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Want To Get Rich? Do These 5 Things Right Now

sticky notes with dollar signs and make money textMost of us believe that we need to get rich before we find financial happiness. At a certain level, this is true. You need money in order to meet your most basic needs. That is just how our consumerist society operates. To get products that will make our life comfortable, we need to pay for it. Because of that, you know that money will be a constant part of your success.

In fact, USNews.com discussed how 4 out of 10 Americans planned to manage their money better in 2015. This was based on a survey done by Allianz Life back in November 2014. Among the things that people would like to do is to pay off their credit card debt and increase their retirement and emergency funds. Their financial welfare is important to them.

5 acts you cannot delay if you want to gain wealth

If you want to get rich, you need to start working on it right now. Delaying your plans will not do you any good. The longer you wait, the more money is lost to you. So to keep that from happening, here are 5 tasks that you need to take care of right away.

Know what you want to happen.

The best way to do this is to come up with a financial plan. According to the data from IQuantifi.com, only 20% of Millennials have plans to help them reach their financial goals. 7 out of 10 create goals – but very few has an actual plan to make them happen. If you want to achieve something, it is very important that you set up a plan to get there. Start by thinking about asking yourself what would it take to consider yourself rich? Will it be based on an amount or a standard of living? Once you have identified that, you can continue to map out how you intend to get there. Will you set aside a specific amount each month to reach your goal? What tasks should you accomplish and when should they be completed? These are some of the questions that you need to answer in order to create a financial plan that will help you get rich.

Find your strengths.

The next task that you need to do is to look for your strengths. You need to find something that you can capitalize on. It may be a skill that you have or even an asset that you own. You want to use something that you are good at because it will increase the chances that you will excel in what you are capitalizing on. Obviously, you want to invest your money on something that you can profit from. So play to your strengths so it is a sure win for you. If it is a hobby that you can turn into a part time business, then you can really benefit from that added income.

Identify your tools.

The other task that you can start doing is to identify the tools that you can work with. If you have a savings account, you can use that to invest and start benefiting from compound interest. You can even look around your house. Do you have a spare room that you can rent out so you can earn more money? Or maybe you can turn your garage or basement and have it leased? Any income that you can make on the side can give you that extra money that you can use to invest.

Calculate how much you can invest.

Believe it or not, investing is one of the effective ways that you can gain financial independence. If you want to get rich, you need to think about compound interest. Take note that it is alright if you have to start small. That will grow in time. A lot of people put off investing because they think that they do not have enough money to start with. Well here’s the truth – you do not need a lot of money. As long as you can meet the minimum amount that is required to open an account in either a mutual fund company or any brokerage firm, you can start investing. Some accounts only require $100 to start with. Even if you earn the minimum wage, surely you can save this amount to start investing. When your initial investment starts earning, you can invest that profit again – thus increasing the money that you have in your account.

Put your debts under control.

Lastly, you want to work on putting your debts under control. This may not be something that you can accomplish overnight but it is important that you start doing something about it today. The money that you pay for the interest of your loan is wasted. Instead of using it to get rich, you are giving it to your creditors to make them rich. The interest in your debt is usually bigger than that of your savings. That means you can save a lot more by putting your extra money towards your debt payments. Once you have gotten rid of your debt, you can free up more money to invest.

Take note that most of the tasks that you will be working on right now is in preparation for the investments that you will make. To get rich, you need to learn how to invest. This is the most proactive way that you can grow your money – at least big enough that you can consider yourself wealthy.

How to keep your financial success from running dry

Take note that getting rich is not just about having a lot of money. Arriving at your target amount is not enough. You need to learn how to manage the money that you just amassed. That is very important. If you fail to learn how to do this, you can use up your wealth pretty fast and end up back where you started.

The sad truth is, people often fail to keep themselves rich because they do not know how to handle their finances. Believe it or not, there are Americans earning $75,000 a year and still end up living from paycheck to paycheck. This is according to the article published on CNN.com. Do you know what was revealed as one of the reasons why those earning a lot still live from paycheck to paycheck? It was because they were eating out too much! Households also admit that they spend a lot on lifestyle purchases. These are purchases that they can live without. If they choose not to spend on these, they can save a huge amount from their budget.

If you come to think of it, getting rich depends on the type of lifestyle that you choose to live. Here are a couple of tips that will help you keep your money after you get rich.

  • Be careful in upgrading your lifestyle. If you lived for years without a luxury car, you can certainly live the next few years without one. Do not upgrade your lifestyle if it is just to show off how much you have. It is okay to reward yourself and make your life more comfortable. But if you can find another use for your money, then just opt to save it instead of spending it.
  • Keep using a budget plan. Regardless of how much money you are worth, budgeting will always be a financial activity that you need to do. This will help you understand how much money is coming in and how much you can afford to spend each month. It will give you an idea on how you should use your money.
  • Use debt wisely. It is understandable that you will need to use credit every now and then. If you have to buy a house or something expensive, using credit can be acceptable. Just make sure that this is a debt that will put more money into your pocket – instead of just robbing you because of the high interest rate.
  • Monitor your credit. Another task that you need to work on is credit monitoring. Even if you are making all the right financial choices, if you fail to notice that you are a victim of identity theft, you could end up in a bad debt situation. To guard your accounts from identity theft, you need to constantly check your credit report.

These are only some of the things that you need to do in order to keep your money after you get rich. Of course, part of that is to never stop pursuing more wealth – at least, to a point where you are not too greedy. You need to learn how to enjoy your money too. Just make sure it is done in moderation. Here is a video from CBS Boston that features Tom Corley, the author of Rich Habits – a book he wrote after observing the habits of real life wealthy people. Get some tips by watching this video.

How To Manage Your Finances If You Are Financially Supporting A Loved One

elderly couple with family in the backgroundLearning how to manage your finances is sometimes, not just for your own benefit. It is also for others who are depending on you.

As a family, we usually try to be there for each other. We try to be there for emotional and moral support, physical assistance, and even financial help. It is nice to know that when you are in deep trouble, you can count on your family to bail you out or at the very least, give you that little push towards the right direction.

It seems that relying on our loved ones became more popular after the Great Recession. Take for instance the new graduates. In the past, young adults who graduated would move out of their parents and live on their own. They will pursue their own life and take care of their own needs. In recent years, this practice is steadily decreasing. While it is not done by the majority, a lot of Millennials are moving back in with their parents. According to the data gathered by PEWSocialTrends.org, the rate of young adults living with their parents is up to 26% in 2015 – a 2% increase since 2010. The age bracket of this group is currently 18 to 34 years old. Only 67% of them are living independently – a 2% decrease since 2010.

You may think that these young adults are moving back in because they have failed at financial management. That may seem like the case but a new study shows that it is not entirely true. At least, not anymore. Apparently, some of these young adults are actually at home because they have opted to financially support their aging parents.

