According to a report by MarketWatch, 44% of Americans don’t have enough cash to cover a $400 emergency.1 Additionally, 38% of U.S. households have credit card debt and most of them only pay the minimum interest rate.
These numbers provide an indication of the financial literacy of the nation. Making more money doesn’t necessarily mean saving more money. In many cases, it means spending more, accumulating debt, and ending up without any savings.
Curious to learn how to build wealth? Keep reading to discover some beneficial tips for managing your spending, and controlling your finances.
Budgeting and Saving
Saving money is a skill, no matter your income. There are people with modest salaries with more money saved than people with above-average income. A key to saving is budgeting and knowing where every penny goes.
Aside from saving a percentage of your income, think about the things you buy daily or weekly. Magazine subscriptions, membership sites, recurring payments, and impulse purchases can affect your budget if you don’t manage them well.
One of the easiest ways to build wealth is to invest with a strategy based on your individual goals. If you’re not financially savvy, you may need to hire a personal financial professional who can help you understand investing and finding the best opportunities for you.
Whether you’re investing in your education, your or someone else’s business, property, or your Roth IRA, the goal is to see a bigger return long-term of the money you put in.
Automate Your Finances
The best advice you may ever get from top wealth management firms is to automate your finances. There are many apps and systems on the market that can divert a percentage of your money into your savings account, retirement fund, credit card bill, rent or mortgage, utilities, and any other expenses.
This way, your money can take care of your most important things so you can focus on living a more confident life.
Make Money Work For You
The wealthiest people in the world know that an essential key to building wealth is to make money work for you, not the other way around. Having your money work for you enables you to save more, can help you pay off debt sooner, and can provide additional investment opportunities.
You may want to consider building a business (LINK: https://daytonandsydney.com/preparing-your-business-for-the-next-market-downturn/)or perhaps investing for additional passive income streams.
Look Into Your Spending Habits
One of the first steps to building sustainable wealth is looking into your spending habits. No matter what your current income is, you should be able to cut or eliminate some expenses in favor of your bank account.
For example, buying a $5 latte each morning, eating out 5 days a week, and online shopping are spending leaks you can work on. Try making your own coffee and lunch at home, shop smart by buying high-quality items and spend money on experience2 rather than things.
Now You Know How To Build Wealth And Work Toward Financial Freedom!
Whether you’re a complete beginner in personal finances or you’re experienced in saving and budgeting, these tips can help you understand finances better and make smarter choices for your future.
Now that you know how to build wealth, it’s time to put it to good use. In this article, we break down 20 ways to leave your 20s behind and live your life to the fullest!
1 “Nearly half don’t have the cash to pay for a $400 emergency, Fed survey finds”, Steve Goldstein D.C. Bureau Chief Market Watch, May 19, 2017
2 “7 Reasons Why Spending Money on Experiences Makes Us Happier Than Buying Stuff”, John Rampton Entrepreneur, May 15, 2017
This article was originally approved in 2019 and certain information presented may have changed. For more current information please contact a financial professional with Dayton & Sydney.)