Heading into 2025, recently released research from two different organizations reflects how tough a year it’s been for many Americans to build wealth.
Northwestern Mutual’s annual Planning & Progress Study found that 33% of U.S. adults “do not feel financially secure,” marking the highest level of financial insecurity since the 167-year-old company began recording that data in 2012.
Additionally, a report from the National Institute on Retirement Security revealed that 55% of Americans are concerned about achieving financial security in retirement.
Don’t let another year get away from you. Learn these tried-and-true tips that can help you build wealth and secure your financial future.
1. Track every dollar with purpose
Taking control of your finances reduces stress, prepares for unexpected expenses, and creates growth opportunities.
Studies reveal that individuals who actively budget save 20% more annually than those who don’t. This habit helps you identify spending patterns, cut unnecessary expenses, and prioritize saving and investing.
Utilizing tools like budgeting apps or spreadsheets makes the process manageable and effective. By understanding where your money goes, you can make informed decisions that align with your goals, paving the way toward financial independence and security.
2. Erase high-interest debt quickly
High-interest debt, such as credit card balances, drains your finances through compounding interest, leaving less money for saving or investing.
The latest Federal Reserve data shows U.S. household debt hit $17.94 trillion, with credit card delinquencies at a 10-year high of 9.1%.
Paying off high-interest debt quickly reduces financial stress and frees up resources for wealth-building activities. Research shows individuals with lower debt-to-income ratios are more likely to achieve financial independence, highlighting the importance of addressing debt to secure their financial future.
Pro Tip: If you have more than $20,000 in unsecured debt, get some professional help. National Debt Relief is a trusted source for free advice and assistance.
3. Continuously improve your financial knowledge
Financial literacy empowers you to make informed decisions about saving, investing, and managing debt, which are essential for long-term success.
Despite its importance, only 48% of U.S. adults answered financial literacy questions correctly in 2024, revealing a significant knowledge gap.
Ongoing education through books, courses, or financial news helps you adapt to changing economic conditions and seize new opportunities. With a stronger understanding of money management, you can avoid costly mistakes, maximize your resources, and create a solid foundation for lasting financial security.
4. Build an emergency fund for stability
Building an emergency fund is essential for creating a financially secure future because it acts as a safety net against unexpected expenses like medical bills, car repairs, or job loss.
Without it, individuals may rely on high-interest debt to cover emergencies, derailing wealth-building efforts. A recent poll of 2,000 workers revealed that the average American feels financially prepared with $5,078 in savings. Most financial experts recommend saving three to six months of your income in an emergency fund.
This fund provides peace of mind and lets you stay on track with financial goals, ensuring that life’s surprises don’t disrupt your journey toward building wealth and financial stability.
Pro Tip: Earn as much as possible on your emergency savings. For example, SoFi Checking is offering 4% interest, plus a potential $300 signup bonus. (May change without notice.)
5. Invest regularly, even in small amounts
By investing early, you harness the power of compound interest, where your earnings generate additional returns over time.
This exponential growth makes even modest contributions impactful in the long run. For example, average 401(k) balances have risen from $104,000 to $127,000 despite economic challenges, showcasing the resilience and benefits of consistent investing.
Regular investments create a habit of saving for the future, enabling you to build a robust financial foundation and achieve long-term goals, such as retirement, homeownership, or financial independence.
Pro Tip: Acorns helps you save, invest, and grow for your future. Their automated saving, investing, and spending tools help you grow your money and your financial wellness.
6. Diversify your income sources
Diversifying your income sources is crucial for building wealth and financial security because it reduces reliance on a single paycheck and protects against economic uncertainties like job loss or wage stagnation.
With diversified income, you can better manage expenses, save more consistently, and invest in long-term opportunities, creating a stable and prosperous financial future.
Exploring side gigs, freelancing, or passive income sources, such as rental properties or dividend-paying investments, provides financial resilience and accelerates wealth-building.
Pro Tip: Earn up to $1000 per month doing simple tasks with KashKick!
7. Practice frugality without sacrificing quality
Living below your means allows you to allocate more resources toward saving and investing, which are critical for long-term financial growth.
A recent survey found that 50% of Americans are cutting back on non-essential purchases like dining out and entertainment to save money, demonstrating a shift toward mindful spending.
You can maintain a comfortable lifestyle while building financial reserves by focusing on value and prioritizing needs over wants. This approach ensures a sustainable path to wealth and stability without compromising quality of life.
8. Maximize tax-advantaged accounts
Maximizing tax-advantaged accounts is vital for building wealth and achieving financial security.
Accounts like 401(k)s, IRAs, and Health Savings Accounts (HSAs) offer tax benefits that help your money grow faster. Contributions to these accounts can lower your taxable income today while their compound growth accelerates long-term savings.
Consistently contributing, especially when employers offer matching programs, significantly enhances retirement preparedness, allowing you to secure a comfortable future while optimizing your wealth-building potential.
Pro Tip: If you have a high-deductible health plan, you should have a Health Savings Account. Check out Lively HSAs.
9. Invest in real estate for passive income
Investing in real estate is a powerful strategy for building wealth and financial security. Rental properties, in particular, provide passive income streams while typically appreciating in value over time, contributing to long-term financial growth.
Real estate investments can hedge against inflation, preserving purchasing power as property values and rents rise. By carefully managing real estate ventures, you can diversify your income, build equity, and create lasting wealth to secure your financial future.
Pro Tip: One modern way to diversify is with real estate and venture capital. Companies like Fundrise, offer investments as small as $10.
Crafting your financial future
Building wealth isn’t just about growing your bank balance – it’s about creating a secure, sustainable future for yourself and your loved ones.
By implementing these strategies, staying consistent, and adapting to changes, you can achieve the financial freedom to live on your own terms. Start today, and watch your efforts compound into lasting success.