Dealing with the financial issues when you are providing financial support

A recent study released by TC Ameritrade revealed that more Americans are supporting their loved ones than before. For some, they support their aging parents. Others support their adult children. There are also others who are supporting both.

Now when you intend to financially support someone else, you need to learn how to manage your finances so you can take care of both of your needs. It is not something to be taken lightly. Even if your financial resources are going well, you need to keep yourself from splurging. Instead, you have to ensure that you will prepare for the times when your resources become limited. In case something happens to your finances, you will not be the only one that will be affected. Even the loved one depending on you financially will also suffer the consequences.

According to the study published on AMTD.com, one out of 5 Americans serve as financial supporters of a loved one. On an average, they spend $12,000 in the past 12 months. Surprisingly, Millennials have spent more – averaging at $18,000 in the past 12 months. It is revealed that in most cases, mothers receive the most financial support from their children. These financial supporters also take on the burden, usually, because they were asked to. Based on the survey done, these supporters are happy with what they are doing. But when it comes to choosing between an aging parent or an adult child, most of them would choose to support their parents and leave their adult children to financially fend for themselves.

Of course, you know that helping out financially has its limits. This is why you need to manage your finances well because if not, you will be forced to make some sacrifices that can cost you a secure future. While your intentions are noble, you do not want to become a burden yourself when you retire. The respondents admitted that they had to make the following sacrifices:

  • Delaying life milestones. Since they have to put their extra money into helping their loved one, a lot of the financial supporters delayed major milestones. These milestones included buying a home, retirement, getting married and having kids.
  • Borrowing more money. Because the financial load is greater, some of the financial supporters end up owing a lot of debt. The average debt that they owe amount to $100,000 – including mortgage. In terms of credit card debt, they owe an average of $22,000.
  • Living a frugal lifestyle. Another sacrifice – that may or may not be one, is to live a frugal lifestyle. If you have the right perspective, you can actually look at this as a blessing in disguise. There are many advantages to living frugally and you may be able to learn a lot as you are forced into this lifestyle.
  • Using up their savings. The last sacrifice that they admitted to making is to use up the savings that they have put aside all this time. It is bad enough that they cannot save for their future. Having to dry up their existing savings is a really great sacrifice to make.

To avoid these sacrifices from ruining your future, you may want to manage your finances well so you can maximize what limited resources you have.

Financial management practices to help you support a loved one financially

There are couple of things that you can do in order to help in your money management efforts. That way, you can continue to help your loved one without making it too hard for your finances to carry. Here are some tips you should implement.

  • Use a budget plan. This is always a big help regardless of your financial situation. This plan will help you understand your income and expenses. It will give you more control so you can decide what your financial priorities are and you can ensure that they will always be met.
  • Track your spending. Another tip that you need to implement is to track your spending. This should be an easy task if you have a budget plan. This will help make you a smart spender because you are more cautious of what you are spending on each month. You can cut back on the expenses that you think is unnecessary.
  • Lower expenses. Once you have tracked your spending, you should be able to identify those that you can live without. There are various ways to slash your expenses so you leave more room in your budget for the unexpected expenses.
  • Plan for your future. Although your finances are tied up at the moment, that does not mean you should stop planning from your future. If anything, this is the right time for you to do that. You need to manage your finances not just for the present expenses, but for your future too. If you think that it is hard to financially support someone, you do not want to be on the other end when you retire. After all, you cannot be sure that someone would be selfless enough to make the same sacrifices that you are doing right now.
  • Save up for retirement. As you plan for your future, the most important task that you need to do is to save for your retirement. There are a lot of retirement plans out there that you can tap into. Choose a plan that your budget can afford.
  • Research benefits you can get as a financial supporter. When you are supporting other people, you need to research certain benefits that you can avail because of that financial responsibility. You can look into Medicare and Medicaid to see if you can get health assistance. You can also visit sites like ElderCare.gov to find out where you can get help.

These should help you manage your finances so you can create a more secure financial position for yourself and those relying on you.

Want Better Money Management Skills? Write Everything Down

top view of calculator, money, notebook and writing handIf you want to implement proper money management skills, you need to start by writing everything down.

Financial management is important if you want to improve your personal finances. It encourages you to be organized and to be in control of your monetary transactions. When you practice proper management of your money, you get to make better decisions. You are more aware of your finances and that gives you an idea about how every decision will affect your financial position.

Some people are hesitant to implement financial management because they feel like it is too much work. The truth is, it will be hard at first. After all, you may have to change a lot of habits along the way. But as you keep on practicing them, you will realize that it gets easier. You just have to start the change.

How can you improve your financial management skills

One of the reasons why you need to implement money management skills is to keep yourself from wasting money on unnecessary expenses. An article published on BusinessInsider.com discussed a tip given by David Bach, a known financial adviser. The author of “Smart Couples Finish Rich” calls the money wasting habit as the “Latte Factor”. Apparently, we cannot avoid passing up on those little expenses because we are not aware of their real weight in our finances. What we do not realize is that the little things add up. He advised that to get rid of this, we need to go through a 7-day financial challenge wherein you will track your spending.

He only gave two simple steps – write down everything and to be honest about it. Bach said that by doing so, you can identify the areas that you are wasting your money on. After identifying them, you can decide how you can take your financial situation to the next level. That is how you can begin improving your money management skills.

Inspired by this method, we have come up with 6-steps that you can follow to help you get started in revolutionizing your financial habits.

  1. Spend as usual for the next 7 days. This is very important. Do not try to change your habits just yet. If you do, you might not be able to identify what is wrong with your current habits. Just be honest with what you want to spend on and do not rein in just yet. That will happen in good time – just not now.
  2. Write everything down. For the next 7 days, carry a small notebook around and write down every expense that you make. Do not leave anything out. You can also use an app on your smartphone if you do not want to carry around a notebook. Note every penny that you are spending on even if it seems embarrassing to record what you have just bought. This is where your honesty will kick in. Do not shield yourself from the reality of how you spend. This is how you can correct the wrong habits – if there are any.
  3. Analyze what you have spent on the 8th day. This is when you will be forced to face the reality of your spending behavior. Take careful note of what you spend in the morning, afternoon and evening. Tally the expenses that you think are necessary and those that are not. Separate the food costs, transportation and other expenses that you think can be categorized. Once you have done this, you can proceed to the next step.
  4. Discuss your expenses with someone. Sometimes, we are blinded by our wants that we tend to justify even the wrong expenses that we make. This is why it is beneficial to have someone else look at your expenses to tell you what they think is wrong with it. You can talk to a trusted friend or a mentor. Not only will this help identify the errors that you are trying to justify, it will also give you a sense of accountability. You will try to succeed because someone knows about what you are trying to do. You can even use your friend or mentor as your support system to help you through the difficult phase of changing your money management skills.
  5. See what expenses you can eliminate. Getting someone else’s opinion will give you an idea what you may be missing from your expenses. It should now be easy to identify the expenses that you can stop spending on – no matter how difficult it may be. Check out the total amount that you spend on the unnecessary expenses and you will realize just how much you are wasting each week. If you divide that by 4, you will have an idea how much you are wasting each month. Multiply that by 12 and you will see how big of an amount you waste each year. That should be an eye opener for you. Once you make this realization, it should be easier for you to identify the expenses that you can eliminate.
  6. Put the freed money to good use. Whatever expense you eliminate can be put into good use in your budget. As long as you can discipline yourself in your spending, you can be assured to have this amount in your pocket. You can either save the freed amount or you can use it to pay off your debts. The choice is yours. In an article published on USNews.com, Jeanette Pavini, a savings expert from Coupon.com said that to be financially successful, you need to spend less and start saving more. She mentioned that it does not mean you will live miserably. She said that you simply have to put aside even a small amount – it will all add up.

