Building more wealth is something that just about everyone aspires to. Business owners launch family businesses to increase their incomes while other professionals get more than one job to earn extra cash. After all, increasing your income sets you up for a happier future. With more wealth, your financial security will be tighter, and you’ll have less money tied up in things like debt and credit cards. If you’re looking to build up your wealth, there are a few steps you’ll want to take to ensure you’re on the right track. Continue reading to discover the surefire strategies to increase your wealth.
How do you know if you’re on track financially? You stay informed, of course. This means taking a look at your credit report at least once per year. This will tell you if there are any accounts that are unpaid, or if you’ve missed a minor detail in your financial history.
It also pays to stay informed about financial trends and what the wealthy are doing with their money. Anytime you want to improve something, you can stand to benefit from observing those who have already done it. What are other wealthy people doing with their money? How are they working to increase their overall wealth? Keeping an eye on Wall Street in New York will give you a better idea of how markets are performing and where to invest as well.
Remember that wealth isn’t built overnight. You’ll need to work at it for several years, if not decades before you’re truly “wealthy”. For instance, some professionals spend years leveraging investments to build wealth with low risk. However, the profits they earn at the end make the wait worth it. Once you’ve obtained this coveted status, all of the hard work will have been worth it, and you can reflect with pride on a lifetime of careful planning and strategizing to secure your financial future.
Find The Right Advisor
Not everyone is great with money, or managing investment portfolios and other assets. Cue the services of a financial advisor. These helpful experts will not only help you manage your wealth but also advise you on how best to increase your overall net worth and build up your assets.
A financial advisor will usually charge a fee that is a percentage of the managed assets, but this money is well worth it. Advisors are certified financial experts, full of knowledge about the financial markets and how they operate, and how they’ll affect your personal portfolio. It never hurts to have an extra set of eyes in the right place. If needed, you can find financial advisors on Careful Cents.
Save As Often As Possible
Saving money helps to build your wealth by increasing your savings account value, 401k or IRA, and more. The more money you have set aside, the wealthier you’ll be overall. Plus, having an extra 10 or $20k lying around never hurt anyone; especially in the event of an emergency.
Most financial experts will advise you to save up about 3-6 months’ worth of expenses before you even think about trying to increase your wealth with investments. This emergency fund will help cover sudden costs due to accidents, family emergencies, lay-offs, etc.
Should you find yourself out of work, you’ll be struggling to pay your bills, and there’s no better way to reduce your wealth than to miss a few months’ mortgages or vehicle payments. Emergency funds are something that people of all financial standings should have available. Whether you’re living on a strict paycheck to paycheck budget or you’re generating millions in revenue each year, you need to find emergency funds.
Expenses are what keep you from saving the most amount of money you possibly can. Between rent/mortgage payments, car payments, insurance, and all of the other costs associated with a modern lifestyle, your bank account is probably leaking money left and right. This is why it’s important to not only shop around for better deals, but also to review your costs each month and determine what can be reduced or eliminated altogether.
Let’s say you have a $100/month gym membership that you don’t use. You’ve got workout equipment at home that you use, but you keep forgetting to cancel your membership. Every year, that membership is costing you $1,200. That’s $1,200 that could be put into savings, your IRA/401k, or straight into an investment of some kind. It’s time to cancel the membership and any other subscriptions that you don’t use any longer.
Cutting expenses can also mean refinancing certain loans at a better rate. You can refinance both mortgage and car loans, saving you quite a bit of money on the overall cost of the loan by lowering the APR and shortening (or lengthening) the term of the loan. It’s always a good idea to try to pay off any debt as early as possible. Some loans come with an early termination fee, but it’s nothing compared to the amount of interest you’ll pay over the life of the loan; especially with something like a mortgage.
Decrease Bad Debt
Bad debt comes in many forms; from credit cards to personal loans for goods, to vehicle loans. Yes, your car loan is considered bad debt, and here’s why: as soon as you drive the car off of the lot, the value begins to drop. Each year that passes after that, the value of that vehicle continues to drop. This is called a depreciating value. As the car’s value decreases, your loan amount stays the same; so you’re essentially paying for something that’s not even worth the cost of the loan.
This applies to credit card debt as well. Most of us spend credit card funds on material items, which also depreciate in value over their lifetime. Your new cell phone? Not worth nearly as much as when it was brand new in the package. That smart TV you bought on credit? It won’t be worth even half of what you paid in a few years. This type of “bad debt” only serves as a black mark on your credit and creates unnecessary costs for items that lose their value over time. Ditch the bad debt; pay off credit cards, and save up for items instead of trying to finance everything on your cards.