Everyone wants to be financially successful, but what does the road there look like? Is it daunting, difficult, impossible? No! Simple habitual changes can take you a long way towards that goal. Follow these tips to set yourself up in the right direction towards achieving financial success. Check out the Finance section of this blog for more tips towards saving and budgeting.
Tips To Be Financially Successful:
1. Take Care of Yourself
This one is simple but so important. There are countless stories of people not taking care of themselves health-wise, and then the results are costly. Dental care is one of the main culprits.
Brush your teeth, floss, and get teeth cleanings and x-rays regularly. The amount of money you spend on routine dental care will far outweigh the cost of fillings, crowns, and veneers later down the line. The same thing goes with your health. Don’t skip your routine checkups. Take care of anything that needs to be taken care of.
2. Financially Successful People Save For Retirement
You WILL need a retirement fund. Don’t bank on receiving government assistance, because who are we to know what will happen in 20-60 years from now? Be self-reliant and save for retirement. Even if it is as little as $10 a week, something manageable will snowball into a substantial amount. The more financially stable you become, the more you will be able to contribute to your retirement.
Consider opening a Roth IRA account. If you’re someone who doesn’t have a 401k, an IRA will be your second option for becoming financially successful.
3. Perfect The Art of Self-Control
This is probably the biggest key to becoming financially successful. This is something that most people struggle with and is never perfect.
Use the 30-day rule to help you realize what a necessary purchase is and what isn’t. This is great for larger purchases that you wouldn’t usually make, such as a new car, computer, or phone. If you can manage to sit on that thought for 30 days, chances are you don’t need to purchase it.
4. Use And Abuse Your Things Before Buying New
Use your stuff until it falls apart and breaks and HAS to be replaced. I see this with people constantly buying something new to “upgrade” and then throwing away something perfectly good.
This isn’t only bad for the environment, but bad for your wallet. This is especially true when it comes to cars. Drive your car into the ground!!! If it gets you from point A to B, it works! Why spend tens of thousands on something that isn’t entirely necessary? This goes for everything else you use around the house, as well as any hand-me-downs you can keep and get good use of.
5. Have Two Incomes
Most people only survive off a single income, which is fine for a lot of people. However, if you were to lose your job, which, as we have seen, is possible with this pandemic, then you should have a second income.
I’m not talking about something that can sustain you outside of your full-time or part-time job, but something that will allow you to put extra funds towards savings. This could be upcycling and reselling, blogging, babysitting, or anything. Putting your eggs in multiple baskets offers security you may not have otherwise.
6. Establish Defined Goals
Another critical tip to becoming financially successful is having defined goals. Set your sights on a certain number you want to have saved for retirement. Start with a small amount first, then work your way up to more significant amounts. Once you give yourself a tangible goal to work towards, you will notice how easier it is to increase your savings. You can download the Mint app to help you track your savings and define these goals. Mint will keep track of how much you have saved within a certain amount of time, so you will be able to see your progress towards your savings.
Consider making goals to have a no-spend day or no-spend week. By seeing how you are able to not spend money for an entire week, you will be able to see how much unnecessary spending you do and make adjustments to spend less.
7. Invest Into Rewarding Hobbies and Activities
Allowing yourself some financial freedom to spend money on a hobby or interest will go very far. No one wants to penny-pinch so much that they feel like they can’t let loose and have fun. Choose your hobbies and interests carefully. Spending $200 on a good pair of hiking boots that will last one to two years is an excellent investment.
Spending money on hobbies that can make money is even better, such as buying a flower press or macrame set where you can sell your creations. This way, you can spend money on yourself while also keeping it within a reasonable limit. For me, I love to try new foods and eat out at restaurants. This can get expensive fast, so I try to limit it to once a week and try something different each time. It’s something I look forward to!
8. Financially Successful People Avoid Debt At All Costs
This tops the list for becoming financially successful! As much as you can, avoid debt. If that means getting rid of your credit cards to control your finances, then do it.
Try for scholarships in place of loans. Student loans and credit card debt are some of the biggest bank scams in existence. You’re just getting trapped into paying the bank money that you don’t owe, and that’s interest. The only way to get out of debt like that is to pay off as large of chunks as possible. If possible, avoid and limit your debt as much as possible. Weigh the pros and cons of a loan and find out if it’s going to be an excellent financial investment for you.
9. Max Out Your Retirement Account Contributions Each Year
As said previously, saving for retirement is going to be so important. Save more early on to allow yourself more wiggle room in the future. If it’s possible, try to max out your yearly contributions to your 401k or IRA accounts.
If you can manage to max out both, it’s in your best interest to do so. Ideally, you want to be saving between 15-20% of your income into a 401k account. Knowing you are setting yourself up to be financially successful and stable in the future is so rewarding and will save you plenty of stress.
10. Advance In Your Career
Don’t be afraid to be a go-getter. When you’re first starting in your career in an entry-level role, look for necessary improvements. Become a vital part of the company and provide skills that not many other people have. Becoming an essential employee will give you a lot of leverage to negotiate pay raises.
Don’t be afraid to negotiate and barter for better pay raises or better job titles. Becoming someone who is confident in their skills and their roles and can portray their knowledge well will get them far in their career. Don’t settle. I know way too many people who become comfortable where they are because of the simplicity and ease. Always push for yourself to achieve more!