Signs you are a great manager of your money

The road to improve your money management skills will not happen overnight. It will take some time so be patient about it. If you make a mistake, forgive yourself and move on. After that, you need to promise yourself that you will not make the same mistake again.

While there are signs that you have bad financial management skills, there are signs that you are actually good at them. Here are the signs that you have improved your money management skills.

  • You can stick to your plans. FInancial management is all about discipline and self control. It is not enough that you can create a plan. What is more important is sticking to that plan and following it no matter what. If you can see that this is a habit that you have mastered, then you have improved as a manager of your own finances.
  • You do not feel stressed about your money. A survey done by the American Psychological Association and published on APA.org revealed that the leading cause of stress is money. It is something that plagues people regardless of how much they are earning. This stress is said to have a negative effect on the health and well-being of individuals. When you know how to manage your money wisely, you do not have to stress about your finances. Stress is something that you feel when you know that you do not have control over your finances. But since money management teaches you to be in full control of your money, then stress will not have any room in your life. Or at least, there will be less of it.
  • You educate yourself. Being a good money manager means you have to know how to take care of your money. That means updating yourself about how you can best manage your finances. You are not content on what you currently know. You are always seeking to update your methods to find out if there is more that you can do about it.
  • You make savings automatic. Another sign that you are good at money management is when you can make saving automatic. Some people think about what they can buy or enjoy today every time they put aside money. This practice makes saving painful. When you are a good money manager, you know how savings can improve your life. That makes saving a lot easier to handle.

You see, money management does not only help you get your personal finances under control. It has the power to improve your overall way of living. There is no way that you can lose financially as long as you can manage it well. Even if you make a mistake, it becomes easier to bounce back from it.

Best Practices After Debt Relief

debt relief signDebt relief is a necessary step towards debt freedom. Of course, that is easier said than done. Although you are earning a lot of money, you cannot just dump all of that towards your debt payments. You have a lot of expenses to think about too. This is why a lot of consumers take forever to finally get rid of their credit obligations.

Depending on the amount that they owe, it takes them years and even decades to say goodbye to debt. For some, being free from debt will never be a reality. Even before they can completely pay off what they owe, some consumers continue to borrow more money. Some do it by choice, while others are forced into it. Those who are forced into it wait for a miracle to help them achieve debt relief. But miracles, when it comes to finances, are hard to come by right?

Not for the 350,000 students that will be granted debt relief by the US Secretary of Education. According to the news published on Gizmodo.com, more than $3.5 billion worth of student loans will be forgiven by the government. It is believed that the borrowers of these loans were victims of fraud. They were forced into taking huge student loans by the online schools owned by Corinthian Colleges. This for-profit college closed and filed for bankruptcy – in the midst of fraud charges. The Education Department will forgive a lot of federal loans owed by these students because of their enrollment to the schools of this college company.

We cannot really say that it was divine intervention that caused the forgiveness of this debt but one thing’s for sure, a lot of students will be feeling debt relief because of this event. It is great that these students were kept from financial demise caused by a loan that would apparently – do them no good.

Not everyone is as lucky as they are but this loan forgiveness is not the end of everything. If you want the debt relief to last, you need to maintain it. You can think of it as achieving your ideal weight after dieting so hard. Your efforts will not stop as soon as you see your target weight in the scale. You need to maintain that by eating right and continuing healthy activities like exercising.

What to do after you have paid off your debts

After debt relief, things will not be a tough anymore. But that doesn’t mean no effort will be spent. You need to exercise self control and discipline to maintain the financial state that you are currently in. For those who benefitted from loan forgiveness, the chances of going back into debt might be more likely to happen. That is because they did not work hard for their debt freedom. Those who worked hard and painstakingly saved every penny just to get out of debt would be more motivated to stay out of debt.

If you really want to turn your financial life around, you may want to follow these important activities that will keep you debt free.

Build up your emergency fund.

First and foremost, you have to make sure that you have an emergency fund. This is the money that you will put aside so you have something to spend in times of emergencies. This is a great way to stay out of debt. Usually people end up in debt because they were forced to borrow money after an unexpected expense arose. If you want to stay out of debt, you need to be prepared for these incidents. Since you no longer have debt payments, you can use the money allocated for this to grow your emergency fund.

Set up other saving goals.

Once you have enough emergency fund, you may want to set up other goals that you can save up for. If you want to buy your own house, you can save up for it. The more money you can pay towards the down payment, the lower amount is needed for your home loan. If you want to replace your car for a more fuel-efficient one, it is better for you to save up for it instead of getting a car loan. We all know that cars depreciate as soon as you drive it from the dealer. That means you will be paying way higher than the value of the car – especially if you add to that the interest that will be added to your loan amount. There are other saving goals that you need to look into like retirement or the college fund of your children. According to Bankrate.com, American families are still finding it hard to save money for a new car, college or retirement. But with some discipline, you can remove yourself from this statistic and save up for the right goals that you want to have in your life.

Invest your money.

Another task that you can do after debt relief is to invest your money. The first two are tasks that you need to do so you can protect yourself from the uncertainties of the future. This task, investing, will help you grow your personal net worth. You can choose an amount that you are comfortable risking and invest it in stocks, bonds and mutual funds. These will help grow your money better than a regular savings account will. The interest rate of investments is bigger than that of savings accounts.

Reward yourself.

Once you have taken care of the first three, you can think about rewarding yourself for freeing yourself from debt. Allow yourself to feel that debt relief is the secret to a happier life by rewarding yourself. You can buy yourself something that you have been depriving yourself for so long. Of course, you need to make sure that the reward that you will buy yourself is reasonable. And that you will pay for the reward in cash. Do not splurge too much that you will put yourself in a dangerous financial situation again. Buying a luxury car may be too much of a reward. A vacation with the family should be a great prize for what you have achieved too.

Spend smartly.

