Get rich slow with these simple strategies
— and a little discipline.
What does wealth look like to you? Your
mental picture might be different than others. But for a lot of folks, wealth isn’t
an over-the-top ride or a mega-mansion. Rather, it’s the freedom from financial
burdens and the confidence that you can retire to an enjoyable and relatively worry-free
life. Fortunately, that outcome is achievable for many people with some planning
and a little discipline.
Save Now and Often
If you haven’t been saving regularly and
consistently, start right away. The mantra is “pay yourself first.” Make saving
for retirement a priority, and make it easy by having contributions to your 401(k)
automatically withdrawn from your paycheck. You can arrange this through your HR
Department. If you want to save additional funds, consider regular, automatic
transfers from your checking account to a savings account.
Take Advantage of Tax-Deferred Growth
You don’t pay taxes on money put into your
401(k), and it grows tax free until you withdraw it. This means you have more of
your money working for you year after year. Upon retirement, you’ll owe taxes, but
you’ll have a larger account balance to draw from due to the tax advantages you’ve
enjoyed over the years.
Don’t Leave Free Money on the Table
Many employers offer a matching contribution
for the retirement plans they sponsor. If yours is one of them. they’ll match all
or a percentage of your 401(k) contributions up to a certain amount. That’s free
money — and there’s no better deal anywhere in the world of retirement savings.
So don’t miss out!
Build Equity
Owning a home can be an important component
of wealth, and comprises about a third of the overall net worth for American families.
The industry rule of thumb is that you shouldn’t pay more than 28% of your
gross income for housing (loan principal, interest, taxes and insurance). So buy
a house if you want to be a homeowner — but not so much house that it cripples
your ability to add to your retirement savings and build wealth. It’s tempting to
think, “I’ll be making more money in five years, so this mortgage won’t be a problem.”
But when in doubt, underbuy rather than overbuy. As you pay down your mortgage,
you build valuable equity that you may be able to borrow against should you need
to in the future.
Keep Spending in Line
Live within your means. Don’t overbuy housing,
transportation, entertainment, clothing or anything else. The less you spend, the
more you can save. And the earlier you start to save, the more time that money can
grow. Do you really need that top-tier cable package? Can you use coupons at
the grocery store? Your grandparents were right when they said, “a penny saved is
a penny earned,” and those pennies can really add up.
Manage Debt
Some debt can be necessary and useful.
It can help you afford a home, transportation or a college degree. But don’t get
in over your head. Weigh the costs and benefits of a new car payment versus increasing 401(k)
contributions for a more secure retirement. A big warning sign is the need to use credit cards to pay
for everyday expenses. Carrying high-interest debt — like a hefty credit card balance
— can seriously undermine your ability to build wealth.
Insure to Be Sure
You don’t want to lose the wealth you’ve
built in the event of an emergency, so insure yourself and your assets. A full-line
insurance agent can help you choose appropriate plans for home, auto, life, disability
and long-term care. They may suggest that you purchase an umbrella policy that protects
you from legal liability as well.
Get Expert Advice
Especially when you get into more complex
areas of investing and tax planning, it’s prudent to seek out professional advice.
Financial advisors aren’t just for the already wealthy — they can help you get there.
Discuss your personal vision of wealth with your advisor and work with them to start
turning that vision into reality so one day, your future self can raise a glass
to toast your present-day prescience and persistence.
Sources:
http://www.mortgagenewsdaily.com/08282019_homeownership.asp
https://www.investopedia.com/articles/pf/05/030905.asp
