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Money is something that is almost always at the front of our minds. How do I even invest? And what do I invest in? How do I create a budget? These are the kinds of topics that, admittedly, are not taught in schools as much as they should be. But with a little bit of research, we can get ahead of our financial goals. Here are some 10 simple tips to get started building and compounding your wealth!
10. Create A Budget
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One of the first and best steps you can take is to look at how much you’re spending each month. Even though it may be something you dread doing (we’ve all been there) — it’s extremely important to see where your money is going. There are a ton of spreadsheets you can find online or you could even create one yourself to start categorizing your spending. This will help you visualize your spending and see where you can cut effectively down your expenses. Even if you’re not hitting your goals every month, at least you’re on the right track to getting there!
9. Aggressively Attack Debt
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Once you know your budget, the next thing you should look at is your debt. If you’re debt-free… congratulations! Keep up the good work and make sure that debt stays at $0 as best you can. However, debt is something many Americans have. First, you should look at the interest rate on all of your debt, and if any of it is over 7% then it is best to start paying this down as quickly as possible. These high interest rates can quickly spiral out of control, especially if you’re only making minimum payments. But if you have any debt between 4-7% you should choose whichever you’re more comfortable with — either focus on paying that debt down or split between investing. If you have any debt that’s less than 4% you should prioritize investing first before paying off debt. Everyone’s story and context are a little different, so prioritize what works best for your situation.
8. Find the Right Cards for your Lifestyle
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Nowadays, credit and debit cards offer a lot of bonuses and rewards that are extremely helpful, but they are not all created equal. It’s important to do some window shopping when looking for which cards you’re going to choose. Travel a lot? Research cards so you can find the best travel rewards credit card. More interested in a daily cash-back credit card? Many cards can give you upwards of 3% cash back on all purchases. When it comes to debit cards and finding the right bank, take your time and do your due diligence. A lot of banks make you have a minimum balance on your debit card or have an ATM fee while traveling, so reading the fine print is important.
7. Open a High-Yield Savings Account (HYSA)
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After finding what cards are best for you, look for a bank that offers a high-yield savings account. These earnings can add up quickly! Most of the big banks only have savings from 0.01%- 0.04% — where you’ll only be earning a couple of cents per month. But, with a high-yield savings account you could earn 3%-5%+ each month where you’ll be making substantially more money. Start contributing as much money as you can to this account. For example, if you have an HYSA at 4.6% APY and have $20,000 in the savings account, you will earn around $75 per month in interest. Not a bad haul!
6. Open up a retirement account (401k, or traditional or Roth IRA)
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Invest, invest, invest! One of the best things you can do for your future is invest your money. Depending on your job you could contribute to a 401k, or a traditional or Roth IRA. When it comes to investing, the younger you start the better because you have more time on your side for your capital to grow. Even if you’re not so young anymore, you can and should invest at whatever age you are. Be sure to understand which account is best for you, but this is vital for your retirement/
5. Open Up a Health Savings Account (HSA)
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A lot of people aren’t aware of what a HSA is. A health savings account is a health care plan you can contribute a certain amount of money which you can also invest. You can also take money out of the account to pay for hospital bills and even some health and fitness products such as an Apple Watch, Oura Ring, or more. You should call your provider today and see if you’re eligible!
4. Open Up a Brokerage Account
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Once you’ve gotten the ball rolling on all the aforementioned accounts, you should open up a brokerage account if you haven’t already. Unlike a retirement account (where you have to wait until you’re 59.5 years old to take it out of the account), you can take the money out of this account at almost any point. But this brokerage account is very similar to a retirement account where you can choose which ETFs, mutual funds, stocks, or bonds you want to invest in. What exactly to invest in can be a dizzying experience, so be sure to do your research. There are some guidelines to know regarding taxes about this account, but this is another amazing way to invest!
3. Ask for a raise every few years
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If you won’t advocate for yourself, who will? It’s important to ask for a raise every 1-2 years since inflation is continuing to rise and your income won’t. In fact, due to inflation, if your income isn’t rising you are actively making less money as time goes on. We know it can be a daunting task, but if you’re a worker who consistently creates value for your company, you should be sure you are compensated accordingly. There may be a cap on how much you can spend — but there shouldn’t be on how much you can make!
2. Look for a ‘side hustle’
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Above all else, it absolutely never hurts to look for a ‘side hustle’ that will increase your income gradually. There are so many ways these days where you can make extra money on the side from dog walking, cat sitting, freelance writing, creating your own Etsy shop and so much more. Even if you start on an incredibly small scale — say a profit or $5-10 a day — that will add up and help build a foundation for future success! We recommend searching online for ways to do this, but one tip is to leverage your connections in the field you already work in — you never know what freelance opportunities are out there especially if you already have the experience.
1. Enjoy your life! Try not to stress about money too much
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Yes, we know money can be quite a stressful topic. But it’s also important to enjoy your life, your money, and the things you’re spending it on. Life is too short to be obsessively saving and penny-pinching — don’t forget to treat yourself once in a while. You should also put money aside into a “fun” money account. If you enjoy dining out, shopping, or traveling you should be able to spend your money on those things and not constantly stress (obviously whatever is in your budget). Also, do not check your bank account every day. Your money is still there. Your investments are still there. Relax.