Now that you have achieved debt relief, you need to maintain it so you will no longer be burdened with debt again – at least, not unless you really have to. That means you need to spend your money wisely from now on. Be careful with your decisions. If you think that a purchase is unnecessary, do not buy it even if you know that you can afford to pay for it in cash. There are better places to put your money in – like your savings account or investment.

How to use credit without falling into a financial crisis

Truth is, although it is very hard to get debt relief, you should not be afraid of debt. Believe it or not, there are good and bad debts. According to an article published on BusinessInsider.com, a debt is categorized as good or bad depending on how it affects your credit reputation and finances. In other words, any debt that you should take from now on should be something that will improve your financial life. If it puts money in your pocket, borrowing money makes sense.

Instead of being scared of debt, you need to learn how to manage it so it works in your favor. Here are some tips that you need to follow when borrowing money.

  • Borrow so you can put more money in your pocket. This simply means you need to choose the debt that you will borrow. Credit card debt is fine but you need to consider what you are using it for. If it will be used to buy a product that will help you function better at work, then you can go ahead and use it. Just try to pay it off in full when the bill comes so you do not have to pay interest on it. Spending on updating your knowledge and skills is also a great reason to be in debt. As long as it can help increase your ability to earn money.
  • Have a plan to pay it back. With any debt that you will borrow, make sure that you have a repayment plan in place. It does not have to be detailed but you need to know where you will get the money to pay it off. If you do not know where to get the payment for the debt you will take, then do not borrow the money.
  • Include the debt payment in your budget. As soon as you know the amount that you need to pay off on a monthly basis, include it in your budget. That way, you will never forget it. This will also allow you to consider how your income will deal with this additional expense. If this expense is beyond your income, you can immediately choose another expense that you can give up so you can afford your debt payments. One of the budgeting mistakes that you can commit is failing to include debt payments. You will be charged with late penalty fees if you fail to pay on time.
  • Limit new credit until you pay your current. Lastly, you need to limit any new debt until you have paid off your existing. Even if you know that the bank will approve your loan, do not borrow money. Leave some room in your budget for your savings. It is better to pay for purchases in cash rather than credit. You can really enjoy your purchases if you know that you have paid for it in full before using it.

3 Skills To Develop To Increase Your Salary

increase in earningsDo you want to increase your salary? Of course you do! That is actually what we all want to happen in our lives. The more money that we have, the more we can enjoy a better lifestyle for ourselves and our family.

It may sound very materialistic but we have been bred to earn a higher income ever since we were kids. All those classes, training programs, seminars and college degrees were meant to help us grow our personal net worth. It may be embarrassing to admit but we use money to measure the success of a person. It is true that there are other things in life that are more valuable than money like love, family, respect, etc. But if you think about it, having enough money to live a comfortable life significantly increases our personal happiness and satisfaction.

The question is, just how much do you have to earn to be able to live a comfortable way of life?

According to an article published on CheatSheet.com, a six-figure income is required if you want to have the American Dream lifestyle. In particular, the article said that $130,357 is needed on an annual basis to live comfortably – at least, this is true for a family of four. That means you need to earn more than $10,000 each month.

The same article revealed that the average income of an American household between 2008 to 2012 is a little more than $53,000 each year. That is only around $4,400 each month. That is not even half of what the article said should be earned by the average American family. The article said that if we want to live the American Dream, it has to be in another country that offers a lower cost of living.

For most families, living on one income is not enough. You have to increase your salary if you want to improve your way of living. You actually have two options: you can ask for a raise or you can tap into another source of income (e.g. a second job or starting a part-time career).

3 skills that will help you earn more

If you think that getting longer hours from your current job is not possible, then you can try to learn a new skill that can help you start a second career. Some people have the option to capitalize on an existing hobby. Cooking and baking are some of the popular ways to earn extra. Some people cook meals for colleagues and get paid for it. Others bake goodies and sell them at work for extra cash. There are so many ways that you can earn a living if you have a talent that can be tapped into.

But if this is not an option for you, there are three skills that you can learn that can give you some serious cash flow on the side.

Learn a new language.

The first option is to learn a new language. If you think that you  gain nothing from globalization, think again. You can use your knowledge of the English language to your advantage. There are many nations that cannot understand this language. You may want to learn a new language so you can teach foreigners or serve as an interpreter or translator. People who are fluent in Chinese, Russian, Japanese, Korean, Spanish, Portuguese, German and other languages can get a part time job. According to USNews.com, the job of an interpreter or translator is very flexible. That means you can retain your day job and still find employment opportunities as a freelancer. The Bureau of Labor Statistics forecasts a 46% growth in employment for interpreters and translators. That translates to 29,000 positions. This is deemed to be faster than the average for other occupations. As the global trade becomes stronger, the need for multilingual individuals increases. The lowest paid for this occupation is $22,180 annually. The highest paid is more than $77,000 a year.

Be tech savvy.

We live in the digital age and the more tech savvy you are, the more you will have opportunities for a second career. Think about it. Online or remote work saved a lot of people who were laid off during the Great Recession. Remote work means being able to work outside the office. According to TechRepublic.com, remote work is growing. They cited a report from the US federal government that revealed how 47% of their employees are capable of working remotely – that is more than a million people. And guess what, tech savvy individuals are needed to support this growth.

Businesses are also becoming more aggressive when it comes to their online presence. That means there are a lot of careers being opened online. Programmers, app developers, online writers, web developers and designers, tech support, social media management – these are careers needed to support online businesses.

Try your hand at graphic design.

Images are quite powerful in our digital world. Graphic designers can be useful for a lot of things. You can help design campaign materials both in the natural and digital world. You can design shirts and sell your designs online. You can design websites, pages, etc. There are so many possibilities as a graphic designer. According to InnovatorsGuide.org, the growth of employment opportunities for this career is also expected to be faster than the average. The competition for jobs will also be high – but it is still a competitive career to be in. Internet advertising has a very high demand and if you have the talent and great work ethics behind you, it should be no problem to build a second career for yourself.

These skills should be a great way for you to increase your salary. The additional cash flow should help you reach your financial goals.

What to do when you get a salary increase

But when you successfully increase your monthly cash flow, you need to remember a couple of things. You have to understand that the secret to wealth is spending less than what you are earning. That being said, you need to stop yourself from upgrading your lifestyle as your income increases. Truth be told, this is a mistake that most of us are making.

While you have every right to upgrade your lifestyle to make it more comfortable, there are a couple of things that you need to do first.

  • Pay off your debts. Some people will tell you to save the extra money that you will earn. But if you think about it, paying your high interest debts will help save you more in the long run. You will not waste money paying the interest – which is actually just making your creditors rich. So if you have credit card debts and other high interest loans, you may want to pay them off first.
  • Build up your emergency fund. Another important task that you need to do is to build up your emergency fund. Make sure you have savings for the unexpected events that can come up in the future. That way, you do not have to resort to credit in order for you to get out of a tight fix.
  • Invest your extra money. After you have paid off your debts and saved for an emergency fund, you may want to invest your money. You do not have to invest everything. But you may want to invest an amount that you know you can risk. This should be a great way for you to grow your money. You can invest this and forget that you have that amount. After a few years, that amount should be bigger than what you started with.

