Approximately 62% of the American population has less than $1000.00 in savings. That harrowing statistic gives insight into the dire financial need so many of us experience in our daily lives.
There are a variety of reasons a person may find themselves financially strapped in adulthood.
Perhaps they’ve experienced a traumatic event that required medical payments. Maybe they were the victim of discrimination in the workplace. Maybe they just never received an adequate financial education.
Expanding on that last point, knowing how to make money and build wealth is not something that’s innate in people. It’s something that’s taught.
For those of you struggling to meet your financial goals, our team has put together this list of ten tips to help you on your way to financial freedom.
1. Limit Impulse Purchases
Impulse purchases are one of the primary things that keep people from investing in their long-term wealth. Buying a snack while out, splurging on a big brand product when an off-brand is just as effective, etc.
To help limit these activities, question your purchases. If you can justify to yourself why you need something you’re buying, go ahead and make the purchase.
If your justification is because you want to treat yourself, you should be passing on that purchase more often than not.
2. Don’t Over-Extend Your Housing Expenses
Housing is perhaps the biggest expense most Americans pay for each month. Your ability to pick housing that meets your needs and does not exceed them will have massive implications on your ability to build wealth.
As a general rule, many financial planners ask that you don’t spend more than 25% – 30% of your monthly income on housing expenses. Do your best to fall within or below that range when possible.
3. Cut Down on Transportation Costs
Are you paying an arm and a leg for your car between its monthly payments, insurance, gas, and maintenance?
Why don’t you ditch that money-suck?
Many will find their work offers carpooling, there’s an excellent bus route that connects them to their obligations, and calling a ride-sharing service for the occasional night out collectively costs less than managing their own vehicle.
If owning a vehicle is a must, always try to go with whichever vehicle will meet your needs at the lowest possible price.
4. Fight for Your Worth
There’s no better way to save more money than to make more money. To that end, always be on the lookout for new work opportunities that could provide you with more income.
Every year you’re employed, learning, and growing, your market worth as an employee goes up. If your employer isn’t acknowledging that in the way of regular raises, bring it to their attention.
Otherwise, stay on the lookout for greener employment pastures.
5. Get Educated
People who have degrees make significantly more than those that don’t over the course of their lifetime. If you’re getting by with no education outside of a high school degree, you could be leaving a lot of money on the table.
Our recommendation is to go back to school and get at least an Associate’s degree to command your worth. You can do this after work in the evening if scheduling is a problem.
6. Make Sure You’re Maximizing Your Retirement Contributions
If your employer has retirement matching for your 401K, you need to be contributing to maximize their contribution. Otherwise, you’re losing a lot of money.
If you’re not eligible for a 401K, look into IRAs or Roth IRAs. Both can net you significant compound interest between now and when you retire.
Retirement investing can be tricky, so you may want to try working with a financial planner at a place like SurePath Wealth Management.
7. Surround Yourself with Money Conscious People
If your friends are financially savvy, it will rub off on you. The same goes for if they’re impulsive spenders.
If you want to be successful with your finances, pick the brains of the people you want to be like. Many communities offer finance clubs or classes through community colleges.
If that fails, consider getting involved with online communities. Remember, a single idea can turn into a positive financial habit that can net you thousands over the course of your life.
8. Eliminate Debt
Interest accruing debt is a huge hurdle to your building the life you want. While some debt is relatively unavoidable such as a mortgage, you’ll want to make sure small debts with high interest are eliminated now.
This includes anything stemming from credit cards or short-term loans.
If you can’t pay down your high-interest debt right way, at least consider refinancing your debt with an institution that has better terms. A single percentage drop in interest can mean big savings.
9. Avoid Fees Like the Plague
Late fees on bills, fees on credit cards, parking tickets, etc. It all adds up and it’s all avoidable.
Go out of your way to make sure you’re never spending money you don’t need to spend by planning ahead. Automate your bill payments and never knowingly violate rules that could be costly. This way, you’ll save a lot on little expenses that can add up to something big at the end of the year.
10. Force Yourself to Save
Saving can be difficult but it’s essential to building wealth. Look at the next ten years of your life, do you have the money you need for the events that are coming up?
Getting married? Having kids? Buying a home?
If you want those things and don’t have the money, do you currently have a plan to get the money?
Planning ahead can save you from incurring excessive debt and spending much more than what’s necessary. So, pre-allocate a percentage of every paycheck and be sure you’re investing it into savings accounts that are reserved for the big events coming up in your life!
Wrapping Up Tips on How to Build Wealth
If you’re wondering how to build wealth, you’re already asking the kinds of questions you need in order to get to where you want to go.
For starters, we recommend practicing the tips listed above. As you master them, keep on building your financial knowledge and making good decisions with your money.
You’ll find that the small financial health adjustments you make today can equal massive wealth building for tomorrow.
Looking to extend your financial knowledge now? Consider checking out more of our blog content on the subject.
Whatever you do, never stop working towards building yourself a secure financial future!