9 Essential Steps to Start Building Your Personal Wealth

You’ve mastered budgeting and built up your savings. Now, you’re ready to make your money work harder for you. Figuring out how to build wealth isn’t about finding get-rich-quick ideas or day-trading the stock market. Building wealth is about growing your assets and net worth over time—with tools like retirement accounts, real estate and other investments that increase in value.

“Building wealth isn’t just about having a big bank account, but about creating options for your future. It means having the freedom to handle life’s surprises and still reach your financial goals,” says Sarah Sealey, Manager, Investment Services at Navy Federal Credit Union. 

You can start building your wealth with a few hundred dollars or a few thousand dollars. Either way, it’s important to start as soon as you can so you’ll have time to build a financial future that can give you real freedom. “The sooner you start, the easier it gets,” Sealey says. “Even small steps today can grow into big opportunities tomorrow. Time really is your best friend when it comes to building wealth.” 

These 9 simple steps to building wealth can help you set yourself up for a future where you can manage your expenses, achieve important life goals like buying your own home or retiring comfortably, and enjoy peace of mind knowing that your finances are strong and secure.

1. Build a strong financial foundation

Before you start investing, make sure your financial basics are solid. Don’t underestimate how important that is, like having an emergency fund. “Having to sell an investment at a bad time or charging an expense on your credit card when you’re trying to build wealth can be counterproductive,” Sealey says.

• Make sure you have an emergency fund that could cover at least 3-6 months of your expenses in case unexpected costs come up.
• Pay down any high-interest debt you have like credit card balances. The interest you’re paying on debt often costs more than what you’d earn from investing. 
• Stick to your household budget, including setting aside funds for your savings account, so you can have money left over to invest.
• Live beneath your means as your income increases so you aren’t spending all your money. This gives you funds left over that you can invest for your future.

2. Set clear financial goals

Your financial goals and time horizon shape your investment strategy. Think about what you want in the short term (1-3 years), mid term (4-10 years) and long term (10+ years). Write down your goals and how much money you’ll need for each one. This gives you some targets to work toward and helps you stay motivated. Also consider working with a financial professional.

Each type of goal needs a different investment approach:

• Short-term goals are best served with safer options like money market accounts and certificates. 
• Mid-term goals need to balance risk and reward based on your goals. 
• Long-term goals can handle more investment risk because you have time to ride out market changes.

Check in on your financial goals at least once a year. If your financial situation changes, your goals might need to change, too.

3. Increase your income

The more you earn, the more you can invest. Look for ways to boost your income through raises, promotions or acquiring new in-demand skills. Taking on extra training or certifications can open doors to higher-paying positions. Extra income helps you build wealth faster, without changing your lifestyle.

You also can explore side gigs or passive income streams to help speed up your wealth-building. You could earn more money by working a side job or freelancing, renting out property or creating something that generates ongoing returns. When you get a raise or start earning extra income, put that money straight into your investments instead of increasing your spending.

4. Start investing early and consistently

Time is your biggest advantage when building wealth. The sooner you start investing, the more your money can grow through compounding interest. Even small amounts can add up when they have many years to grow.

For instance, did you know that the S&P 500 has averaged an annual return of about 10.4% (or 6.21% adjusted for inflation) since 1965? Compare that with many traditional and high-yield savings accounts that earn about 0.4% to 1.72% on average as of October 2025, and you can see why investing—and the power of compound interest—matters.

As an example, if you made an initial investment of $5,000 and added $1,000 to your account every month, with an average monthly compounding rate of return at 6%, you could potentially have $1,000,000 after about 30 years. Run your numbers in our Savings Goal Calculator to think about how you can achieve your investment goals.

Remember: Time in the market beats timing the market. Focus on long-term gains instead of daily market changes. When you stay invested over the long haul, you’ll benefit from overall market growth even when there are bumps along the way.

“Automate your saving and investing, check in on your goals regularly and celebrate the progress you make along the way, increase a little when you think you can,” Sealey says. “Consistency beats perfection.”

5. Choose beginner-friendly investment options

You don’t need to be a stock-picking expert to start investing. There are plenty of ways to build wealth that work well for beginners, and you can start with whatever amount of money you have available.

Index funds and exchange-traded funds (ETFs)

These types of funds track market indexes like the S&P 500, giving you broad exposure without you needing to research individual companies. Index funds are a reliable, cost-efficient way to invest that can often outperform actively managed funds over time. ETFs offer even more variety across different sectors and markets.

Fractional shares

You can buy portions of expensive stocks instead of needing enough money for a whole share. This lets you build a diverse portfolio for less. Or, you can invest in mutual funds that collect money from many investors to buy shares of stocks.

