The 10-Step Formula for Building Wealth

If you want to be wealthy, there is an extremely simple formula that has worked for generations: Live beneath your means and invest the difference.

It's such a simple formula that everyone should be doing it. While it takes effort and discipline to live below your means, doing so will help you achieve your financial goals and help you avoid debt and the stress that comes with it.

There is an impression that living within your means is the same as being tight with money and not being able to purchase the things you want. That impression couldn't be further from the truth. Being frugal simply means taking great care in the way you spend your money so that you can use it in the ways that you want to most. It means not spending it on an image, but instead on what is truly important to you.

Take Warren Buffet as an example. He's the second wealthiest man in the word, according to Forbes and could purchase almost any home in the world that he wants. Yet since 1958, he has lived in the same house that he purchased for $31,500 in Omaha, Neb. Even though he could buy a much bigger and fancier house, doing so apparently is not important to him.

While Buffett's frugal ways are not the sole reason for his riches, it says something about a man who has accumulated such vast wealth. Unfortunately, many Americans do not share the same principles. They have instead fallen for the false promises of advertising and the image that you can have it all right this instant.