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7 signs you're building wealth faster than you think
You're focused on the 'big wins'
Focus on the 5-10 Big Wins, rather than 50 little things.
For example, paying down debt, saving automatically, negotiating a higher salary, and investing early will have a much greater impact than forgoing your morning coffee.
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You max out your retirement accounts every year
If you can afford to put the full $19,000 into your 401(k) this year,
- you multiply your earning potential in the market,
- you can score if your company offers to "match" your contribution,
- You only pay income tax on it later, but for now your money grows tax-free.
You're not obsessive
Check on your asset allocation periodically to ensure it matches your overall risk tolerance. Do not obsess over the details that could lead to emotion-fueled mistakes.
You don't keep too much cash
Never keep more than you need in cash or in a checking account.
Grow your money in the short-term by storing it in a high-yield savings account or certificate of deposit.
Your income is higher than last year,
... but your spending hasn't changed.
Increasing your earnings is a form of leverage, whether you scored a raise, landed a better-paying job, or created a second or third income stream.
You have no high-interest debt
Consumer debt kills wealth.
The average credit card charges an APR of 17% while the stock market returns an average of 7% to 8% each year, adjusted for inflation.
You have financial goals
Create a roadmap to increase your chances of achieving your financial goals.
It might be worth it to work with a financial adviser to set specific goals and have a plan in place.
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Increase Your Income
Formal education, practical experience in your field and doing a good job is important to earn a high income.
Most professionals see their incomes increase over time. If you can gain high ear...
Save and Invest
You’ll only build wealth if you save a reasonable percentage of those earnings.
- If your employer offers a 401(k) plan, increase your contribution.
- Automatically send a portion of your money to your savings or investment accounts before you can spend it.
- Purchase a home instead of renting. You'll get your house payments back in the form of equity.
- Pay off anything you owe to avoid paying interest.
- Maximize the interest earned on your savings.
Cut Wasteful Spending
Periodically evaluate your spending and look for sources of savings.
- Invest in more sustainable technology for your home. For instance, if you watch cable, buy only the channels you are watching.
- Improve the insulation of your home to reduce the amount you are spending on electricity and gas.
- Consider buying in bulk.
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Create a Spending Plan
Know your income, your expenses, how much is earmarked for additional expenses and how much for other f...
Spend Wisely
Learn how to spend on the things that matter to you.
Consider your values and priorities when you draw up your spending plan. If going on vacation or giving to a charity is important to you, include those items in your spending plan.
Pay Off High-Interest Debt
Pay down your high-interest debt as quickly as possible.
While some types of low-interest or tax-deductible debt can help you along the way, high-interest debt rarely has a good purpose.
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Many life transitions happen in your 30's
From moving up in your career to buying a home. Making smart moves with your money during your 30's can help you achieve future financial success.
Focus on percentage of income saved, not the dollar amount
Over the long term, it's not as much about the dollar amount you save, but the percentage of your income that you dedicate to saving and investing. By focusing on percentages, you can ensure you're always saving more as you earn more.
Spend time tracking your money
Most people react to their finances. The problem with that is that you rely on chance to have enough money in the bank when you actually need it. Be intentional about your money and spend time reviewing and evaluating it. If you don't, you'll never know if you're moving in the right direction or not.
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