Continuing on from my previous post, “10 Steps To Get Ahead And Create Long-Term Wealth, Part 1” here are the next five steps that I’ve personally used to help me get ahead and create an environment for long-term financial success. I want you to understand that you can also get ahead and start building wealth. Keep the process simple… your finances can be as complicated as you want it to be. For me, I like everything in my life to be simple, so I use very simple methods.
As I keep things simple, I continue to educate myself, as you will see in Step #10. There are so many resources out there at your disposal. Step #10 will touch on some of them that I’ve found useful. This website is dedicated to try and inspire people that are in the same situation as I was, just trying to find a way to create some wealth with limited resources. I’ve learned so much in the past 10 years, I only wish I could have started the process earlier. Still, the key to long-term success is starting now, no matter what point in your life or what your current finances are. Start now and secure your future for yourself and your family.
Continuing from Part 1, here are the next five steps that have worked for me:
Step #6: Be conscious of your spending
Evaluate every purchase and decide if you really NEED to make the expense. Living frugally is really the key to creating an environment for long-term financial success. No matter how much money you earn, if you make good financial decisions you can definitely get ahead. The good majority of people I know that are struggling with their finances have done so because of bad financial decisions, over and over again, then they wonder why they have no money and live paycheck to paycheck. Remember, being frugal and controlling your spending is a true mindset and lifestyle that you have to implement in order to get ahead with limited resources.
Of course, living frugally doesn’t mean that you have to totally deprive yourself completely. We all have hobbies and different interests that cost money. You also need to treat yourself with a reward occasionally, you earned it! Just be smart about your expenses and really think about each purchase. After I changed my mindset on accomplishing my financial goals, I soon realized that material things just weren’t important. Just ask yourself, “will buying this help me make my goals”? Most people simply don’t think about spending money, they act impulsively, then when the reality sets in with their spending it just gets them down and depressed. Again, it’s all about making good choices. If you do this, you will come out ahead and the money you save by living frugally will help you secure your financial freedom for good.
Step #7: Setup automation on your accounts
In earlier steps, I mentioned always paying yourself first before your expenses. Once your budget is totally tweaked and you fully understand how much you have coming in and going out, you can setup automatic transactions for deposits to your savings or investment accounts. This way you make sure money is funneled into your accounts, so you get paid first. Then you can also setup automatic payment transactions for your expenses. It really helps to have a system down to make sure you don’t forget to pay a bill. Automatic transactions eliminate the human element, which really helps from potentially paying late fees if the payment is accidentally overlooked. You can setup automatic payments for just about everything. It just simplifies the process and helps you manage your budget better.
I also use an EXCEL spreadsheet for all of my bills every month. I mark off each bill or financial obligation once I see it clear my checking account, just to make sure I didn’t miss anything. Do what works best for you, but keep it simple and efficient so it makes it easier and less stressful to deal with every month.
Step #8: Fund Your Retirement
Step #8 goes right along with Step #7. Pay yourself first! Your long term-wealth building is just that, long-term! It takes time to accumulate wealth, especially with limited resources. If you don’t already have a retirement account, you need to start one now! Time is on your side and it will take many years to build up a significant amount of wealth to live on in retirement. I’m not a mathematician, but the basic numbers from my Social Security (SS) benefit tell me that I will need much more income to live on in retirement. If you haven’t done so already, take a look at your potential SS benefit and really think about how much money you will need to live on. If you think that you are going to make it on SS and live the way you currently live, you’re in for a real shock. Do the math and really think about this, it won’t be hard to see that you will need different sources of income to keep you afloat…especially if you live 20 to 30 years after you retire.
At a minimum, take a look at your employer and see if they offer a 401K plan. If so, do they offer matching funds? If they match your deposits up to a certain percentage, take advantage of that, it’s free money! If they don’t offer a 401K, you can start your own IRA account. There are lots of good options, so do your homework and see what works best for you. If possible, have one of each going and utilize them for different tax purposes long-term. I also highly recommend opening a taxable account with an online broker, such as Ameritrade, E-Trade, Sharebuilder, etc. I am a huge fan of dividend paying stocks. With a brokerage account you can buy good dividend paying stocks that pay you to own them. You will be amazed how much you can accumulate with a good dividend stock portfolio.
We will take a closer look at these different types of retirement accounts in future blog posts. Visit my website for more on this subject later.
Step #9: Earn extra money
Once you have your budget set and fully functional, you may realize that you still don’t have any money left over. At this point, you may need to simply find ways to earn extra money. The best way to push your financial goals over the hump is to bring in more money.
Maybe you can find a promotional opportunity at your current job? If not, maybe you can work with your employer to ask for a pay raise. Most of the time employers don’t realize how important you really are to the organization until you bring it to their attention. If you are highly valued as an employee, you might be surprised that they will do whatever it takes to keep you. If not, maybe you can look at switching jobs and finding a better avenue for future advancement opportunities somewhere else? If you are happy where you are, maybe you can just consider working a second job? That may be the answer to help you bring in that much needed extra money each month.
You should also look to get rid of stuff around the house to free up some extra cash. I’ll bet if you look around the house, you’ll find plenty of stuff that you can get rid of that you really don’t need. Put your ads on Craigslist, it’s free! You could also sell stuff on eBay with online auctions.
Getting extra money selling stuff you don’t use or need around the house can really help you get a jump start. I can honestly say that I’ve used Craigslist successfully for everything that I’ve tried to sell. It works great for advertising your stuff and won’t cost you a dime. You might also find local papers in your community that you can advertise your stuff for free. Do some research and look for the best alternative to paid advertisements in your area.
Step #10: Learn as much as you can about money and finances in general
Educate yourself and learn as much as you can when it comes to money. There are so many good resources for this, including on-line blogs like this site, books and financial newspapers or magazines. You can go to the public library in your community and check out books for free! Knowledge is power, the more you learn the better off you will be. Remember I said that I prefer to keep my finances as simple as I can, I also keep this prospective when reading new books or articles. I take whatever I can from each type of material and implement what I believe would work for me. Every book I’ve read has given me different perspectives to consider. Some offer great information or ideas that I really find valuable. Either way, it’s all really a continual learning process. I find that reading and researching financial books and topics help to keep me focused on my own goals in creating long-term wealth.
Getting a grip on your finances and building wealth can be overwhelming, stressful or even intimidating at times. That’s why I really like to keep things as simple as possible. Learning different perspectives from multiple resources can be beneficial, but ultimately finding what works best for you is the key to your own financial success.
Use the 10 steps I’ve outlined here (part 1 and part 2) to help you get started on your journey to taking control of your finances for good. Stay focused and persistent with your goals. Make good financial decisions that will put you in a position for long-term success. Use addition income resources to build a security blanket account to cover unexpected expenses, then use anything left over to start using your money to make more money. Do your research and continually educate yourself. Once you change your mindset about your finances, you will actually break the mold of the typical blue-collar worker and get ahead of the game for good. Best of luck to you!
We are not professional financial advisers. All of the information presented on Middle Class Succuss.com is for informational purposes only. Our goal is to try and help as many people get control of their finances and create an environment for long-term success as possible. Please continue to do your own research and/or consult with a financial professional to make the best possible decisions for your own financial future.