A common excuse for not saving enough is that there simply isn’t enough to go around. However, the tried-and-true strategies for building wealth do not involve a lot of money. Rather they focus instead on the little things that nearly everyone can do if one puts forth the effort to make it happen. In order to ensure your future financial house is in order and that you can retire more than comfortably, here are the 6 most common strategies for building wealth that everyday people can incorporate into their existing financial practices that can lead to a very comfortable and potentially wealthy future.
Photo by Jeff Belmonte via Flickr
A very simple rule to live by yet many fail to make this a priority in their financial strategies. This is first and foremost one of the easiest ways to bulk up your savings. Experts recommend saving at least 10% of your income regularly.
For example, if your paycheck is $600 paycheck, you deposit $60 into your savings account. Depending on your budget and regular living expenses, you should aim to deposit more but commit to at least 10% of your earnings at the start. $60 x 26 weeks = $1,560 of automatic savings in a year’s time that can then be invested into other investment vehicles.
Your budget should clearly outline where you are spending every cent. If you are unable to meet your 10% commitment or wish to save more, start with your budget. Find any expenses you can slash, even if it is just temporarily (think dinners out, expensive trips, coffee on the go, extra cable packages, etc.), and put the money saved into your savings account. Be creative in your budgeting practices and teach yourself new ways to save.
Once you have a decent amount of your savings available, it is time to start making your money work for you. Start research investments where you can generate additional growth and income for your future. Stocks, bonds, and real estate are just a few of your options. Consider meeting with a qualified financial advisor to discuss a plan for your investments if you are not familiar with the investment world. Your goal is to have a diversified portfolio of investments so you are not putting all your nest eggs into one basket. You need to protect yourself from loss and balance your investment risks. Investing does involve some trial and error but err on the side of caution and get caught up to speed on the investment basics before committing your hard-saved cash.
Owning your own house in its entirety is one important aspect of financial stability. If you do not already own, start taking the steps to get a mortgage and find a home you can reasonably afford. The total housing cost of your home should be less than 33% of your income for all related expenses including the mortgage note. The home you purchase should be for the sole purpose of residing there, not as a rental or a ‘flip’ situation. Make the commitment to paying off an existing loan note as soon as possible by adding more money to your monthly loan payment than is required to reduce the principle. The sooner you own it free and clear, the better off you will be financially.
If you are ‘getting by’ now it means that your future retirement years may be even more difficult. It is imperative you start saving and planning for your life in the future now. Ideally, it is best to start saving while you are still young but there is never a bad time to start tucking away cash for retirement and maximizing your use of the important resources for the future including 401k accounts, life insurance, and other savings vehicles.
The one resource you have for building a stable financial future is the experience and skills you possess for generating money. If you are secure in your employment and your salary affords you the ability to meet the strategy goals above, continue working hard and exceeding the expectations of your current employer. Seek promotions and salary increases from within. If you are not financially capable to build your wealth at your present job, you can start by asking for a pay increase if you have proof of your contributions on the job. Otherwise, never deny yourself the opportunity to look for advancement elsewhere. You may want to invest your time in learning a new trade, a new skill, or earning a higher education degree that will afford you the opportunity of a better, more stable pay in future years. Not only will you benefit financially from these changes, your will also likely appreciate the challenge and the fulfillment you feel professionally and personally.