The Basics
You can tilt the odds of creating wealth in your favor. Sure, spending less is one way. But be sure to make your money work hard for you -- and set goals to make certain it happens.

A question often been asked the secret of creating wealth. Is it to buy hot Internet stocks or work for a tech startup that offers you stock options? Is the trick to count every penny and live a life of penury? Is the road to wealth paved with risk? Do you have to be smart and well-educated? Or is it simply a matter of luck?

The answer is: There is no one road to wealth, and all of the above have created wealth for a few notable individuals. But you can put the odds of creating wealth on your side by following a few simple precepts.

1. Spend less than you earn.
This is often the most overlooked scenario, because many people believe it's a matter of cutting back on your current standard of living -- a strategy that's almost impossible for most people. Certainly, you can affect your personal balance sheet by spending less money dining out or on entertainment. Making a pot of coffee at the office instead of buying a $3 latte will make a slight difference in your cash flow. But the big difference is usually made on the income side of the ledger.

Stop looking at your budget as a fixed pie that must be cut up into different size pieces to cover your regular bills for housing, telephone, electricity, car expenses and insurance. Instead, concentrate on thinking about how you could expand the size of the pie. Sure, you could ask your boss for a raise. But that's a less likely prospect than figuring out how you could earn more money on the side.

Take a look at how you're spending your time, as well as your money. Perhaps instead of dining out this weekend, you could earn an extra $100 by becoming a waiter or bartender. Instead of shopping at the mall, you could be a salesclerk earning some extra cash. Instead of paying for a baby sitter, you could take care of a few other children on Saturday or Sunday, freeing working parents to do their errands. Then, instead of spending the extra money you earn, you should invest it so the money can work for you.

2. Make your money work as hard as you do.
The real secret of financial success lies in making your money do the work, so you can relax. But that requires accumulating enough investment dollars so that the growth and earnings can free you from the need to punch a time clock. Many very wealthy people continue to work simply because they enjoy what they're doing. Or they redefine work to include managing their money.

Many people argue that they'll never get to the point where they won't have to return to work because they can't afford to set money aside today. But don't overlook the power of compound interest. Every worker with earned income is now entitled to open a non-deductible IRA or, even better, a Roth IRA. The maximum $2,000-a-year contribution works out to a cost of $38.46 a week.

And a $2,000 annual investment in a Roth IRA, growing tax-free at the historical average of 10.6% for the stock market, builds to more than $500,000 in 31 years. If you start in your twenties and put $2,000 in that same Roth IRA every year, at 10.6%, you could have a nest egg of nearly $3.5 million at age 70.

3. Make sure your money is working for you, instead of against you.
Just as your money can work very powerfully for you if you make the right decisions and stick to a plan of regular investing, wrong money decisions put potholes on the road to success. The classic example is credit-card debt. In my books, I give the example of a person who charges $2,000 on a credit card at 19.8% interest and a $40 annual fee. If you make only the minimum monthly payments (and many people do just that), it will take you 31 years and two months to pay off the balance! And along the way, you'll pay an additional $8,202 in finance charges.

What could be so important to charge today that it puts you in debt for a period far longer than the object is likely to last? (Sure, a mortgage lasts 31 years, but the interest is deductible and your home should grow in value over that time period.) Most things you charge on your card have a far shorter useful life.

If you're already in debt, you should know that if you would only double the minimum monthly payment, you could be out of debt in less than three years. Paying down current debt is the way to start on the road to building financial freedom.

4. Remember: If you don't see it, you won't spend it!
If you take a close look at your paycheck, you'll notice a lot of deductions before you get to the amount you can cash or put in the bank. Surely, there are deductions for Social Security and federal and perhaps state income taxes. It's money that's out of your paycheck before you have a chance to make decisions about it. Money set aside for wealth building should be treated in the same way. If your company offers a 401(k) retirement plan, make sure you sign up for the maximum possible contribution. It will be taken out of your paycheck automatically. (And if your company matches all or part of your contribution, failing to sign up is like walking away from free money!)

If you don't have a chance for automatic deductions to a company savings plan or even a U.S. Savings Bonds payroll deduction plan, then you'll have to create your own automatic savings plan. See if your company will deposit your paycheck directly into your bank account -- or promise yourself to do it the day you receive the check. Then sign up for an automatic monthly deduction plan with a mutual fund company to create regular deposits into an IRA. You can even set up an automatic deduction for U.S. Savings bonds at its Web site (a link is on the left). The whole point is to get the money out of your checking account before you see it and spend it.

5. Create savings and investment goals.
Would you like to have $1 million by the age of 40 or 50 or by the time you retire? Set your own goals. But never set a goal you can't control. Your targets can't depend on your boss giving you a raise; they must be reachable by your own efforts. You might need to invest in yourself by acquiring more education so you can qualify for a job that pays more. You might need to take more risk in your investments, or in your lifestyle by taking on a job that pays commissions instead of a fixed salary. Evaluate the risks involved, and understand that by putting the odds on your side, you can get a larger return.