People these days are busier than ever before. So, it’s no surprise that some less exciting yet essential aspects of life get pushed to the wayside: *cough cough*your financial plan.
Studies show that only 30% of people have a written financial plan or less than 1 in 3. The average American spends more time planning vacations each year than they do on their financial situation.
I get it, people are busy, but the bottom line is this: money is essential, it is linked to nearly every aspect of our lives, and it has the power to buy you freedom over your time or the ability to cost you considerably.
If you are super busy and in need of some quick tips to get you on the right path toward financial wellness, here are ten things to consider:
- Spend less than you earn. This is perhaps the simplest but most important tip we will cover: spend less than you earn. The difference between what you make and what you spend is your ability to create freedom over your time. It’s the amount that you can save and invest for the future to build your wealth consistently. If you build enough wealth, you can become financially independent, giving you the power to decide how busy you want to be.
- Know where your money is going. Look, I don’t want to sit here and tell you that you need to write out and be on a strict budget, but you should understand where your money is going each month. I can’t tell you how many people I have talked to that review their W2 for the year, see their total earnings, and are shocked and confused trying to figure out where all the money went last year.
For some, the quickest way to track your money is to write out a budget and stick to it. For others, the thought of budgeting is like pulling teeth, and they might be better off simply scanning their accounts every so often to watch where their money is being spent. Whatever approach you identify with, it is crucial to know where your money is going each month, rather than wondering where it went.
- Get paid what you are worth. If you’ve been in the same job for a year or more and haven’t received a pay increase, you may be getting paid less than you are worth. It’s up to you as an employee to help your employer understand the work you put in and the compensation that you deserve.
A great way to know your worth is to network with professionals in a similar role and understand what their employers are paying. If you are below the going rate, it may be time to discuss compensation with your boss, but be sure to proceed tactfully.
- Pay yourself first. While we’re on the topic of getting paid, it is vital to pay yourself first on your path to financial success. Paying yourself first means that rather than waiting till the end of the month and saving any money left, you decide how much you will save first and then spend what is left over.
It is a simple yet effective way to prioritize saving and investing and force your spending to fit the mold you need. Unfortunately, many choose to approach it from a spend first, save later mentality and often wind up kicking the can down the road in hopes of having some leftover money to save later.
- Avoid lending money to friends and family. I’m not saying you need to be Ebenezer Scrooge with your finances, but trust me on this: many relationships have been strained or destroyed by lending money to friends or family. If you’ve got friends or family in a pinch and you’re in a position to help, consider gifting the money with no strings attached. That way, you won’t get upset when they can’t pay you back, and the relationship stays on the right track. The last thing you want is for a friend or family member to start avoiding you because they’re embarrassed or stressed that they don’t have the money to pay you back. Trust me, it is not worth it.
- Pay your credit cards in full each month. With the average credit card interest rate hovering between 15 and 20%, nobody can afford to be paying less than the total statement balance. So, the best way to approach credit cards is to use them and then pay them in full every month. Anything less than that is a good sign that you probably shouldn’t be using them.
- Save in a tax-advantaged retirement account. Legislators pass laws to incentivize various behaviors. For example, certain accounts are specifically designed to incentivize investors to save for retirement by providing unique tax advantages. These are 401ks, IRAs, 403bs, and other tax-advantaged retirement accounts. When saving for retirement, it is a good idea to utilize these tax-advantaged accounts, giving your money the best opportunity to grow into a healthy retirement nest egg.
- Develop an investment strategy. Now that you’ve got money going into retirement accounts each month setting up an investment allocation is essential. An investment plan is a written plan that outlines what you want your money to do and how you plan to do it. For some, they want to provide income during retirement, and their investment should reflect that. For others, they want to maximize growth and should select investments accordingly.
Depending on your level of expertise and interest, this may be a great time to consult with a fiduciary financial advisor that will give you investment recommendations that are in your best interest at all times.
- Update your will and ancillary documents. A will outlines what should happen to your assets when you pass away. Namely, who will inherit your things and in what proportion? Therefore, it is critical to update your will every so often to reflect any new changes in life and ensure that your wishes are correctly executed after you pass. The ancillary documents include a living will, durable power of attorney, and designation of health care surrogate. Typically, these are created and updated in unison with a will.
- Review your insurance. Last but not least, you might be able to save some money by shopping around on your home and auto coverages. Check with your agent to make sure that you have the right coverages for your current needs, as well as eliminating coverages that overlap, you don’t need, or are costing too much. It’s also not a bad idea to occasionally shop around for competitive quotes for comparable coverage.
So there you have it, ten quick tips for a busy professional looking to increase their wealth without a significant outlay of time.
I am here to help.
One of the best ways to ensure you’re on track financially, without giving up much of your time and potentially even getting time back, is to hire a trusted financial professional to help manage your financial planning. If you’re interested in working with a fiduciary CERTIFIED FINANCIAL PLANNER™ professional that always has your best interest in mind, then let’s chat. You can schedule a complimentary consultation using the link below.