Building wealth is often an afterthought of personal finance. When most people talk about paying off debt and getting their budget in order, there is often one area that is forgotten which includes bringing in more money! It seems out of reach for many people and I think that is one reason why they don’t even bother with trying. My goal for this blog is that you can start to realize that bringing in extra income so you an pay off your debts, build a significant savings and have money for retirement is possible!
Cutting back is definitely one way to make an immediate impact on your financial situation. But as you may have discovered, you can only cut back so much before there is nothing left to cut out. That’s when building wealth comes in to the equation.
What does that mean exactly? And why should you focus on it now?
Building wealth can take many different forms. It can mean getting a second job to bring in extra income, start a side gig or gifs to earn additional and multiple streams of income (which I am a huge fan of). This helps get you to the point of becoming debt free, a large savings and having extra money to invest and save each month to have peace of mind about your financial future.
To do that, it’s important to understand where you are today. I suggest using Personal Capital to get a holistic view of your financial picture. It’s free and easy to use. It can be accessed via your desktop, tablet or mobile device and will provide insight into where you are spending today and where you might be able to cut back.
Building wealth is the strategy you use to actually gain the valuable resources and/or material possessions.
Building Wealth the idea that you can meet your own personal financial goals for the future.Click To Tweet
I hate to say it, but I don’t think most women are focused on this important area of personal finance. I think many women sell themselves short and are waiting for “the” job or Prince Charming to start saving for their future. This is a huge mistake. When you are in charge of your money – you’ll be creating your own destiny for a solid financial future!
Most of us think we can do it later or when our circumstances change.
But it is important to know that you must start to prepare for your financial future now! I’ve been working with women over the past 10 years through this website and this is what I know to be true (note: this is my own observances – I’ve never done an actual study on this but I think you will agree with what I’m saying):
- Most women are unprepared financially due to fear, lack of knowledge or overall disinterest in learning more about their financial situation.
- Most women are not saving for retirement or saving very little (only putting 2-3% of your income in your company sponsored IRA is unlikely to get you to financial freedom!) because they are unsure what to do, think they can’t “afford” to save more or plan to do it later, but later never comes.
- Many people make personal finance harder than it needs to be. It’s really as simple as spend less than you earn and put money aside for your emergency fund and retirement. Many of us have a behavior issue around money (what we do or don’t do with it) and use the excuse that learning personal finance is too hard and continue that behavior.
- Most of our thoughts, ideas and opinions around money formed when we were kids. It’s interesting to see how your parents and other family members felt about money, how they discussed it and felt about it and tie that back to your beliefs around money today.
- What we believe about ourselves and our self-worth plays a huge part in our personal finances. If you don’t believe you deserve it, can keep it or are worth it, you won’t have it.
- You will get old one day and want to retire. The sooner you learn the basics about your personal finances, pay attention to your behavior around money and start to implement positive changes the better off you will be in the long run. Do you want to end up in your 60’s and 70’s with no clue how to manage your money or what to do next? It happens and I hear from these women quite often. You owe it to yourself to invest some time in this area of your life.
How do I do that?
So you are probably asking HOW do I do that? There is a lot to this and it can’t be answered in just a few paragraphs on this blog. Here are a few simple things you can do to get started today:
- Spend less than you earn, live below your means, stop buying the junk you no longer need. Simplfy and downsize your life if needed becuase the “stuff” in your life is what is keeping you from living a financially free life.
- Pay off your debt and become debt free.
- Build an emergency fund so you can pay for things in cash instead of using credit cards.
- Save for retirement. One of the simplest books I’ve read on this topic is by J.L. Collins called The Simple Path to Wealth. I highly recommend this book as he goes into further detail on investing and the simple steps you can take to ensure your financial future.
- One of the ways I believe to get out of debt and build wealth which is key is to create multiple streams of income. I am doing that currently with my day job, my blog and and now my coaching business. Why? Multiple streams of income have allowed me to quickly pay off debt and accelerate my savings account. It allows me to have options if something happens and I lose my job (which has happened before). I talk about this concept of multiple streams of income in my Follow Your Bliss coaching program when I’m working with clients. It’s a plan B,C,D for my life! You can do it too, just like I did.
- Invest a little at a time with Acorns. I’ve been using Acorns for a while to test out to see how it works before I shared it with my readers and I have to say I’m pretty happy with it! It’s a simple way to start investing by rounding up on your purchases (also called micro investing), it makes investing painless. The way it works is you connect your card, make a purchase and Acorns invests the change. If you use my referral link to sign up, we will both get $5 deposited once you open your account!
Specifically, here are some of the things I’m doing in my own life:
- Maxing out my 401k contribution at work (this is currently $18,000/year) plus getting a 3% match from my employer. If you are not currently contributing to your 401k or are unsure how to, I urge you to speak with the appropriate person at your place of employment so you can learn more about this.
- Maxing out my IRA contribution each year (currently $5,500/year)
- Saving an additional 25% of my income each month and putting that in my emergency fund savings account
- In addition to my full time job, I have side gig income from this blog & my coaching business. This income has helped me accelerate my debt pay down. I now only owe $900 in consumer debt which will be paid off in November 2016. After I pay that off, I will only have a small amount of business debt as well as my home loan. I currently have approximately 40% equity in my home so I will start to tackle this home loan debt to pay my 15 year loan off early.
- I work and I save a lot of what I make. However, I do not feel like I live a deprived life. I have more than I will ever need and I’m very grateful for that. Over the years, I’ve just learned to pair down what I no longer need & this has gone a long way to help me improve my finances.
I tell you this to show you what is possible. Before you tell yourself that learning about personal finance, budgeting or investing is too hard or it’s something you can’t do, please stop and realize that is just a story you keep telling yourself! It can be changed. You can change.
When you are moving into new territory and learning something new, the thought of investing or managing your own money can be scary, trust me I get that. But you can learn how it works, even if you have no intention of managing your own investment portfolio. I did an interview on my podcast with John Stein, the founder and CEO of Betterment. I think you are going to find that investing really isn’t as bad as it seems and you (yes YOU reading this) can do it! Listen to the interview with John Stein of Betterment on the Smart Girl’s Guide to Life & Money.
Here are a few resources that might be helpful to get you started with terms and help build your knowledge about investing:
Financial Tutorials – This list contains more information on investing as well as other areas of personal finance.
20 Free Online Finance Courses – List of 20 online college courses you can take for free on various economics, investing & personal finance.
Remember – learning about investing doesn’t have to be scary.
Start with one area you are interested in and start to learn more about it. As you get comfortable with that, start to build on it and move on to something else.
Even if you don’t want to manage your own investment account, learning how they work will help you know more so you can ask your financial planner better questions. After all, no one will watch out for your money better than you!
You can start today by getting access to Personal Capital to help you pay off your debt and start building wealth! Additionally, here are some more resources I put together for you:
How Retirement Investing Looks Different for Single Women
Are You Female? Are You Single? Are You a Statistic?
The Best Financial Advice You Will Ever Receive
Ladies, You are Not Saving Enough for your Future!
Every Girl Needs a Financial Plan
There’s More to Getting out of Debt than Just Paying off Debt!
Disclosure: This page contains affiliate links.
