Where do you see yourself when you’ve retired? Are you traveling the world without a care? Or, are you worried that you won’t even have enough money to buy the grandkids an ice cream cone?
If you fall into the latter, you're not alone.
According to survey conducted by Wells Fargo, “Americans ages 60 or older reported having a median retirement savings of just $50,000.” While younger people are faring better, the fact is we’re not saving enough money to retire comfortably. This is causing people to work longer than expected, which isn’t always your decision. What happens if you aren’t physically or mentally able to work any longer? You may be in some serious trouble.
Instead of delaying your retirement savings or losing sleep that you don’t have enough money saved to retire, you can start building your personal wealth right now and in the right way so that you can retire whenever you want and start enjoying your life.
Sound too good too be true? It’s not if you follow these seven tips.
1. Don’t Spend Your Money Frivolously
Despite what you may think, millionaires aren’t aren’t “popping thousand dollar bottles of champagne, buying luxury cars or living in million dollar homes.” In fact, according to Tucker Schreiber, a majority of millionaires are actually frugal. For example, 50% of millionaires have never spent more than $399 on a suit.
2. Start Saving Early
As Cameron Huddleston says in The Huffington Post, “One of the best ways to retire rich is to start saving money as soon as you start earning it.” Huddleston adds, “Thanks to the power of compound interest, even small monthly contributions to a retirement account can grow over time to a sizable nest egg. The more time you have, the more your money will grow.”
3. Side Hustle
Even if you have a full-time position that pays you a decent salary, there plenty of ways for you to easily bring in an extra income on the side.
Some suggested side gigs would be freelancing, cashing in on your hobbies like photography, mowing lawns, becoming an Uber/Lyft driver, or volunteering for overtime at your full-time job.
4. Don’t Be Afraid to Take Risks
Ken Weber, president of Weber Asset Management and author of “Dear Investor, What the Hell Are You Doing?” tells Huddleston that “For most people, the key to investment success comes down to three words: Save, save, save.” However, placing your money into a savings isn’t going to increase your personal wealth.
Real-estate investor Frank McKinney adds on Shopify;
“If you exercise that muscle and you take a calculated risk and then see whether it pays off and then take another calculated risk and see whether it pays off, you start to trust your judgment better and your analysis of what you’re doing.”
Keep in mind though that when you do invest your hard-earned money that you also diversify your investments. If you put all of your money into a single stock and it plummets, then you’re probably going to lose more than you want to, and possibly everything.
5. Eliminate Unnecessary Expenses and Spending
Take the time to sit down one day and look at all of your bills and expenses. It may not be the most exciting task, but if you actually review how much money you’re spending per month you can start trimming the fat - which will ultimately lead to a nice little boost in your personal wealth.
Start with every recurring expense - like your phone, internet, gas, car insurance, subscriptions like Netflix, and credit card annual fees - and evaluate what can be cut out or lowered. For example, if you only watch one movie a month on Netflix is it really worth keeping? Also pay attention to the small expenses like ATM transaction fees, and having that quick pizza delivered.
After reviewing these bills and expenses, create a realistic monthly budget that you’ll be able to stick to. If you are one of those to whom the word, "budget" immediately makes sick, just becoming aware of the amount of money you have - the actual figure - and the amount that goes out will help you be more aware of your expenditures.
6. Make a Plan to Stay Out of Debt
Whether you’ve got a $2,000 credit card or $150,000 in student loans, you can’t start increasing your personal wealth until you’ve gotten yourself completely out of debt. While creating a monthly budget can prevent you from continuing to get further into debt, it may not help you solve how to get out of debt completely.
Beverly Harzog, a credit card expert and author of ‘The Debt Escape Plan' tells U.S. News & World Report that you can start this process by making specific goals. She even suggests that you develop goals for each decade of your life in order to keep you moving and committed to the plan. Harzog also suggests that you downsize. For example, you don’t have to stop drinking coffee. You just start grinding your own beans at home.
Other recommendations include;
- Being aware of your spending triggers (Do you buy new clothing when you are sad and eat out if you are too tired)?
- Consolidating your debt.
- Seeking help by using online budgeting services or speaking with a financial advisor.
Getting yourself out of debt may require discipline and delaying gratification, but once you’ve accomplished this feat, you can start enjoying the fruits of your labor.
7. Automate Your Wealth
Todd Tresidder, founder of FinancialMentor, says that the “easiest, least painful way to save your way to wealth is automatically.” He adds, “Arrange your finances so that every month certain actions take place that automatically grow your assets without any decisions or extra effort on your part.”
Some of his example include,
- If you own your home, coincide the mortgage payoff date with your retirement date.
- You can own multiple homes and rent them out.
- Maximize your contributions to your tax-deferred retirement plans so this is taken out of your paycheck before you even notice that it’s gone.
- Automatically place a percentage of your paycheck into a savings account.
- Join an investment club.
He also recommends that you subscribe to an educational investment newsletter so that you educate yourself on the best ways to “grow your financial intelligence.”