Ask anyone why they aren’t saving more of their money and they’ll be sure to come up with a number of the same old excuses. “I Don’t Make Enough Money to Save”, “Life’s Too Short to Live Like a Miser”, and so many others are all too common.
However, the truth is that learning how to properly manage your money is actually much easier than you might think. In fact, if you can take just a few important steps and master some key concepts, then you might be closer to reaching your financial goals than you think.
Here are 7 things that no one ever tells you about building your wealth that can make a huge impact on your life and well-being.
1- Time is Your Best Asset
A lot of people think that it takes money to make more money. But surprisingly, what you really need is something much more common: Time.
When you invest your money, thanks to the power of compounding returns, it can grow and multiply several times over. But the extent of how many times this can happen really depends on how much time your investments mature.
For example, suppose you’re a teenage kid working a summer job and you earn $2,000. You continue to do this all through high school and even college for the next 10 years. By the time you retire, you’ll have $20,000 right?
Wrong! If you invested that money using your Roth IRA, by the time you were 70 years old, that $20,000 would have grown to $1 million.
That’s the power that time can have when we invest. The sooner you start, the better off your chances are of building as much wealth as possible.
2- It Doesn’t Take Much to Get Started
Becoming a millionaire doesn’t mean you need to become some kind of stressed out day-trader or go around buying up random plots of real estate. To get started on the right path, you don’t have to look much further than your employer retirement plan such as the 401k.
Now more than ever, there are more 401k millionaires in America than there has been before. This is largely because workplace retirement plans offer such enticing incentives such as tax-sheltering your contributions and employer matching.
When bundled together, that can equal a ton of extra money that can be invested for years of compound growth and bigger returns.
3- A Little Bit Goes a Long Way
Building wealth isn’t all about hoarding your money or being stingy with every penny you earn. Surprisingly, you could make yourself rich by diligently saving much less than you might think.
For example, let’s say you saved an extra $50 per paycheck every two weeks into your 401k and invested it in a simple stock market index fund. If you kept that up for the next 30 years, how much extra money do you think you’d have?
The answer: An extra $213,842! Again, that’s just one more example of how the awesome power of compounding returns can be leveraged to build your fortune.
This is why it’s so important to realize how valuable the little sacrifices you make now can be. Small changes in your financial habits can be amplified into big achievements for your financial future. By cutting back on just a little bit of shopping or even a meal out at a restaurant here and there, you could be adding as much as an extra six figures on to your nest egg later on.
4- You’re Not Bound to One Paycheck
Are you sick of not making enough money at your job? Well, guess what – no one ever said you have to settle for just one stream of income.
These days, it’s easier than ever to get into the world of side hustles and make some money on the side. Speaking from experience, there are literally hundreds of different ways you can earn more money. Most of these side hustles can be done right from your laptop.
For example, you could make some extra cash:
- Deliver groceries
- Become a freelance writer or graphic artist
- Test websites
- Manage social media
- And so many others!
As long as you’re willing to put in the effort and hustle your skills, then there are lots of money-making opportunities waiting for you.
5- The Less You Need, The Sooner You’ll Get There
While you might think you need millions of dollars to be happy and retire successfully one day, there’s another road available that’s far less traveled. The road where less leads to more …
In his book “Early Retirement Extreme”, author and blogger Jacob Fisker was able to retire before the age of 30 on just $250,000 worth of savings. How was he able to do this? By cutting down his living expenses to approximately $10,000 per year.
People often forget that the job of your retirement nest egg is to produce enough money to cover your living expenses for the rest of your life. If you can recognize this correlation, then you can certainly take advantage of it. The more you can learn to live on less money, then the less you’ll require to reach financial freedom.
6- Your Best Investment is Yourself
Investing is always thought of as putting your money in the markets. But there’s something else you should be investing both your money and time into: Yourself.
You are your best investment when it comes to being able to build your wealth. The more you can learn about what steps to take and which ones to avoid, the better primed you’ll be to recognize these opportunities and start taking advantage of them as they come along.
This has long been my approach to making more money. With every tip I read about better money management, investing for the future, and how others achieved early retirement, I gain not just the knowledge of how they did it but the sense that it’s an attainable goal.
7- Anyone Can Do This
Perhaps my favorite part about each of these insights is that none of them are exclusive. Literally, anyone with ambition can take advantage of these tips and grow their financial position.
You don’t have to be gifted, exceptional, or even lucky to do amazing things with money. If there’s one thing I’ve learned from reading blog after blog on the internet, it’s that every day people can use these little-known secrets to make themselves richer than they’ve ever imagined.
It doesn’t take much to start participating in your 401k plan, stashing an extra $50 per paycheck, or even picking up a book or two from the library about investing. What’s important is that you actually do these things, develop the right habits, and don’t give up. Before long, you’ll be amazed at how far just a few small changes can go when it comes to living your best financial life.
Contributor’s opinions are their own. Always do your own due diligence before investing.
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