We all have our periodic struggles with finance -- from how to save money to how to set up a budget that really works. In this article, we'll dig into 3 of my favorite money secrets of successful people that are habit and lifestyle focused, rather than opportunity or education based. There are many ways to financial stability, and starting off on the right foot with these habits will be helpful first steps.
Money Tip #1 is an EXTREMELY popular concept and one known by many of the wealthiest people in America. This tip is to pay yourself first. Whenever you receive a check or receive any kind of income, take 10% of that money and automate it to be deducted from your income for savings and investments. This method of saving money allows you a cushion to have a reserve to invest in opportunities to increase your earning potential. These investments can range from advertising to educational courses. 10% repeated bi-weekly over the course of a year can add up pretty quickly. Even if you're only able to put away 5%, this will still make a significant difference. At the end of the day, the money you have earned is for you so you need to make sure it's there when you need it most. If you're just starting out on your journey for financial freedom, start by putting away a small percentage and gradually increase the percentage, and see where that takes you. You could even look at credit cards for limited credit history to help you build your credit score. You can use a credit card for small purchases and pay it off at the end of the month in full, which helps to build a solid foundation for a healthy credit rating.
Money Tip #2 is to consider opening a home based business for tax advantages. This may sound far-fetched, but with careful planning and strategic moves, this can become a reality with enough time invested. Let's talk about a widely-known reality: housing costs are the most significant annual expense for anyone. If you've got a dedicated room for an office, or even part of a room, you'll be able to deduct some of your housing costs by square footage. While most people may not be sure exactly how to start this process, you can begin with a passion project that you can dedicate a portion of your time to until you're ready to take the full time leap. Some can even deduct a portion of new electronics purchases, wifi bills, phone bills, etc. All these deductions can add up to thousands in savings over time.
Money Tip #3: Live below your means, and identify your assets and liabilities. This is an essential difference between those who were raised rich and those who were raised poor. When you don't ever pay yourself towards your future goals, and stay living paycheck to paycheck, this is an indication that you are always living above your means. One obvious (but difficult to implement for many) solution to this, is to spend less than you earn, and invest the difference. Our consumer focused society has made it challenging to feel like we don't always need MORE. To learn more about how to make game-changing lifestyle adjustments to make room for a savings, read our blog on How To Save Money. One small example of this is buying a used piece of cardio equipment for $300 through a website like Craigslist or an app like OfferUp as an alternative to that $800/year gym membership you never use. Opportunities to save exist all around us. Identifying assets and liabilities also have much to do with living within or even below your means. This means not creating unnecessary bills for yourself and knowing which investments will be profitable vs draining your bank account monthly. We'll be posting a blog soon about this topic, with quick and easy ways to assess your investments at a glance.
Feel free to contact us with any questions about opening a home-based business, and feel free to post your comments or questions in the comments below. Share this article with friends and family to spread the money saving love.
Empire Tax Professionals