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Written by: Corey Janoff

Today we’re going to talk about wealth accumulation.  Specifically, ideas for how to accumulate wealth and accumulate wealth faster.  If you have read the book The Millionaire Next Door (a title from one of our recommended financial reading lists), you’ll recall that they spend a lot of time comparing Prodigious Accumulators of Wealth (PAW’s) and Under Accumulators of Wealth (UAW’s).  My goal for all of you is to become Prodigious Accumulators of Wealth so you can achieve financial independence sooner (maybe even fatFIRE).   

Without further ado, let’s dive into six tips for rapid wealth accumulation! 

how to accumulate wealth

1. Keep Mortgage Under 2x Income 

Two years ago, I wrote about how the number one predictor of wealth accumulation is your housing costs as a percentage of your income.  If you want to learn the first rule of how to accumulate wealth, it’s keep your housing costs below your means!  

Your housing will likely be your largest expense in life (maybe after taxes).  The more money you spend on housing, the less money you have for everything else you want in life.  This will slow your ability to accumulate wealth. 

The less you spend on housing, the more money you have for other things, therefore you can direct more of your earnings to wealth accumulation.   

In The Millionaire Next Door, they talk about how Prodigious Accumulators of Wealth rarely carry a mortgage balance greater than two times their income.  This would go for second and third homes too – keep the combined total below 2x income to make rapid wealth accumulation a possibility for you. 

I will admit, when the research from the book was conducted, mortgage interest rates were considerably higher than they are today.   

At a 3% interest rate today, you can afford about 1.75x as much mortgage as you could at an 8% interest rate (mortgage rates in the 90’s were 7-10%.  In the 80’s they were 10-15% on average!).   

That means the payment on a $400k mortgage at 8% interest is the same as a $700k mortgage at 3%! 

That being said, student loans were much smaller in the 80’s and 90’s.  Cars were much less expensive, too.  Kids aren’t cheap either, especially if you plan on paying for their college. Therefore, if your goal is wealth accumulation, try to keep your mortgage balance below 2x income.   

Related: Education Planning and College Savings 101 

2. Pay Yourself First 

You have heard the term before.  Pay yourself first.  Make sure to put money towards your goals before spending it. 

Financial planning can be summed up in eight words: work hard, spend a little, invest the difference.  I like to change that order around, though.  Work hard, invest a lot, spend the difference.   

If you are putting an adequate amount away to achieve your financial goals in the timeframe you want to achieve them, go nuts on spending the rest!  Don’t feel dirty about it, either!  Your goals are on track!  

Forget budgeting to keep your spending in order.  Focus on directing adequate amounts towards your various financial goals, such as retirement, college savings, etc., and let your expenses fill up the rest.   

If you spend money first, you’ll find it challenging to come up with enough money to invest towards your wealth accumulation goals.   

Related: Your Life Story Told Through Your Spending 

That’s what paying yourself first is all about.  Put money into your savings and investments before giving it to someone else in the form of buying stuff.   

3. Make Investing More Every Year a Goal 

I’ve written numerous times before about how you should try to invest at least 20% of your gross income for retirement each year.  If you want to rapidly accumulate wealth, make it a goal to increase the amount you invest each and every year.   

If you invested 20% of your income in 2020, try to invest 22% in 2021.  If you invested $75,000 for your retirement goals last year, try to invest $80,000 this year.   

If you get a bonus or a pay raise, invest the majority of that and keep your spending flat.   

Track your savings rate every year and make it a competition with yourself to save more this year than you did last year.  Baby step your way to higher and higher wealth accumulation. 

If you want to accumulate wealth faster, make a solid effort to continue to grow the money stack at an increasing rate.   

prodigious accumulator of wealth

4. Drive an Inexpensive Car 

For the record, I am not a car person.  I see a car as a way to get you safely from point A to point B.  Don’t care if the paint is nicked.  Don’t care if the seats are leather or cloth, manually or electronically adjust.   

In addition to housing, transportation costs can be a large expense for a lot of people.  I know some people who spend over $2,000/month in car payments!  $2,000/month is a lot to spend on cars!   

If instead you paid cash for inexpensive but reliable vehicles once a decade and invested that $2,000/month, after 25 years you would have $1.2M, assuming an average return of 5%/year.  If your investment returned an average of 7%/year, you would have $1.6M.   

Investment returns aren’t guaranteed, of course, and every year is a roller coaster ride, but you get the idea.  That nice car you’re driving could be an extra $1.5M in your nest egg.   

Personally, I’ll take more money in the bank over a fancier car any day.   

5. Avoid Buying Status Items 

The big house, the fancy car, the nice watch, designer jeans; sure they look cool, but you spent a bunch of money on stuff.  If you spend money on things, you’ll end up with the things and not the money.   

Wealth is what you don’t see.  Remember that next time you catch yourself trying to keep up with the Joneses.  

The more money you spend on the status items, the less you have available to invest towards wealth accumulation.   

As mentioned earlier, put enough of your money towards your savings and investment goals first, and then spend what’s leftover.  If what’s left is enough to buy the status items, then more power to you.   

Accumulate Wealth

6. Live In a Modest Neighborhood 

Bringing things full circle.  We started with housing costs, so we’re going to end with housing costs.  The ancillary costs of home ownership extend far beyond the mortgage payment, property taxes, and maintenance. 

Keeping up with the Jonses is real.  If your neighbors drive nice new cars, have high-end furniture, belong to country clubs, go on lavish vacations, drink expensive wine, etc., etc., you’ll feel pressure from yourself to do the same.  We want to fit in with those around us. 

On the other hand, if your neighbors wear faded blue jeans, drive old cars, drink cheap beer, and take their kids camping for vacation, you’ll stick out like a sore thumb if you drive a nice car and sip pinot noir in your custom-made teak Adirondack chair on the front porch.    

You want to feel like you fit in with those around you.  Don’t believe me?  Try showing up to a BBQ in a suit & tie, or a to funeral in a T-shirt & shorts and see how awkward you feel.   


If you want to achieve rapid wealth accumulation, make wealth accumulation a top priority.  Pay yourself first, focus on investing money towards your goals, and let the rest fall into place.  Make your cash flow flexible by keeping the big things in check, so you can put more of your money to work and achieve financial independence. You got this!  



Examples are hypothetical and for illustrative purposes only.  Investments involve the risk of loss, including total loss of principal.  This should not be construed as individualized financial advice.  For advice pertaining to your specific circumstances, consult with your financial advisor.   

Finity Group Blog


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