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Increasing your income and automating your savings are crucial to building more wealth.
- Brian Weitzel, a high school economics teacher featured on the personal-finance blog ESI Money, reached a $1 million net worth at age 35.
- Weitzel's strategy for achieving the milestone was twofold: make savings automatic to max out his retirement accounts, and increase his income.
- In addition to his day job, Weitzel owns rental properties and runs a six-figure photography business.
- Multiple financial experts say increasing your earnings is a crucial step to building more wealth.
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Rarely does a saving or investing strategy need to be complex to be lucrative. The simpler, the better.
Brian Weitzel, a high school economics teacher recently featured on the personal-finance blog ESI Money, said he reached a $1 million net worth last year, at age 35, thanks to a system he put in place years ago.
Weitzel, who lives with his wife in Detroit and also hosts the business podcast "Ride Your Money Wave," said he has always focused on contributing as much as he could afford to his retirement accounts, which are funded through automatic contributions.
It was only when they started earning additional income from two rental properties and his side photography business that they were able to fast-track their way to the seven-figure club. Weitzel's photography business brought in nearly $176,000 in revenue last year after 11 years up and running, he said. The extra income has gone primarily toward retirement savings and investments and buying property.
"Strategically, I knew I wanted to build a system where all of my investments were maxed out and automated, forcing me to live below my means and keep my standard of living in check for as long as possible," he wrote on the blog.
Weitzel said the increase in income has helped them direct about $80,000 annually into retirement accounts, which includes maxing out both his Roth 403(b) and 457 plans at $19,000 each; maxing out both his and his wife's Roth IRAs at $12,000 total; maxing out his SEP IRA, a type of individual retirement account for business owners for which the limits depend on income; and maxing out her 401(k) plan at $19,000.
They also have a brokerage account with $71,000, which Weitzel plans to continue funding and eventually use to either retire early, pay monthly mortgage payments, or pay off their mortgage early.
Financial experts often talk about the value of increasing income in order to build more wealth.
Financial planner Eric Roberge said cutting costs is necessary, but if you've hit a limit and it's possible to earn more money, the benefit will be much greater. "If you can take the cap off of that and increase your income - it's not always easy to do that, which is probably why people don't pay attention to it - but if you can do that, it gives you a lot more room to both spend and save," he said.
Ramit Sethi, author of the bestseller "I Will Teach You To Be Rich" said audiences are generally resistant to his advice to earn more money, mainly because they don't think they're capable or have the time.
"When you embrace the idea that you can earn more, one of the biggest surprises you'll discover is that you already possess skills others would pay for - and you've never even realized it," Sethi wrote in his book.
- Read more about saving automatically:
- How to automate retirement savings
- How to invest in a 401(k) for retirement
- The best way to build wealth, according to financial planners
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