11. Financially Successful People Stick To A Budget
This one is going to be huge in your journey to financial freedom. People with financial success can often attribute it to sticking to a budget. You need to know where your money is going at all times. You need to always know how much money is in every bank account and how much money you need to pay towards debt.
12. Financially Successful People Invest Money In the Market
Almost every person who is well off and has a lot of money has plenty of it in investments. Investing is something you should do as soon as you have your emergency savings tucked away. Once you begin putting extra money into savings, start throwing the leftovers into investments.
If you started today and invested $100, with a monthly contribution of $200, let’s determine how much that will accumulate in interest. If you invest $200 a month at an interest rate of 8% in 10 years, you would have $34,983! It’s incredible what investing can do with your money. If you still aren’t convinced, make sure to read about investing here.
Retire Guide also has an in-depth explanation for starting your investment journey. I highly recommend taking a look there!
13. Financially Successful People Build Good Credit
You hear debt and think, bad, bad, bad! Debt is not always bad when handled appropriately. People who are successful with their money can use debt to their advantage. Sometimes taking out a loan will help boost your credit rather than putting down all the cash at once.
This is smarter to do, so you can learn how to make payments and fit them into your planned budget. The only thing to always be aware of is making payments on time and never going into CREDIT card debt.
14. Track Your Net Worth
You should always be aware of how much you’re worth at all times. Your net worth, if growing accordingly, should be slowly increasing and not decreasing. This is another place where Mint will come into play. Mint allows you to see all your accounts pooled together, so you always know how much you’re worth.
I have bank accounts at various branches, so when I open Mint, I can see exactly how much is in each account and where I should transfer money. I highly recommend this app!
15. Don’t Wait For The Market
Frequently, new investors will be timid about where and when to invest their money. While you should always put in the time to do research, you shouldn’t have to “wait” for something to happen. If you are investing right, you will see a return on that investment.
By starting early, you will have plenty of time to ride out the market and watch your investments come back. Just because you see the stocks or the fund you invested in go into the red doesn’t mean you have to sell and get out as fast as possible. The market is expected to fluctuate, so go with the flow, and you will see your return on the other side.
16. Make Your Goals Tangible
So, we’ve established that you need to make goals. It’s essential to make sure these goals that you set are within reach. If you begin by telling yourself you want $50k saved, you will have a long way to go right off the bat! Start small, say maybe, $10 a week.
Even if your goal doesn’t seem like much, make an effort to reach it. Once achieved, set another larger goal right after that one. This sort of snowball effect will get the ball rolling on your way towards decreasing debt and increasing savings.
17. Shop Smart
There are a lot of things to consider while you are shopping. You need to determine an item’s worth through a few different things. Evaluate cost per use. Think about how many times you will use an item and how much the cost is if you divide it by those times. If you know you won’t use this item very much, then maybe it’s not a necessary purchase. If this item pays for itself with all the use it will get, then perhaps it’s a great purchase!
Spend money on experiences over things. This one goes a long way. You are going to feel much more satisfaction and be happier when you spend your money on experiences. Experiences build relationships, reduce stress, and bring about new memories. To me, that’s an investment worth making!
18. Keep Your Overdraft Fees On
Some banks will allow you to have the option to turn on overdraft protection. This means you can overspend what’s in your account without being penalized. Don’t allow this to happen! You shouldn’t ever come to a point where you are over-drafting your account if you are sticking to your budget. Don’t let yourself fall into the trap of giving yourself this leeway, either.
By keeping your overdraft fees, you will be much less inclined to overspend your account and be more thoughtful about budgeting. This is especially good if you already know you struggle with self-control, which all of us do at some point or another!
19. Financially Successful People Put Unexpected Money Into Savings/Investments
Too many times do I see people who take any unexpected new income and spend it immediately. When you get your tax return, put it into savings! That money had been set aside for you all year long, so treat it like it was you saving it the whole time.
This is the same with Christmas or annual bonuses. You don’t have to spend the money just because it’s “extra.” Remember, you still worked hard for that cash, so use it wisely and towards your long-term goals.
20. Keep Your Savings Account At Another Bank
You will not realize how much difference this tactic will make towards being financially successful until you try it yourself. I keep my long-term savings at a separate bank than my checking account, and I have never saved more money before. When you keep your savings and checking accounts at the same bank, the ease of transfer allows you to dip into it much more frequently.
By keeping your savings at a separate bank, you have to wait 2-3 business days before you can even see that money. This will give you those 2-3 days to think about whether or not this is the right move or purchase to make with that money. I keep my money in Ally bank. Using this online platform allows me to accrue higher interest rates by putting my savings there. There are also no brick and mortar branches, so it makes it just slightly more challenging to access the money I want to protect from myself.
Keep an emergency savings fund in the same bank as your checking. You will want some of your money easily accessible when those unexpected expenses occur, and you should. I am someone who struggles with self-control, so this plan works great for me, and it might work for you, too!
21. Financially Successful People Keep a Positive Outlook
It can be tough to stay positive when you might be struggling financially. We have all been there. The best thing you can do throughout your journey to financial success is to stay positive!
Financially successful people don’t always have everything going their way. You will be in situations where you lose money, have an unexpected expense, or maybe have a medical emergency. All the steps listed above are to prepare you for when those unpredictable life moments show up. Remember to keep positive and invest in yourself and your hobbies. And lastly, remember you’ve got this!