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Three stacks of coins of increasing height, topped with a bit of soil and small plant sprouts growing from them, to represent building wealth.

Daily Habits That Make Building Wealth Easier

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It is easy to think of wealth as something that happens overnight. The media often emphasizes rags to riches stories, forgetting how rare those scenarios are. News sites share stories of happy lottery winners, reports that overlook the enormous odds ticket buyers face.

 

Given these misperceptions, it is easy to see why so many people haven’t taken the steps that could help them achieve their financial goals. Goals that may seem unattainable. With discipline and hard work, building wealth is possible. Here are a few strategies and everyday habits that can make wealth building easier.

Pay yourself first

Pay yourself first, or “PYF,” is perhaps the most effective wealth-building habit and one of the easiest to implement. With this simple strategy, you direct part of every paycheck to a savings account, mutual fund, or other investment vehicle, forcing yourself to live on less than you make.

Know how much is in your accounts

There is a reason why financial institutions make so much money on overdraft fees. A shocking number of account holders have no idea how much money is in their account. As a result, they are blindsided when writing a check or withdrawing cash from an ATM sends their balances negative. Knowing how much is in the account is an essential first step toward controlling unexpected costs and taking control of your finances.

Prioritize fee reduction and demand real value for your money

Those who manage to build wealth know that prioritizing fee reduction is a vital first step and that every dollar not spent on management costs is one more dollar that can be invested. The wealthy, and those on their way, always demand value for the money they spend on their investments.

Deposit (or invest) raises, bonuses, and other found money

If you want to build wealth, start by putting bonuses and other found money in a savings account or investing the cash in a mutual fund or other low-cost investment. When wealth builders get extra money, they avoid lifestyle inflation, opting instead to beef up their savings and investment accounts.

Take advantage of tax savings

From 401(k) contributions to IRA accounts to health savings accounts, some types of investments have a double and even triple advantage. One of the most effective ways to build wealth is to prioritize investments that offer tax savings and the promise of tax-free withdrawals. Consult a tax advisor to determine the best strategies for your situation.

Develop multiple streams of income

One of the fastest ways to build wealth is to bring in extra money, which starts with developing multiple income streams. That could be a side hustle, a home-based business, or even rental real estate. The idea is to generate extra cash, money that can be saved and invested.

Save on everyday purchases

People who are successful at building wealth look for ways to save money on everyday purchases. These people choose generic and store-brand products when they go grocery shopping. You might even see them scanning the racks of the local thrift store for gently worn designer duds and used but still pristine furniture and home décor.

Take the long view

Building wealth will be a slow and steady process unless you are the one in several million who buys that winning lottery ticket. If you want to succeed, it pays to adopt the long view, saving consistently, taking calculated risks, and tracking your progress over time.

Conduct an annual financial review

Successful wealth builders know where they stand and where they are going. So they conduct annual reviews of their finances, including emergency savings, investments, insurance, and all other expenses.

 

Building wealth is not an easy process; in many cases, it is not fast either. If you want to build wealth for the long term, start today, and adopt these smart habits that can help you succeed. The strategies listed above can help you get started, one dollar, and one day, at a time.

 

This article is for informational purposes only and is not intended to provide tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors for advice. Membership required. SRP is federally insured by NCUA.

Article Credit: BALANCE

A lemonade stand is pictured to represent seasonal income.

Making the Money Work When Your Income is Seasonal

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Flexibility, built-in vacation time, freedom—seasonal work has many natural benefits. But it also comes with its own challenges, especially in making its financial side work for you. Most of the available financial advice assumes a steady income stream each month. But that doesn’t help much if you have to plan for extended periods without a lot of cash rolling in.

 

Use these pointers to make sure your money situation is what you need it to be, no matter the season.

Take advantage of all incentives

With labor shortages common in the US, many employers offer several incentives – from retention bonuses to transportation reimbursement and beyond – so weigh your options and go with the employer offering you the best total package. Keep track of all offers mentioned to make you get everything coming to you.

Know your monthly expenses

This can’t be overstated: the biggest key to successful money management with seasonal work is understanding your baseline monthly expenses. Knowing what you need to survive and have a decent quality of life throughout the year ensures you don’t encounter too many anxious moments when money is tight. Once you know your basic monthly expenses, you can start calculating how much you’ll need each month during your off time.

Do the calculations

Multiply your monthly baseline expenses by the number of months you don’t plan on having income (or much income) over the coming year. Once you have that number, divide it by the number of months you will be working. Now, you know how much you need to save as a bare minimum total during your work stretch.

Utilize multiple savings accounts

In addition to being a time of earning, your heavy work months should also be a time of saving aggressively. To keep all your savings goals straight, set up accounts to stash money for your upcoming monthly expenses and anything else approaching the horizon. That could include vacations, tax obligations, home repairs, or other outlays of cash.

Do a new budget with each transition

On top of diminished income, your life during the times when work isn’t plentiful may have other differences when it comes to expenses. Taking the time to do a new budget each time you transition into and out of your busy work times will help you keep your spending in a place that keeps you safe and secure.

Prioritize emergency savings

With variable income, you’re even more susceptible to the negative effects of a sudden, unexpected expense. Even if you’ve covered all your core expenses, you’re not assured of a smooth transition time until your next larger gig. Without a steady income stream, a big surprise can lead to a big crisis. You may not be able to save enough to cover every emergency right away. Still, putting money away is a good idea to ensure less turbulence when that inevitable curveball comes.

Stay wary of credit card usage

If unforeseen events arise and you find yourself looking to a credit card to cover your necessities, understand that this should be a wakeup call that your finances are in a precarious position. Mounting credit card debt, especially for someone with inconsistent income levels, is not sustainable and should be treated as a sign that significant changes need to be made to your overall financial plan.

Be conscious of stress-related expenses

When you’re in the thick of a busy work season, you’re probably looking to work as many hours as possible. When you have a little time off during this hectic stretch, you might be looking to make the most of your leisure time to blow off some steam. Whether it’s lavish food and drink, a retail therapy session, or another type of splurge, these big spender moments might feel good at the time, but they can be costly to your overall financial wellness in the months ahead. Try to plan some low-cost activities ahead of time for your relaxing hours, so you’re not as tempted to go hog wild.

Time your more considerable expenses carefully

If you’re like many seasonal workers, you may keep yourself motivated during the tougher moments by thoughts of treating yourself once working days are put on hold for a while. It could be a nice trip somewhere or a lovely little gift to yourself. It’s wise, though, to hold off on treat until you’ve done a full assessment of where your money’s at before making a big purchase. You don’t want to start your leisure time by creating a more tenuous financial situation for the months ahead.

Avoid check-cashing businesses

If you get paid with a check for your seasonal work and rely on a check-cashing business to get at your hard-earned money, please reconsider your options. Having a checking and savings account with a local credit union, or bank will help you keep more of that money you put so much effort into earning.

Take advantage of available assistance

Contact your state’s unemployment office to determine if you might be eligible for unemployment benefits during the period in which you’re not employed. Additionally, you may also qualify for help through the Temporary Assistance for Needy Families (TANF) program. For other programs that might be available in your area, dial 211.

Don’t neglect your retirement

Many employers make retirement savings easy with a set-it-and-forget-it plan like a 401(k). Saving for your golden years may be a bit more complicated if you plan on continuing with seasonal work. However, remember that an Individual Retirement Account (IRA) and other options are available. Take advantage of the opportunity to put the power of time to work for you.

 

This article is for informational purposes only and is not intended to provide tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors for advice. Membership required. SRP is federally insured by NCUA.

Article Credit: BALANCE