Building wealth is a process that requires you to spend — and save — deliberately. The good news is that you don’t have to make millions now if you want to have millions later. Even if your budget is tight, there are steps you can take right now to start building up a nest egg. Take advantage of as many as you can now to build more momentum toward your future financial freedom.
Max Your Employer Match
It’s slowly becoming more common for companies to offer their employees a match when they put money into their retirement fund. No matter how minuscule that match may seem, you can earn a lot more over time by maxing out that benefit. Even a match of one percent a year will add up over time!
To find out if your employer offers a match, look in your employee handbook or talk to your HR representative. Then, find out what you need to do to become eligible and do it! Taking advantage of an employer match is like giving yourself an instant raise. If you wait to start contributing, you’ll only be missing out on free money from your employer.
Refinance Your Student Loans
Education can help you get ahead in the long run, but it often comes with a hefty price tag and student loans. Even when you’re making a steady salary, the interest on student loans can make it feel like you’ll never see the light at the end of the tunnel. Refinancing your student loans is a great step to gaining more control over your debt.
Refinancing is a tool you can use to get more flexible loan terms and lower your interest rate. There are progressive lenders like SoFi that will take into account your credit score, your salary, and your career trajectory to give you the best chance of getting a lower rate. You’ll get to spend more of your money each month on things that make you money and less on interest.
Also Read: How to Build Wealth In Your 20s
Rack Up The Rewards
When you pay off your credit card in full each month, it doesn’t cost you anything to use. In fact, putting the majority of your purchases on a credit card might just save you money. How? Rewards!
While each credit card is slightly different, there are awesome cards out there with no fees that offer great rewards. Use a cashback card to pay yourself each month just for using your card! Even if it’s just a few bucks per month, that free money is sure to add up. And that’s all wealth really is — building up small sums of money consistently over time.
Contribute to a Roth
The best time to contribute to a Roth IRA is when you’re young. There are two reasons. First, you contribute to an IRA with money that you’ve already paid taxes on. Since you’re more likely to be in a lower tax bracket when you’re young, it’s smarter to contribute that money now. If you wait until later, you’ll probably be in a higher bracket and getting taxed more. Dollar for dollar, the poorer and younger you are, the more you can gain from a Roth IRA because the money grows tax-free.
The second reason? Roth IRAs are super flexible. You can invest in stocks, mutual funds, bonds, real estate – almost anything you can think of. Another great feature is that you can tap into your Roth contributions when you’re ready to buy your first home, up to $10,000. That can make a huge difference in the house you buy. Even if you don’t need to use that money, a Roth IRA gives your wealth a better place to grow than a low-interest savings account.
Invest in Yourself
This is one of the most important factors in building wealth, but it’s often the most overlooked. Even if you already have a formal education, there are lots of things you can do to invest in yourself. The goal is to put yourself on a career trajectory that offers you more financial freedom as you grow. If you’re young and have a plan to leverage your time to push yourself further in your career, you’ll see benefits for years to come.
For example, let’s imagine that there’s a certification course you could take to give you more credibility in your industry. Even if that certification only gets you a raise of $2,000, it might be worth it. That’s $2,000 per year for the next 25 to 35 years — $50K to $70K over the course of your lifetime!
When you add it up, it’s easy to see how getting on an accelerated career path has the same impact as compound interest. Putting a little time and even a little money into your development can help you earn more over time and become a wealthier, more awesome version of yourself.
