5 Tips for Building a Strong Financial Future Right Now
America has a serious problem when it comes to the way people handle their finances, or more accurately, how they mishandle them. Today, the average American holds $90,460 in debt, and this number is expected to climb.
Building a strong financial future protects your family, enables you to buy a house, and save for retirement. Making relatively simple changes to your life will put you ahead of the vast majority of your peers.
Here are the top money saving tips you can implement today to build a bright financial future.
- Go Debt Free
Debt is the biggest obstacle to most people’s financial success. You cannot make a profit until you start to eliminate your debt.
Everyone’s situation is different, but the key to going debt free starts with:
- Creating a household budget.
- Cutting your regular spending.
- Borrow less.
- Make a savings plan.
Until you go debt free, your current lifestyle is unsustainable.
The biggest step you can take is to start paying down high-interest debt and using those monthly savings to build up your bank balance. If you have especially large debts, you may want to seek professional help or opt for debt consolidation, forgiveness, or even bankruptcy.
- Start a Side Hustle
Most financial advisors will point to the way millionaires build up their wealth. The wealthiest 1% of Americans all have side hustles. Multiple streams of income not only allow you to increase your income but could help you to retire early.
If you want to become independently wealthy, you must start building up a side hustle now. It could involve starting your own business. For example, if you’re a professional graphic designer, why not start working for private clients during your free time?
Here are just some ideas for side hustles that people have utilized to make themselves wealthy:
- Becoming a freelancer.
- Investing in buy-to-rent real estate.
- Focusing on dividend stocks.
There are also platforms like MyPoints that allow you to earn a few extra dollars with nothing more than a few extra minutes to spare each day. Check out this review on MyPoints to find out more about how it all works.
Side hustles take a long time to build and require commitment, but it’s all about leveraging the skills you have to maximize your earnings.
- Create an Investing Portfolio
Investing your money is the easiest way to multiply your savings in the long term. It’s also the only way you’re going to obtain your desired retirement lifestyle.
You don’t need to be rich to build your investing portfolio. The value of compounding means that adding a few hundred dollars every month can turn you into a millionaire by the time you reach retirement age.
Did you know that if a 25-year-old invested $200 per month they would reach $393,700 by the age of 65 just by enjoying an average return of 6% per year?
Now imagine how much that could be if they started with a large nest egg or opted for an aggressive savings plan.
When it comes to investing for the future, here are our top recommendations for low-risk, reasonable-return investments:
- Blue-chip stocks
- Tracker funds
- ETFs
- Government bonds
Even today, the best investment strategy is a conservative one. Forget about risky, speculative investments promising massive returns, such as penny stocks and cryptocurrency. More conservative investors typically outperform day traders and people looking to “beat the market” in the long run.
- Plan for Taxes
Death and taxes are the only guarantees in life. But the IRS make it easy for you to potentially save thousands through tax credits and deductions. Unfortunately, many Americans are leaving thousands of dollars on the table when they file their taxes.
It’s one of the simplest ways to make money. Employ an accountant or use a platform like TurboTax to ensure you take every available tax credit and deduction.
Proactive tax planning can dramatically increase your annual savings rate.
- Start Right Now
Wondering whether to go all-in with your side hustle and leave the day job behind? Worried about credit card debt? Haven’t opened an investment account yet?
Perhaps the biggest flaw in the finances of most people is analysis paralysis. Time is the most valuable resource you have when building a financial future.
The best time to start increasing your wealth was yesterday. The second best time is today. The longer you spend trying to analyze your finances the more time you lose on actually turning your life around.
Final Thoughts
You don’t need to be an expert to build a solid financial future. If you haven’t earned any money because your income leaves your account within days of entering it, it’s time to make a change.
Strong financial habits are not about fads and trends. They’re about being willing to change your lifestyle and take the long view.
Start your journey to a stronger financial future today!