Once you have taken cared of these three tasks, you can now start upgrading your lifestyle. Of course, you still have to implement financial management practices to make sure you will not make a mistake in your decisions.

Here is a video from the Bank of America that has tips to help you be smarter when it comes to money management.

Survey Says: Almost Half Of Workers Do Not Have Enough Emergency Funds

piggy bankWhen it comes to saving money, financial experts have always encouraged consumers to think about their emergency funds. This is the amount of money that you will put aside so you have the funds to get you out of unexpected expenses in the future. The use for this money can range between the trivial (e.g. busted transmission in your car) to the serious (e.g. medical illness) expenses.

The irony about living is you will never know what will happen in the future. No matter how careful you are, something is always bound to happen that will get you off track. Even the most careful individual could suddenly end up with an illness or without a job. It is better to be prepared for these events. Apart from being physically, mentally, and emotionally strong, you also have to be ready financially. And the only way you can do the latter is by building up emergency funds.

According the pulse survey results from Bankrate.com, 28% of their respondents will resort to credit in order to pay for unexpected expenses amounting to $500 to $1,000. 16% of the respondents said that they will borrow money from family and friends. This is a great option because these people usually do not have to worry about high interest rates. The same survey also revealed that 12% of their respondents would use credit cards to finance an unexpected expense. This is a dangerous habit because of the high interest rates that oftentimes accompany credit card debt.

If you want to be prepared for emergency expenses, it is important that you save up for it. You do not want to be caught unprepared at the wrong time.

Survey says Americans are not prepared for unexpected expenses

In a separate survey published on Principal.com, it is revealed that almost half of their respondents will find it difficult to find financial resources for an unexpected expense that amounts to $1,000. The survey was initiated by the Principal Financial Group and conducted by Harris Poll among 1,111 employees. These workers come from small to mid-sized businesses. The survey was done to gauge the financial well-being of workers.

The results of the survey revealed that 17% said that it is difficult to produce this amount, 13% said it is very difficult and 17% said it is extremely difficult. That means 47% of the respondents in this survey said that they will have a difficult time getting the resources for an emergency that will cost them $1,000. Imagine if they were faced with a bigger expense – that could very well lead them to a financial crisis.

To prevent this from happening, you need to build up emergency funds that will give you the resources to pay off unexpected financial needs. There are four important reasons why you need this savings.

Emergency funds can help you avoid a crisis.

If you have the financial resources to spend on an unexpected expense, you may very well be able to avoid going into a financial crisis. Instead of letting a situation get out of hand, you can immediately use the funds that you have to quickly solve a problem. Of course, you can only do this if the cause of the crisis is something that you can control. For instance, if you get sick, you will not hesitate to get treated because you know that you have the funds to spend for it. That can keep you from developing a more serious illness.

Emergency funds can help you survive a crisis.

In case you are faced with a financial crisis that you have no control over, your emergency funds will help you survive a financial crisis. An example of this is a job loss because of an economic situation.  Your emergency fund will give you the resources you will need in order to get through the tough situation that you are currently in.

Emergency funds can keep you from debts.

Another reason why you need to save for an emergency fund is to keep yourself from debts. Going back to the Bankrate survey, people who do not have savings usually resort to credit. It is okay if you can borrow money without interest. But what if you have no choice but to loan an amount with a high interest rate? You will be wasting a lot of money paying for that interest amount. You can avoid debt if you have the amount to spend from your savings in the first place.

Emergency funds can give you peace of mind.

Lastly, you need to build up your emergency funds because it will help you life a life that is free from stress. At the very least, you know that your financial situation is one thing that you do not have to worry about – regardless of what the future may bring. This is probably the most important thing that an emergency fund can give you. Even if you are already immersed in problems, you do not have to panic because you have the resources to spend in the meantime. You can concentrate on solving your problems while you continue to have the finances to spend on your needs.

Tips to build your reserve fund fast

According to an article published on NYTimes.com, more than 5 out of 10 American households have less than one month’s worth of income in their savings account. That means if something happens to their job, they can only survive for barely a month before their finances expire. You do not want this to happen so you must be prepared to build your emergency fund fast. The article mentioned that it is possible to build up your savings even if you have a limited income. The thing that you need to overcome is sometimes, psychological. People think that saving up for 6 month’s worth of income is impossible and they give up on the task even before they have started.

You need to overcome this negativity and concentrate on the target amount that you need to reach. There are rules that you need to follow when building your emergency fund and here are some of them.

  • Compute how much you need for emergency and reserve funds. Calculate the amount that you need to save for your emergency funds and your reserve funds. The emergency fund is the savings that will be spent for very serious expenses like job loss, etc. The reserve fund is for the more trivial expenses that you did not plan for. For instance, the gift that you need to buy for the wedding of your cousin, etc.
  • Review your budget plan. It is also important to review your budget plan so you can include the amount that you need to put aside for your savings. It is best to treat your savings like a bill so that you will put money into it no matter what.
  • Downsize your lifestyle. To increase the amount in your emergency funds, you may want to downsize your lifestyle so that you can lower your expenses. At least, this is true if you really want to grow your savings quickly. The more you can sacrifice from your usual expenses, the more you can put aside in your savings.
  • Increase your income. While you are saving on your expenses, you may want to boost that by increasing your income too. Try to earn more by setting up a passive income. You can also sell off some of the things that you no longer need so the profits can be added to your emergency fund.

Want To Increase Your Savings? Live On One Income

couple discussing finances

Couple calculating their budget

You would think that in order to increase your savings, you need to have at least 2 earning individuals at home. In fact, in most households, both couples are forced to have a job so they can make ends meet. Having both husband and wife earning may seem like the family will be better off financially. But did you know that it is possible to grow your savings even if only one person is earning an income?

Unless you are both career-driven, you probably have thought about quitting and staying at home to take care of the fort. If you feel like you are not getting paid what you are worth anyway, this may be a great option for you. A young couple who want to start a family would be talking about this too. Someone needs to stay at home to take care of the kids – especially while they are young. This would be a very good reason to live on one income.

But if you have dreams of buying something big in the future, you know that you need to increase your savings. And if you want to maximize what you can save, you know that the most logical thing to do is to have both you and your partner or spouse working.

According to a the daily consumer spending found at Gallup.com, Americans spend an average of $90 each day. That makes $2,700 a month. That amount does not include any payments made towards the house like mortgages, and household bills. Any expense on cars or vehicles are also not included here. So you can see that this amount is actually higher. That means the average household needs to spend at least $3,000 to $3,500 each month.

