The recipe for building wealth hasn’t changed

Building wealth has gotten harder for most people in recent years. But the habits that can make you rich haven’t changed.

It boils down to this: putting aside money, regularly and consistently, that can be invested for your future. You have to leave that money alone to grow, which means you also need an emergency fund. And you must be careful with debt, because the wrong kinds can erode your wealth rather than build it.

It’s a simple formula but one that’s become increasingly hard to implement as incomes stagnate and prices rise. A shocking number of American households — nearly half, by the Federal Reserve’s last count — don’t have enough savings to cover an unexpected $400 expense. Our inability to save has contributed to a 21 percent decline in household median net worth between 1998, the year median incomes peaked in America, and 2013, the last year for which Fed stats are available.

Hardest-hit are households in the lower middle class, which in 2013 meant incomes from $23,300 to $40,499. Their net worth fell by half.

In my latest for the Associated Press, how to use the habits of wealthy people to build for your future.

Monday’s need-to-know money news

Today’s top story: Why long-term care insurance is worth the expense. Also in the news: The differences between a 401(k) and a Roth 401(k), how to make yourself a better retirement saver, and keeping an eye out for electricity surge pricing. Long-Term Care Insurance Is Worth the Expense Paying now can save a lot later. […]

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Q&A: Does Social Security pay survivor benefits in same-sex unions?

Dear Liz: I am 65 and was recently laid off after 26 years with the same company. My life partner of 25 years died in 2010. We had been legally married in 2008. I’d like to wait until I’m 70 to collect my Social Security. Is there any way I can collect her Social Security […]

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Q&A: Conflicting credit scores

Dear Liz: Why is there such a difference between my FICO 4 and FICO 8 scores? My FICO 4 score is 646 while my FICO 8 score is 678. I want to buy a home and I know some lenders may still use the FICO 4. Answer: Most (not just some) mortgage lenders use outdated […]

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Q&A: Divorced, and in debt

Dear Liz: I recently got divorced and found myself in about $50,000 of credit card debt. While I’m struggling to slowly pay off this debt, I do have some money saved in a tax-sheltered annuity as well as a small Roth IRA. Should I use those, take a personal loan or file for bankruptcy? Answer: […]

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Friday’s need-to-know money news

Today’s top story: How to find the best mortgage rate online. Also in the news: How to set up your first 401(k), what happens if you work after signing up for Social Security, and why we value purchases more when we pay with cash. How to Find the Best Mortgage Rates and Lenders Online Comparison […]

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Thursday’s need-to-know money news

Today’s top story: How payday loans work, and what they cost. Also in the news: Getting the most out of a retirement calculator, money tips you should ignore, and the best budgeting apps for your financial life. Payday Loans: How They Work, What They Cost Reading the fine print. 5 Steps to Get the Most […]

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Wednesday’s need-to-know money news

Today’s top story: Overcoming the obstacles between you and retirement. Also in the news: What the President wants to tell college students, what happens when your debt goes to collections, and how to pay less for staying cool this summer. 5 Obstacles Between You and Retirement (and How to Overcome Them) Clearing the pathway to […]

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Tuesday’s need-to-know money news

Today’s top story: Carrying a credit card balance for the first time. Also in the news: Closing the bank of Mom and Dad, why the starter home is in decline, and an employee benefit that could help with student loans. Carrying a Credit Card Balance for the First Time Managing the debt. Closing the Bank […]

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Should you save enough to live to 100?

First, you were supposed to die at 85. Then 90. Now 95 and even 100 are common defaults when financial planners tell people how much to save for retirement. Except that’s nuts. In the U.S., the typical man at age 65 is expected to live another 18 years. The typical woman, about 20. Yet many […]

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