Do an internet search on how to become wealthy, and you’ll get hundreds of millions of results that would take a lifetime to read. These well-meaning authors provide many kinds of advice, but for people who don’t have time to read through dozens of articles, here’s the CliffsNotes version: Earn more. Spend less.
That might not be the profound financial secret you were hoping for, but it’s the foundation that all other wealth-building advice is built upon. And it works. Here are a few strategies you can use to start tipping the scales in your favor today.
Earn More: Invest Your Money
Investing your money is arguably the best way to grow your long-term mutual funds because there are good odds that your investment earnings will outpace inflation and taxes — something that most high-yield savings accounts can’t do.
Meeting with a professional financial advisor will be key in talking about your long term wealth building goals and make sure that they are explaining things in detail and have the heart of a teacher if you are going to trust them with your retirement savings.
Don’t try to time the market. You’ll probably lose money that way. Practice dollar-cost averaging by investing a set dollar amount according to a regular schedule.
Spend Less: Create A Budget
A budget enables you to track where your money is going and better plan for your long-term financial goals. Make a list of all your monthly expenses and subtract this from your monthly income. Then, decide what you’re going to do with the rest. You should be putting about 15% of your Gross Income into retirmement if you aren’t paying off consumer debt. If you have student loans, credit card, or other types of debt (besides your mortgage), get rid of that before you start saving for retirement.
Stick to your plan once you’ve made one. Use a budgeting app if that helps you or create a spreadsheet on your own. You can set up automatic deposits to savings and automatic bill pay if that makes things easier for you. Check in with yourself once per month to see how well you did and whether you need to make any changes to your budget.
Earn More: Push Yourself In Your Career
Many workers see substantial wage growth throughout their 20s and even into their 30s, but a recent PayScale study shows that wages begin to stagnate for women in their early 40s and for men in their early 50s. But you don’t have to let this happen to you.
Work overtime here and there if you’re paid hourly or pursue promotions in your current job. Switch employers if you feel you’re not getting paid as much as you should be or switch fields altogether. Never stop educating yourself, especially if you’re in a fast-changing field like information technology. Learning new skills will make you a more valuable employee and will increase your odds of promotion.
Spend Less: Stop Wasting Money On Things You Don’t Use Or Need
Look over your budget for areas where you can cut back. This might include dining out less, making your coffee at home instead of buying it at a coffee shop, or canceling cable or other subscriptions you don’t use.
It’s OK to spend money on your wants from time to time, but wait a day or two before you go through with the purchase to avoid impulse spending. Another good strategy is to think about cost in terms of hours of work. If you want to buy a $100 item and you earn $20 per hour, ask yourself if it’s worth five hours of work before you buy it. Set a monthly discretionary spending limit when you create your budget and don’t allow yourself to exceed it.
Earn More: Start A Side Hustle
It’s never been easier to start your own business. The internet can connect you with people in your area or around the globe who are interested in what you can offer, whether that’s handmade items, a ride across town, or help fixing a broken computer. Side hustles don’t have to require a lot of work from you either. If you have an extra room or property, you could rent that out each month for some easy cash.
Don’t forget about taxes, though. Side hustles don’t have regular paychecks the government can take money out of, so you must set aside these funds on your own. If you had a side hustle last year, your tax return should tell you how much you must pay quarterly to avoid penalties. Otherwise, you can use this worksheet to estimate how much you’ll owe.
Spend Less: Pay Off Credit Card Debt & Other Debt
Credit card debt is expensive and crippling. You don’t earn rewards on money you pay in interest, so you’re basically just flushing those dollars down the toilet. Whenever you get any extra money like a year-end bonus or a tax refund, put that toward your debt first.
The above tips might not help you get rich quick, but they can help you get there eventually if you stick with them. Try incorporating a few of them (if you haven’t already) so that you can see what kind of a difference they can make for you.