Retirement accounts

A Thrift Savings Account (TSP) or a private-sector 401(k) may come with an employer match, which is free money that’s invested in your future. Individual Retirement Accounts (IRAs) give you access to many options to help you grow your savings over time with tax advantages. Traditional IRAs let you deduct your contributions now and pay taxes later. Roth IRA contributions are taxed now so your withdrawals in retirement can be tax-free.

Health spending accounts

If you’re enrolled in a high-deductible health plan (HDHP), you can use your Health Savings Account (HSA) to invest pre-tax dollars, let them grow tax-free and use them later for medical costs—or any expenses after age 65. 

Robo-advisors

These automated investing tools build and manage your portfolio based on your financial goals and risk level, usually for a low fee. Robo-advisors can be a good option if you’re not ready to manage investments yourself. 

Real estate

Property tends to go up in value over time, according to the Federal Housing Finance Agency. If you don’t own a home yet, buying one can help you build home equity. You have the option to use the equity you build up for other financial needs, like a down payment on your next home or as collateral to take out a loan.

High-yield options for uninvested cash

High-yield savings accounts (HYSAs), money market accounts (MMAs) and share certificates typically earn more interest than regular savings accounts. Cash management accounts  also can help your money work harder while you decide your next investing move.

6. Use tax-advantaged accounts

In regular investment accounts, you pay capital gains taxes when you sell for a profit. In tax-advantaged retirement accounts, you can avoid or delay those taxes. Some, like traditional 401(k)s and IRAs, let you defer paying taxes now. Others, like Roth IRAs and Roth 401(k)s, let your money grow tax-deferred until you withdraw it.

If your employer offers a 401(k) match, contribute at least enough money to get the full match. “Be sure you invest enough to receive any matching funds or make a plan to reach that level as soon as possible,” Sealey says.

After that, consider maxing out an IRA. And, if you can save even more money, look beyond retirement accounts. HSAs offer tax benefits for healthcare expenses, and 529 plans let you grow education funds tax-free. Remember, every dollar you contribute to tax-advantaged accounts helps to lower your taxable income, which also can save you some money.

7. Understand risk and diversification

Your investment strategy should match your timeline and risk tolerance. If you need money in a few years, you’ll want safer investments. If you’re investing for your retirement that’s decades away, you can afford to take on more risk because you have more time to recover from market drops.

Diversifying your investments can help you balance the risk in your portfolio. Diversification means spreading your money across different types of investments. You can diversify across stocks, bonds, real estate and other financial assets. You also can spread your investments across different industries and company sizes. Index funds and ETFs make this easier because they include many different investments in one package.

8. Automate your contributions

One of the best ways to build wealth is to make investing automatic. Set up automatic transfers from your checking account to your investment accounts so you’re consistently putting money toward your future without actively thinking about it each month. This strategy is called dollar-cost averaging. 

“Investing a small amount regularly at set intervals such as monthly in a diversified investment in line with your risk tolerance means that your investing is automated,” Sealey says. Investing a set amount on a regular schedule through market ups and downs can help smooth out your returns and take the emotion out of investing.

Start with whatever amount fits your budget, even if it’s small. As you get comfortable or as your income grows, increase how much you contribute. Many people bump up their contributions when they get a raise so they can keep building wealth without feeling the pinch.

9. Protect the wealth you’re building

You’ll need to put some safeguards in place so unexpected events won’t wipe out your hard-earned progress.

Get the right insurance coverage

Insurance protects your income and assets when life throws you a curveball. Health, auto, disability, homeowners and life insurance act as your safety nets. Look at your needs and make sure you have just the right amount of insurance—not too much, not too little—so you’re covered without overpaying.

Plan for your legacy

If you have a spouse or children who depend on you financially, estate planning helps to protect what you’ve built and to build generational wealth. Make a will and name beneficiaries on your accounts to make sure your assets will go where you want them to. Legacy planning lets you create security for the people you care about. 

Avoid common investing mistakes

You can protect your portfolio by steering clear of some common investing mistakes. 

• Don’t let emotions drive your decisions. When the market dips, stay invested for a potential rebound instead of selling and locking in losses.
• Don’t spend more money than necessary on investment fees.
• Don’t chase hot stocks or trends.
• Don’t set-it-and-forget-it. Be sure to review your financial plan at least once a year so you can stay on track.

Navy Federal can help you build wealth for financial security

Building personal wealth is the result of strong financial habits and purposeful actions. Navy Federal offers resources and tools to help you at every step of your wealth-building journey.

Our MakingCents library of articles covers investing basics, how to start investing, understanding different investment accounts and more. Navy Federal Investment Services offers IRA accounts and access to knowledgeable financial advisors who can help you create a personalized wealth-building plan. And, if you prefer a hands-off approach, you can get started with Digital Investor, our online investment tool.

Wherever you are in your planning, we’re here to support your financial goals and help you build the wealth you deserve.