5 key Money Moves to Make in 2022 to Build Wealth (MUST READ!)
Many dream about being wealthy, and while it may seem distant for some, strategic planning can help set you up for success. There is no one-size fits all blueprint to guarantee wealth, but these strategies may help.
1. Budget and make a plan to reduce expenses
Creating a budget can help you better track your money. Not having a budget can make it difficult to know where you are spending your money, or difficult to have control over your spending in general. To get started, you can look at old credit card and debit card statements to get an idea of where your money is being spent, and then figure out areas that you can cut back. Budgeting with software, websites or apps can also make budgeting easy to stick with. Many may feel intimidated about where to start, overwhelmed by the amount of data to go through, or can’t afford an accountant, but using an app, website or software can help reduce stress and make things easier. There are many free apps, websites and software to choose from. Creating a budget will help you visualize where you can cut back spending and where you can save money.
2. Be more frugal and spend less than you earn
Many millionaires are wealthy because they know how to keep and invest their money, and not spend it on unnecessary things. Being frugal can help you build wealth, because by being frugal you are being more resourceful with your money. Being frugal is not the same as being cheap. Being frugal is prioritizing your spending so that you can focus on building wealth, and spending your hard earned money on what is important to you in life. Think of money as a tool, and use your money resourcefully to build wealth.
3. Increase your income
There are many ways to increase your income such as by negotiating a raise or promotion at work, finding a new job with a higher salary, or working on a “a side hustle”.
Get a cash bonus when you signup and save on the Cowrywise app with my invite code JOSEPLWV or invite link.
The most efficient way to land a raise, is to keep a “work diary” and update it every week your accomplishments, problems you’ve solved, and value you have added at your place of work. Then, when it is time for your annual review or time to discuss a raise, you will have many examples on why you deserve a raise. Managers can be very busy and may not remember everything that their reports do (especially if they have multiple reports), so this record keeping system is a great way to remind them of the value you add, and not forget about your contributions. At the end of the year you will not remember every single thing you’ve done, but by recapping your progress on a weekly basis, you will be able to have dozens of talking points a year from now. Every single employee that I’ve hired, have been encouraged to keep a document like this, to track all the “wins” they have had through the year.
Finding a job has never been easier due to the internet. There are dozens of websites online that allow you to browse jobs from the comfort and convenience of your home. It does not hurt to browse jobs, and you may be able to secure a job which pays more.
Due to technological advances, we are also living in a time where the “gig economy” is more popular than ever, and it has never been easier to pick up a “side hustle” to earn extra cash. Many apps and websites allow you to work on your time, and on your schedule. There are so many options such as dog walking, cleaning, tutoring, being a driver, simple home repairs and handyman work, delivering food, picking up groceries, and helping others move just to name a few. It never hurts to try something new that puts additional money in your pocket.
4. Pay-off and eliminate debt
Debt can rob you of your future because you are using the money you earn today, to pay off things from the past. And if unpaid, debt can grow larger and larger with the interest and fees adding up. Debt can also cause a lot of stress.
In terms of paying off debt, initially I used the debt snowball method, but then switched to the debt avalanche method. The debt snowball method is the better method to stay motivated, empowered and less overwhelmed, and this is how I needed to feel when initially tackling debt. This method focuses on paying off debt with the smallest balances first, to get them out of the way quickly. With this method, I was psychologically motivated by seeing the progress of smaller loans being knocked off. The snowball method can feel more empowering, and it motivated me and encouraged me to keep attacking my debt. For many, staying motivated is very important. However, because I was prioritizing paying off small balances first, instead of balances with the highest interest rates, I ended up paying more money in interest in the first few months. After becoming more financially savvy, I switched to the debt avalanche method, which is the better method for saving money in the long-term. This method focuses on paying off balances with the highest interest rates first. Because of this, this method results in paying less interest over the life of the loan, because you are focusing on paying off the debts that carry a higher interest rate. Based on math, the debt avalanche method is the best strategy that uses money as a tool, because it will save you money due to paying less interest in the grand scheme of things. Mathematically, it makes sense to pay off debt first that charges a 21% interest rate, over debt that is only charging a 4% interest rate to borrow money.
5. Invest in Real Estate
I believe that money is a tool which can be used to build wealth. When you rent, your money is solely being used to provide shelter. However, owning provides numerous benefits in addition to just providing shelter. When you own a residence, your monthly payments create many benefits such as building equity in the residence, building additional equity over time though price appreciation of the property, being able to leverage equity in the home to take out loans or use for another real estate investment, tax incentives with home ownership such as the interest paid on a mortgage being a tax deduction, as well as many people being able to write off a portion of their home used as a home office due to how common remote working has become during the pandemic. These are a few of the many excellent benefits that owning offers and renting does not , which can help you to build generational wealth over time. I like to think of money as a tool, and use my dollars to my advantage. Additionally, you should definitely consider buying a home if you have the cash available for a down payment. First-time homeowners are able to purchase a property with as little as 3.5% down or 0% down if you served in the military.
At the end of the day, personal finance is personal because everyone’s situation is different, and what works for one person may not be the best option for another person. But with one step at a time, you can achieve financial empowerment. Consistency is key when pursuing financial freedom!
CONTRIBUTED BY Andrew Lokenauth
READ ALSO: 11 reasons why good men never cheat