Wealth-building is the process of accumulating assets over time to increase financial security and achieve financial freedom. The definition of security and freedom varies considerably based on your personal needs, wants, and desires. For some, financial security may mean having a stable income and enough savings to cover basic expenses such as shelter and food. For others, financial security may include having a large emergency fund, being debt-free, and having a diverse investment portfolio. The actual cost of these things depends on where you choose to live and the lifestyle you want to have. 

On the other hand, financial freedom generally refers to the point at which you have enough wealth to support your desired lifestyle without having to work for an income. The level of wealth needed to achieve financial freedom will also vary depending on your goals, such as your desired standard of living and retirement plans. Check out the FIRE Movement (Financial Independence Retire Early) and some insights from those living the FIRE lifestyle - Amon & Christina. 

There is no one specific financial number that satisfies everyone. Setting clear, achievable wealth-building goals is an essential first step on your journey to financial security and independence. It helps you to understand what you want, focus your efforts, and track your progress. It is important to remember that goal setting and tracking is an ongoing process. Our life goals may change over time due to changes in our environments, relationships, interests, and priorities. Make goal setting a regular part of your routine to ensure that your goals remain relevant and achievable. Take the time to reflect on your current situation, your long-term goals, and the steps you need to take to achieve them. You can stay motivated and on track toward building wealth and achieving financial success with clear, well-defined goals.

Whether you are just getting started or looking to change your financial habits, setting wealth-building goals can help you take control of your financial future and work towards achieving your short- and long-term life goals. Here are five wealth-building foundational principles to set for financial security and financial freedom:

Get a handle on your income and expenses. 

Tracking both your income and expenses is essential for building wealth. By identifying areas where you can increase your revenue and cut back on spending, you can free up more money to save and invest. While we are all advised to consider ways to lower our expenses, it is also important to consider ways to grow your total income. Thinking about costs only leads to a scarcity mindset. Tracking and building a plan for ways to increase your income and decrease your expenses will give you more options for setting aside a percentage of your money towards savings, investments, or life experiences. To help you get started, you can create a budget tracker using a spreadsheet or budgeting app.

Save, save, save. 

Saving is a critical component of financial security. According to CNBC, 63% of Americans live paycheck to paycheck, and an increasing number of 6-figure earners are falling into this lifestyle. Living paycheck to paycheck causes financial distress with the constant fear of a costly, unexpected event happening and the inability to allocate money toward savings. The most immediate value of creating the habit of saving is to build and have a stable, just-in-case, rainy-day fund. Here are some examples of the average costs for an emergency event: a medical emergency may cost $1,322; a car accident may cost $775; or a job loss $28,824. If you haven't already started the habit of saving money, you can start right now. The rule of thumb is to have 3 to 6 months of your monthly expenses in your savings account. One way to boost your savings is to set up automatic transfers from your checking account to your savings account, so you can save without even thinking about it. I personally use SoFi Bank as my checking and savings account of choice. They offer amazing APY earnings on both checking and savings accounts as well as monthly point incentives that translate to dollars. Check out my referral link here.

Maximize your 401K + company matching 

If your employer offers a 401K plan, be sure to take advantage of it. A 401K is a retirement savings plan that allows you to contribute a portion of your paycheck to a tax-deferred account. Many employers also offer matching contributions, which can significantly boost your savings. One of the benefits of a 401K is that it is a "set and forget" method of saving - you can contribute automatically from your paycheck, so you don't have to worry about remembering to save. However, it is vital to be aware that 401Ks are designed to be long-term savings vehicles, and there may be tax penalties and other restrictions for withdrawing funds before retirement age. It's a good idea to familiarize yourself with the terms and conditions of your employer's 401K plan, including any matching contributions and the rules for early withdrawal. By maximizing your employer's 401K benefit, you can enjoy immediate tax savings and earn free money from your employer.

Clear bad debt. 

• There is a difference between good and bad debt. For the sake of simplicity here, high-interest credit card debt and personal loans are examples of bad debt. Due to the high-interest and low minimum payments required, this can become a financial trap where you're paying way more than you originally borrowed. It's essential to focus on paying it off as quickly as possible. High-interest debt can drain your finances and hold you back from achieving other wealth-building goals, such as purchasing a home or building your own business. Setting a plan to pay off your bad debt can free up more money to save and invest.

Create a vision board. 

• A vision board is a powerful tool that can help you stay focused on your goals and visualize your future. By displaying it in a place where you can see it every day - your bathroom mirror or whiteboard in your home - you can keep your goals top of mind and stay motivated to achieve them. The more details, flowcharts, and milestones you include, the stronger the visualization will become. This exercise enables you to create something for yourself and "write it in stone," so when you look back, you can reference where you wanted to be and where you landed. When you invest the time in yourself, map out your financial goals, and take action to build momentum based on your vision board, you'll be pleasantly surprised to see what you were able to achieve, future opportunities, and learning lessons. 

No matter where you are in your wealth-building journey, these principles outlined above are foundational for financial security and financial freedom. The hard work is setting clear personal wealth-building goals and working towards them consistently. You can achieve financial success and build the life you want. The management of your life and your financial goals is an ongoing journey. Start today by managing your income and expenses, saving for your future self, maximizing your 401K, clearing bad debt, and having fun creating a vision board.