5 Simple Money Habits That Will Enable You to Build Wealth in 2020
Photo by Micheile Henderson
Originally Posted On: https://newslo.com/5-wealth-building-tips-and-money-habits-in-2020/
In America, everyone has the opportunity to build their wealth and grow as an individual.
However, not everyone has the knowledge of how best to do that. After all, resources vary from person to person, and the path forward for each individual might not be exactly the same.
The sad truth is that most Americans still live paycheck to paycheck.
They struggle to build the wealth that they so greatly desire. If you’ve found yourself in this kind of situation, it is essential that you take some important wealth building tips to heart.
The below tips can help push you to take the steps you need to increase your personal sense of wealth and profit. If you can get into these money-making habits, you can see your fortune turn around in no time.
Here are the 6 simple money habits
1. Invest In The Stock Market
The easiest place for a person to make some extra money? The stock market. Anyone can begin investing in the stock market. Making an account with a licensed brokerage is easy and free, and you can invest even a small amount to get started.
Holding onto certain stocks over a long period of time can yield great financial results. This can be a great source of passive income: income that you don’t have to actively work on in order to grow.
You’ll need to watch over your investments, obviously, and do some research on the ones you think you want to take on. However, for the most part, the money you make will rise on its own over the course of many years.
Finding Money To Invest
What can you do if you don’t have any spare cash to put into the stock market? This is a situation that many American families seem to find themselves in. The more you put into the stock market the more you’ll get out of it, of course.
Not every family can put in tens of thousands of dollars, however.
One thing you can do if you’re really strapped for cash is to simply start by investing your pocket change. Whatever money you get back from your purchases, put in a jar. At the end of the month, put all that change into some form of stock.
You’ll start out very small, but eventually, the amount you’ll be able to invest will increase over time. You’ll have built up money month-to-month from your change, and your stock investment will be increasing at the same time.
Investing your credit card rewards, birthday money, and other extra cash can also be a good idea as well. Don’t think of it as giving this money away– think of it as increasing its value!
2. Better Track Your Spending
How can you hope to build money-making habits if you aren’t even on top of what you’re currently spending your money on? This is a huge mistake that far too many Americans fall into.
Tracking your spending will give you a much clearer idea of what your current financial situation is. You’ll be able to see where you are losing money more easily, and that may even give you a few ideas for how to keep more cash in your pocket.
You can’t build true wealth if you’re spending more than you’re making, obviously. If you track your daily expenses, you’ll get a clear idea of your monthly expenses. You can then put that next to your monthly income and see how much you have leftover.
Your goal should then be to increase that number. What are you spending a lot of money on that you may be able to cancel or cut back on? All the numbers should be right there in front of you, so determining this shouldn’t be too difficult.
Many people do this kind of tracking on pen and paper. Given this is the year 2020, however, there are also plenty of applications out there that can help you.
Programs like Mint or Level Money can be linked straight to your cards and can get a head start on tracking your purchases for you.
3. Stay Out of Debt
This might seem like an obvious suggestion, but nearly all Americans have some form of debt they take on. For many, they just don’t have the funds they need to make the kinds of purchases they hope to make.
Credit card debt is the most common form of debt out there, but it’s also the one you should have the easiest time avoiding.
For Those Currently In Debt
If you’re currently in credit card debt, your first priority should be to get yourself out of it. The sooner, the better! There are various ways to do this, but your approach shouldn’t be that different then what we discussed when talking about the stock market.
Take all of that spare change, all those credit card rewards, bonuses, and birthday gifts. Put them in a separate account intended to pay off your debt.
If you can cut back on other purchases, put that saved money towards your debt as well.
The quicker you can pay off your debt, the less you’ll have to pay in the long run. This is because debt collects interest, which means it’ll grow in size over time.
If you can get the money together to pay off your debt quickly, you’ll keep more money in your pocket in the future.
For Those Not In Debt
If you’re not currently in debt: good for you! Now, you just need to make sure you keep out of it. This shouldn’t be too difficult as long as you practice responsible financial decision-making.
