Life is unpredictable, but your finances shouldn’t be. You can create financial wellness by following these 5 steps!
1. Save, save, save
Saving money should be your top priority! Why? Because saving is how you pay for big purchases. Saving is how you make investments. Saving is how you buy a car and a house. Saving is how you retire! Your future financial stability is dependent on your willingness to sacrifice and save today. It’s hard, but it is worth it!
2. Pay off debt
Debt destroys your net worth. If you want to make yourself financially secure, take radical steps to rid yourself of debt! Start with consumer debt – credit cards and car loans. Those have higher interest rates. With high interest rates, you end up paying way more than the sticker price once your interest comes due!
Next, tackle long-term debt like student loans and mortgages. While you can opt to take these more slowly if the interest rates are reasonable, it’s still ideal to pay them off as quickly as possible! It saves you interest money and increases your net worth to have no debt to your name.
3. Generate multiple streams of income
Multiple streams of income technically isn’t required for financial wellness, but it sure does create stability. If you become permanently disabled or get laid off, having some kind of income besides your primary job can save your bacon! Being dependent on someone else for livelihood makes it fundamentally impossible to be financially independent.
Passive income is the best kind of income, and you can find different ways to develop passive income stream. Passive income examples are rental properties, drop-shipping businesses, or investments that make a good return. These are forms of income that require little or no work on your part.
Side hustles like businesses, transcription, or amazon selling can also increase your cash flow.
It’s exciting to have extra money! Just remember that you don’t grow your income so that you can buy more – you grow your income so you can save and invest more!
You can find tons of great ideas for earning money on my pinterest board, Ways to Earn. On that board, I’m constantly gathering the best ideas for side hustles, cash back, and salary growth.
4. Make wise investments
What I’m primarily referring to here is a retirement of some sort, be it a 401k or RothIRA. Few people are prepared for retirement. In this day and age, it’s nigh impossible to find pension plans anymore. Do you really want to be working for a living after the age of 60? My husband and I are definitely not planning on social security to get us by, either! We want to retire comfortably.
Often, employers have retirement contribution matching plans. If you have a matching plan from your employer, make sure you are taking advantage of it! Max out your contributions each year! If you contribute $10,000, your employer gives you $10,000 too. The more you give, the more you get!
Beyond just investing for retirement, good investments can became an additional source of income. A profitable investment might be something like a rental property, peer-to-peer lending, or investing in a business start up (especially your own small business!).
5. Live frugally
The ultimate trick for financial wellness is living on less! Lowering your expectations free’s up more money for investing and saving. Millennials love the idea of retiring early! Many don’t realize that early retiree’s don’t live in wealth and excess. Instead, they have a very low cost of living and use money hacks and financial smarts to generate what little income they need to sustain their lifestyle.
Related: How to meal plan to save money
What steps have you taken to secure your finances and achieve financial wellness?