Do you think your home can afford to meet this expense with just one person earning a living? And what if you want to increase your savings? Would it be possible with this spending statistic and one income?

It will honestly not be a walk in the park but it is very much possible.

Saving benefits of having one stay-at-home parent

Believe it or not, there are saving benefits if you have a stay-at-home parent in your household. Do not frown upon those who decided to quit their job to take care of their career. They may be saving more money by staying at home instead of working for someone else. If you have the right situation, it may be more feasible to just quit your job.

There was an article that went viral a few months ago that indicated how much a stay at home mom is really worth. This was an article written by a husband with a stay-at-home wife. This article published on WeAreGlory.com gave specific figures that will give you an idea about how much a stay-at-home parent would be earning if we paid them for the work they do at home. Let us enumerate what was indicated in the article.

  • Child caring services. The author started by stating how his wife cares for their son every day. Changing diapers, feeding, playing, comforting, putting to sleep – all of these are tasks that his wife does day in and day out. If you hire a full time nanny to care for your child that way, you have to spend $705 a week or $2,820 a month. In essence, your wife (or husband), would be worth more because they care for your child 24/7.
  • Cleaning services. The one staying at home is usually the one cleaning the house too. This costs $50-$100 per visit – depending on the size of the house and how thorough you want the cleaning to go. If you have pets too – that will cost more. This is easily $100 a week – or $400 a month.
  • Personal shopper. Whenever your wife goes out to run errands like doing the groceries, buying gifts for family and friends, and going to the dry cleaners, that is a career too. The people who do this professionally are called personal shoppers. And they can cost you around $65 hour, for 4 hours a week, that is $260 a week or $1,040 a month.
  • Personal chef. Now this can be costly. A chef preparing 5 meals with 2 servings each can cost $400 or more. To be conservative, the author of the article gave an amount to $240 a week. That is $960 a month.
  • Financial assistant. Most of the time, the one staying at home is the one handling the finances because they know how much money is needed to keep the house stocked and in order. Whoever stays at home will most likely do the budgeting, paying of bills, etc. That sound like the work of a financial assistant who earns around $15 an hour. Assuming this will take around 5 hours a week to organize financial matters at home, that means $300 each month – at the very least.
  • Washer/Dryer personnel. Doing the laundry costs $25 a week. This will means it will cost you $100 a month to have all the dirty laundry in the house taken cared of.

We could go on and on because there are other things that a stay-at-home parent does around the house. But if we stop here, we are looking at a monthly salary of $5,620 or $67,440 a year. If you think about it, that is the amount that you are saving if one of you stays at home. Who would have thought that living on one income is actually a great saving tip?

If one of you earns less than this amount, then quitting your job could make sense. You would be able to increase your savings for future purchases.

How to transition into a one income household

According to the PewSocialTrends.org, there are more stay at home moms in 2012. In 1999, 23% of moms do not work outside. In 2012, that percentage went up to 29%. A lot of those who chose to stay at home are married and thus have husbands who are financially supporting them. These are the women who have consciously decided to stop working to care for their kids. Most of the single or unmarried mothers who are staying at home have done so because they could not find a job – and not because they decided to.

Of course, you have to deal with having a low monthly budget when only one of you is earning at home. While it may seem like a difficult task, it is possible to be happy while in a low income household. You just have to know how to transition to it properly.

  • Visualize how your budget will be like with one income. Before you go ahead and quit your job, create a budget and see how the household will fare with only one income. That way, you can discuss with your spouse if it is feasible or not. Here is a video that you can watch for some tips when creating a budget for a one income household.

  • Make sure you have an emergency fund. Increase your savings first before you quit your job. That way, any unexpected expense will not cripple your budget immediately.
  • Identify the expenses that you can get rid of. Definitely, you need to lower your expenses so you can increase your savings despite a lower monthly cash flow. Try not to sacrifice your savings. You need to have savings so try to sacrifice your expenses instead of your emergency fund. If you have to downsize your lifestyle, that could be arranged. Selling some of your stuff could help increase your emergency fund.
  • Have a plan for your debt. In case you have debts, you need to get rid of them before you live on one income. When you get rid of debt, it is one way to increase your savings too. You are wasting money on the interest amount that you pay towards your debts. Eliminate that and living on one income will be easier.
  • Try to find part-time work that you can do at home. Of course, staying at home does not really mean no income can be generated. There are so many work from home careers out there. You may be able to generate some income by becoming an online freelancer.

With some great financial management skills, it is possible to increase your savings even if you are living on one income in your household. Once you get the trick of budgeting and smart spending, it should all come easily. Not only will you be financially smarter, you have a better chance at creating a high quality home for you and your kids.

FTC Wants To Help You Battle Identity Theft

identity theft sign

identity theft sign illustration design over white

Identity theft continues to be a problem in our society today. This crime happens when someone uses your identity without authorization so they can buy something in credit under your name. That is how they rob from you.

When you become a victim of identity fraud, that is a clear sign that you need to implement financial management. If you are a good manager of your personal finances, it would be very hard to rob you. Thieves will find it hard to get your personal information so they can rob from you.

Some people are in deep financial trouble not because they were irresponsible with their money. Some of them had the misfortune of becoming victims of identity theft. Although they were careful with their purchases, they were unaware that someone already got their information and were opening new credit accounts under their name. When the time came for these victims to borrow money, they are surprised to find out that they are disapproved because someone loaned an amount under their name and did not pay it back. If the victim cannot prove they are innocent, they will end up paying for the money and all the penalties and interest charges associated with it.

According to a press release published on FTC.gov, identity theft was the top consumer complaint in 2014 – at least those filed with the Federal Trade Commission. This was revealed in  the 2014 Consumer Sentinel Network Data Book. It was 13% of the overall complaints filed for the whole year.

Given this information and the seemingly growing threat of this crime prompted the FTC to create a tool that will educate consumers in case they face this in their life.

FTC released a tool to help victims of fraud

The tool that was launched recently is at IdentityTheft.gov. This website shows the step by step instructions for those who are already victims of identity theft. Although you can protect yourself from this type of crime, there are thieves who are just too smart and good at what they do. In the event that you do end up becoming a victim of this crime, your next steps will determine the extent of the damage that will be done to your finances.

This is what the website wishes to solve. Based on the site, these are the things that you need to do.

What To Do Right Away

As soon as you find out that someone took your identity and is using it to steal from you, it is important to inform the company involved. For instance, if your credit card was stolen, you need to get in touch with the credit card company immediately. Let them know that any transaction done after the time the crime was committed should be taken with caution. You can ask them to freeze the accounts and ask for more identification before any transaction is to be completed. You also have to change any passwords, PIN or other security questions associated with your account.

The credit bureaus should also be alerted after. You need to raise a fraud alert on the stolen account. You only have to get in touch with one of the three credit bureaus (Equifax, TransUnion and Experian). The one you will call will tell the other two on your behalf. This fraud alert will be raised so that everytime someone uses your account, they will be asked for extra identification. That means only you can use it.

