7 strategies for wealth building
As a financial advisor, one of the most important parts of my job is helping clients maximize their savings and build their wealth. It’s a job that I take seriously, and it doesn’t always require complex strategies.
My role is to help clients invest intelligently and to help them find new places to save so we can put more of their hard-earned money away for retirement. Here’s a list of smart strategies you can use on your own for wealth building.
1. Save on your transportation
Who doesn’t love a new car? What you won’t love is how fast that car will depreciate. According to Trusted Choice, new cars depreciate an average of 11 percent as soon as you drive them off the lot. If you’re buying a brand new car that costs $25,000, that means you’re losing an average $2,750 as soon as you drive your car home. Save your money and buy a certified pre-owned car for a fraction of the price.
2. Take a few days before making a big purchase
Impulse is your worst enemy when it comes to money. Whether it’s buying a fun new toy, a new television or a vacation package, take a few days to mull it over before you spend the big bucks. Putting that $800 into an investment account may get you much better return that the fancy TV you’re looking at online.
3. Live well within your means
Simply put, don’t take out huge loans or hold on to debt. The sooner you can step away from big loan payments, the sooner you can put that hard-earned money into your investments. Making a few compromises on your lifestyle now means you won’t have to later in life.
4. Max out your investment accounts
In 2018, you can put away up to $18,500 into your 401k, and if you’re over 55, you can take advantage of the catch up provision by adding an extra $6,000. While it may seem like your paycheck is taking a hit in the short term, you’ll thank yourself later when you’re living a happy, comfortable retirement thanks to those extra investments.
5. Pay yourself first using direct deposit
When it comes to your savings account and your retirement accounts, pay yourself before you pay the bills. If you make those transfers before you look at your income for the rest of your pay period, you’re more likely to stick to your budget than if you wait to put away whatever’s left at the end of the month.
6. Get a side job
Whether it’s consulting, contracting, selling handmade goods or finding a part time job, creating multiple streams of income can be a great way to build your wealth and stash away bigger portions of your paychecks. You won’t feel like you’re pinching pennies to save, but you’ll still see healthy bump in your savings and investment accounts.
7. Get the most of out of your financial advisor
If you’re working with an advisor, make sure he or she is held to the fiduciary standard. That means advisors are mandated by law to be working in your best interest. By working with an advisor held to the fiduciary standard, you can be confident that he or she will try to help you build your wealth for the long road ahead.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Investing involves risk, including loss of principal.
Jim Sandager, MBA, CFP®, Senior Vice President-Financial Advisor at Wealth Enhancement Group® and co-host of “Your Money” on News Radio 1040 WHO on Sunday mornings.