions to your retirement accounts are crucial steps toward a secure retirement. Whether you participate in an employer-sponsored 401(k) plan with a company match, a self-directed IRA, or both, ensuring monthly contributions means long-term wealth accumulation.
A few tips include contributing enough percentage to your 401(k) to take advantage of the full employer match (if you’re offered one), automatically increasing the contribution percentage to your retirement accounts each year when you get a raise or promotion and maxing out your contributions each year. Over time with raises, you’ll be adding even more money to your retirement account and you won’t feel the decrease in your take-home pay.
Live Below Your Means
This seems like a simple virtue to live by, but isn’t always easy to do. It’s tempting to start spending more or living larger whenever you get a salary bump or a promotion. Consistently increasing your expenses commensurate with your raises can be dangerous. Why? If your expenses increase too much, you could find yourself in financial trouble in the event of a job loss or a large unexpected expense. Living below your means ensures that you’ll always have what you need, financially speaking, and the chances of running into a money problem will be slimmer.
Stay Out of Debt
Staying out of debt is so important to building wealth. Carrying too much debt, especially high-interest credit card debt, eats away at your finances and creates a never-ending financial drain. Before you start saving more money, it’s a wise move to pay down and eliminate your debt. When entering the later phases of your life, including retirement. Once you’re out of debt is the best time to contribute a higher percentage of your income to your savings, investments and long-term financial goals — such as entering the top 1%.
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Read More: The Income You Need To Jump Into the Top 1% — And 5 Ways To Make It Happen