The identity theft incident should also be reported to the FTC so you can get an FTC Identity Theft Affidavit. This is one of the documents that you need to submit to the local authorities when you report the crime.

What To Do Next.

Once you have accomplished the reports needed, you need to start repairing the damage – if there is any. Check if there are any new accounts opened under your name. You need to close these. Just call the companies involved and tell them that you were a victim of identity theft and that you want to close the new accounts. The company should send you a letter confirming that the fraudulent account was closed. Make sure you keep this document in case a transaction appears in your credit report in the future.

You should also check your existing accounts in case there are charges that you did not make. You need to dispute these transactions so they will be removed from your credit report. Again, make sure the companies will send you a letter proving that the charges have been removed.

The actions that you will do is to help you correct any information in your credit report.

This website is a great way for you to know what to do about identity theft should you become a victim. Again, this crime is only destructive if you fail to act on it immediately. If you can raise the fraud alert or freeze your accounts immediately, the perpetrator will be unable to do harm to your finances or credit report.

This site also has information that you can follow in case you are a victim of specific identity theft like your tax identification, Social Security, etc. For child or medical identity theft, there are certain things that you need to do so it pays to take a look at this site. Regardless if you are a victim or not, check out this site and try to memorize what has to be done so you will know what to do in case you become a victim of identity theft.

Tips to keep yourself from being a victim of identity fraud

According to a study published on Equifax.com, there is a new victim of identity theft every two seconds. This study was done by Javelin Strategy and Research. According to the published report, victims of this crime does not only bear the financial damages. There are also emotional effects after becoming a victim of identity fraud. There is an emotional roller coaster to be dealt with while you are trying to solve the crime. And of course, the paranoia will never really leave you – even years after the incident.

This should give you more motivation to make sure that this will not happen to you. There are critical things that you need to know about identity theft so you can avoid it. Here are some tips that you need to implement in your life.

  • Always check your credit report. You are entitled to three free reports each year – one from the three major credit bureaus. All you have to do is to download a copy from the Free Annual Credit Report website. You can get one copy every four months so you do not have to spend to look at your credit report.
  • Be cautious when entering your personal and financial details online. Make sure that the website you are accessing is secure. There are logos to look at to make sure it is a trustworthy site.
  • Avoid accessing your financial records or entering your PIN or password using a public wifi. It is very easy to intercept your information if you access it through a public wifi.
  • Keep the antivirus program of your computer, laptop and other devices updated. Malwares can steal your information. Make sure your electronic devices are protected at all times. If you have to invest in a software, then do just that.
  • Stay informed. Lastly, you need to always keep yourself informed. Try to find out the new scams and techniques of criminals to get your information. Also, be aware of what you need to do in case you become a victim of identity theft.

In the end, vigilance is the best way to be protect yourself from the threat of identity theft. Although you need to trust others, it is important to know whom you should put your trust to.

How To Spring Clean Your Personal Finances

dollars hanging out to dryDid you know that spring cleaning is not only applicable to your home but also to your personal finances?

March is here and everyone is getting ready to do some spring cleaning. Once the snow has melted, it is time to check out homes to see how it can be cleaned and maintained for the coming year. While you are at it, why not look into ways that you can clean out and make changes in your financial management efforts?

What you need to realize is that your finances require constant checking. It is actually not something that you do only once a year. You do not set up a budget and then leave it at that. A lot of changes happen in your life that directly affects your personal finances. When you get an increase in salary, when you open a monthly subscription, when you use your credit card – these require you to revisit your financial situation to make sure that your decisions will not cause your financial demise.

According to MarketWatch.com, there will be a lot of improvements in the economy this coming 2015. One of them is the increase of employment. In 2014 alone, 3 million jobs were created for the unemployed. This is predicted to continue this year. With additional news about gas prices and possible stagnant inflation rate, you want to make sure that your finances is positioned in such a way that will make your net worth grow this year. Ideally, you want to do a monthly checkup to make sure that your finances are in good condition. But if what you will do is something as thorough as spring cleaning, then it can be done once a year.

5 ways you can clean out your financial life

There are three important reasons why you need to clean out your finances.

First, it allows you to organize your financial files. When things are organized make you more efficient as you complete financial tasks like paying your debts and bills. But more than that, it gives you a clearer picture of what your current financial situation is like. It allows you to make better decisions because you are aware of what your finances can afford. Finally, cleaning out your finances will help protect you from the dreaded loss of data or identity theft. These will not only rob you of money, it can also ruin your financial prospects. It can ruin any opportunity that you may have to improve your financial position.

So now that you know why it is important to spring clean your personal finances, the next question is, how are your going to do it? Here are 5 things that you can do.

  1. Revisit your budget plan. Your current budget is a reflection of your financial priorities. In most cases, your financial priorities are aligned with your current goals. As we age, our goals change over time. When we experience changes like marriage or parenthood, we find that what used to be important is no longer valuable and we look into things that we never thought would mean so much to us. Since these changes are constant in our lives, it is also important that we revisit our budget every now and then. That is the only way we can make sure that it is still aligned with what we currently prioritize in our lives.
  2. Simplify your financial tasks. You may also want to revise any payment terms that you may have – especially if it involves debt. If you have a lot of credit obligations, you may want to change your payment term to grab a lower interest rate or to help you save more in the long run. For instance, if you received a salary increase, you may want to put in more money into your debt payments. That way, you can pay the balance off a lot faster. In terms of managing your finances, you may want to look into the latest apps that can help you stay on top of your money.
  3. Try to get better deals. We all have monthly payments to take care of. As you are spring cleaning your personal finances, you may want to take this time to review your payments and to see if there is some way that you can get a better deal. If that means calling your service providers to negotiate a better offer or going to a new one, maybe that is what you should do. As long as it will help you get a better value for your money, the change should be worth it.
  4. Take a peek at your credit report. One of the things that you need to do as a good money manager is to check your credit report every now and then. Each year, you are entitled to get one free copy of your credit report from each of the three major credit bureaus. You might want to pick one of the bureaus and get your free copy to see if everything is in order. You can see if you had been a victim of identity theft or not. You can also check how much money you owe your creditors. If there are any errors on your report (like a debt that is already paid or a credit account you did not open, you need to have this fixed immediately. According to an article published on the NYTimes.com, all three major credit bureaus, Equifax, TransUnion and Experian have promised to improve their dispute resolution process. Now is a great time to do just that if you find any errors in your report. You do not want any mistake or wrong entry haunting you.
  5. Physically clean out your wallet and financial files. Lastly, you may want to take a look at your wallet and your financial files. If there are bills that are already paid or receipts that you no longer need, you may want to dispose of them. And you can also review the important documents and receipts that you need to keep for a very long time. Make sure these are kept in a secure location.