One of the best things you can do is to change your frame of thinking. Instead of thinking of your credit card as a line of credit, think of it as just a debit card.
That means you should avoid making any purchases that you don’t have the money to pay off at the current moment.
Approaching your purchasing decisions in this way will help to ensure that you never find yourself in a situation where you can’t pay your bill. If you can always pay your bill, you’ll never go into debt!
That means you can turn that extra change into something more financially productive.
4. Open a Retirement Account
You don’t want to have to work forever, right? Eventually, we all hope to reach an age where we can take time away from the office and settle into a new routine.
Even if that doesn’t sound like you, you might eventually reach an age where you can no longer work– and you’ll need a hefty amount saved up to make it through your remaining years.
Saving up for retirement might not sound like the most fun thing you can do with your cash, but it is the most responsible. The bottom line is that the earlier you start saving for retirement, the more you’ll have when you finally hit the ripe age in question.
Lucky for you, starting a retirement account is a pretty simple task. Most employers out there even have a system set up that can deposit a portion of your income straight into a ROTH or 401k.
Many employers will even match your annual contribution at the end of the year, giving you an incentive to add more to your account each year.
You can consider this match something like a Christmas bonus for your future self.
Of course, if you don’t have an employer who offers this service, or if you’re self-employed, don’t fret! You can open up a retirement account fairly easily all on your own.
If you’re unsure of how best to approach this kind of thing, you can reach out to a financial expert such as Charles Carey.
Someone with a background in finance can help you get a retirement account set up as well as offer a wealth of other financial services and suggestions.
5. Consider a Side Hustle
One mistake that many Americans make is not thinking of wealth-building as an independent pursuit. Too many people go to work, collect their paychecks, and take no initiative to think of other ways they could help to endow themselves.
If you haven’t, 2020 might be the year to start considering the power of the side hustle.
The side hustle is something other than your day job you can do to make additional income. What this side hustle should be will depend on how much money you need to make and what talents and skills you have.
Those with a tight financial existence might want to take on a side hustle to get themselves back on stable ground in terms of their cash flow. There are a lot of jobs out there that are flexible and can be easily scheduled around a person’s primary position.
Many people drive for rideshare services such as Uber or Lyft in order to make some extra money. Others tutor students online in subjects such as English, Math, or SAT-prep.
These are all positions that can be easily worked into a person’s pre-existing schedule.
Turning Passion into Profit
It’s also worth considering what your favorite hobby or pastime might be able to provide in terms of your monthly income.
Are you an incredible artist? It might be worth putting your work on websites like Etsy and seeing if there are people out there interested in purchasing it.
If you’re an amazing writer, amateur musician, or skilled video editor? They’re certainly people out there looking for, and likely willing to pay for, your skills.
If you can make some extra income from doing something you already love, why wouldn’t you? Selling your art or using your personal skills to make some extra cash can be an inspiring way to fatten your wallet during your downtime.
Plus, you can do all of this without the stressful-presence of a true second job.
6. Finish Your Taxes Early
There’s no sweeter moment during the year then when your tax return comes in the mail. This extra flood of income in the early Spring helps to bolster so many around the country through difficult financial times.
Finishing your taxes early can help to ensure you’ll get this return in your pocket sooner rather than later. Most people turn their taxes in right near the deadline, meaning traffic around this time can be quite intense.
The closer you file to the deadline, the more likely it will take the IRS a decent amount of time before they can process your return and issue a check to your address.
If you file early, you’ll be one of the few returns the IRS has on their hands. You’ll be much more likely to get your return early on. Getting your tax return done early and can help you avoid the stress of trying to get everything in order right before the filing deadline.
Using free services like TurboTax or H&R Block can also help to get you through the process more smoothly. These programs can help you find laws and loopholes that will allow you to save money when filing.
Wealth Building Tips for 2020
It’s the start of a new decade, and that means it’s time for you to look forward and think of the future. The above wealth building tips can set you up for success in 2020 and beyond. The more you can integrate these money-making habits into your monthly routine, the better off you’ll be.
Need more personal finance advice? Keep scrolling our blog for more.