These 5 tips should help you make a thorough spring cleaning on your personal finances.

How to take your financial situation to the next level

Now that you have cleaned out your finances and have put everything in order, it is now time for you to consider the steps that will take your financial situation to the next level. After all, you do not want a stagnant financial life. You want it to keep on improving because it will really benefit your future.

Here are a couple of things that you can do.

  • Pay off your debts. If you really want to improve your net worth, you should consider erasing all your debts. You are wasting money through the interest that you are paying your creditors. Instead of investing that money, you are just making them rich. So if you have the extra cash, just pay off what you owe so you can work on growing your money.
  • Boost your emergency fund. According to an article published on Bankrate.com, a lot of Americans, although they keep budgets, do not have enough cash to deal with emergency situations. 6 out of 10 do not have the cash outside of their budget to help with any significant emergency expense. This could lead you to debt so make sure your reserve fund is sufficient.
  • Increase your retirement contributions. If you want to directly invest in your financial future, you need to increase the contributions that you are making towards your retirement account. This is especially true if your employer is matching whatever you are contributing. It will increase the free money that you are practically getting and make yourself more secure when you retire.
  • Add to your investments. Speaking of investments, you may want to start investing in something. It does not have to be in stocks or bonds – at least, if that is something that you do not really understand. But you can at least invest in something that grows in value over time – like gold or your own home. It will help increase your personal net worth. In truth, it does not have to be a lot. You can invest on a pauper’s budget if that is all you can afford. As long as you start with something, even if it is small, it will grow soon enough.
  • Set up financial goals. Lastly, you may want to set up some realistic goals that you can reach. If you have goals, you have something to focus on. Here is a video that will help you set financial goals – at least, those that you can commit to and succeed in achieving.

How To Improve Your Personal Wealth This 2015

piggy bank with moneyDo you think that you experienced any genuine financial improvement last year? As we start 2015, you may want to look back a little to figure out the right and wrong decisions that you made about your money. This is important if you want to improve your personal wealth by the end of this year.

In truth, improving one’s finances is not as hard as it used to be thanks to our rising economy. According to an article published on Bloomberg.com the US economy improved last year. The household net worth is actually $1.3. trillion higher than the peak before the recession – which was at $67.9 trillion in the second quarter of 2007. This is caused in part by the improving real estate market that grew by 4.9% by September of 2014. Not only that, the improving job market is also a factor in improving the net worth of Americans.

It was not all good news though. There was a damper in the household wealth improvement caused by a drop in the stock indexes. However, this should be easy to recover as long as consumers take extra care of how they manage their investments. Another thing that may be slowing the growth of household wealth is the rising consumer debt. Obviously, the growth in our personal wealth is making us confident when it comes to taking in more credit.

3 steps to improve your finances this year

If you want to take your wealth to the next level, you need to start planning how you can do that. As early as now, you should have plans in place that you can follow periodically this year. Without a strategy, you will just go around blindly, hoping that you will hit the jackpot. Obviously, this is not the best way to improve your personal finances this year.

If you really want to revolutionize how your money is spent, think about these three steps that you can work on this 2015.

Pay off your debts

The first thing that you should do is to pay off your debts. According to a speech delivered by William C. Dudley at the Bernard M. Baruch College in New York, when debt goes down, the net worth goes up. The speech titled “The 2015 Economic Outlook and the Implications for Monetary Policy” was published on FRB.org. While discussing how consumers are in better financial shape, the speaker revealed that the household liabilities have gone down by roughly $500 billion as compared to the peak debt amount in 2008. This is helped by the lower interest rates – which is a factor in increasing debt loads. With this decrease in debt, the household net worth was able to recover and increase – thanks to a higher asset value.

It seems to correlate with each other. The less debt you have, the more you have in your personal wealth. Even if you own a home that is valued at $500,000, if you still owe $400,000 in your mortgage, you only have $100,000 in your personal assets. The more you pay towards your mortgage, the more equity you own in your home. This concept can be applied to all your debts – whether it is credit card debt, auto loans or student loans. What you are paying towards your debts can be used to grow your savings or increase your investments.

Another way that paying off debts can improve your wealth is the money that you will save on interest. This is only making your creditors and lenders rich. Pay off what you owe as soon as possible to lower the money you waste on interest payments.

Increase your savings

Once you have paid off your debts or at least implemented a repayment plan, it is time for you to focus on your savings. Increasing your savings is the direct way for you to improve your personal wealth. When you spend, you are distributing what you earned and putting them in the pocket of other people. When you save your money, you are putting it in your pocket. Whether it is to be spent on something that will increase your net worth or saved for the rainy day, the bottom line is it will be an addition to your assets.

According to an article published on EquitableGrowth.org, wealth comes from two sources – your income and your savings. While wealth can be inherited, that is something that is beyond your control. Your income and savings, on the other hand, is something that you have full control over – more so with savings. Your income will still depend on your employer but the amount you save will entirely be based on your own discretion. So grow your savings and it will directly affect your wealth.

Map out your financial goals

After working on your debts and savings, the third step that you need to work on is mapping out your financial goals. In some cases, this should be the first on your list. But considering how debt is rising and savings are decreasing, it may be more prudent to work on the first two before adding more financial goals.

So what goals can you work on? That will depend on you. It can be a new home, a car, your child’s college fund, retirement, or a business. The important thing is to have a goal. When you have a goal, it gives you focus. It gives you motivation. It gives you something to reach for. In essence, it gives you something to live for in the future. Not only will it do all that, it can also grow your personal net worth – at least, if you choose the right financial goal.

Tips to make your wealth last long

Growing your personal wealth is only the first phase in achieving financial success. Make sure that after growing your wealth, you know how to make it last long. You may end up with a huge amount but if you do not know how to manage it, this will not last.

Here are some tips that can help you make your money last long.

  • Live below your means. One of the fastest way to deplete your wealth is by living beyond your means. This simply means you are spending more than what you are earning. Some people think that living within your means is the best way to go. While it will keep you in debt, it will only preserve your finances and keep you in the same financial state. The best way to make your wealth last long and increase it at the same time is to live below your means. This way, you can take care of all your expenses while having extra money to set aside for savings.
  • Think before you spend. Regardless of how much wealth you have, smart spending will always be important. Even if you can afford it, that does not mean you should buy it. Ideally, you want to buy things that are aligned to your financial goals. If not, then think carefully before you make the purchase.
  • Make investments. Like savings, this investing is another way to grow your personal wealth. think about where you can place your money and consider the risks that you will face. Without a little risk, growing your money will not be as rewarding as it should be. Investing the extra money you have is one of the best ways to make your finances work for you.
  • Be aware and educate yourself at all times. In the end, you can make better financial decisions if you are aware of your options. Always make time to educate yourself about something. Read about rules, laws and various techniques to manage your money. While hiring financial experts will work, it will serve you better if you know what is going on with your personal wealth.
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