If you talk to any self-made millionaire, nearly all of them are going to give you the same advice. Find something you love so you can create a business around it and make sure you make smart investment decisions to grow your wealth.
It’s no secret that most rich individuals have accumulated wealth because they’ve made smart decisions with their money. If you want to increase your wealth, the best time to start is today.
Even though this year is halfway over, there is no need to wait until the new year to start improving your financial habits. Here are six ways you can end the year a little richer.
Increase Your 401(k) Contributions
A 401(k) is a retirement savings plan offered by most employers. When you contribute to your 401(k), money from your paycheck will be automatically withdrawn pre-taxes and invested. As long as the money stays in the 401(k) account, you won’t have to pay taxes on any investment growth, interest or dividends. However, when you withdraw money from your 401(k) account in retirement, you’ll have to pay income taxes.
Many employers will match a portion of what you contribute to your 401(k). If you are not already taking advantage of this match, you are potentially throwing away free money. If you can afford it, it may be beneficial to increase your 401(k) contribution to help you grow your retirement nest egg.
If you don’t have a 401(k) or want an additional way to save for retirement, you can open and contribute to other types of retirement accounts as well. Some options include a Roth IRA, traditional IRA, SEP IRA or an HSA.
Ask for a Salary Raise
Although it may be scary, asking for a salary raise is one of the easiest ways to finish the year richer.
If you haven’t had a raise in a while, it might be your time due to increased inflation. However, before asking for a raise, you should prepare by doing research on comparable salaries for your position. You should also make a list of the reasons you deserve a raise. Include things like how much money you brought in for the company and your successes. You should approach asking for a raise by highlighting the value that you bring to the company, not by focusing on how badly you need a raise.
Start a Side Hustle Doing Something You Love
It is good to diversify your sources of income. In addition to your main job, you could start a side hustle. You could take the money that you earn from your side hustle and pay off debts, invest it or use it to save for retirement.
Ideas for a side hustle could include driving for rideshare companies like Uber and Lyft, making and selling crafts, babysitting, pet sitting, bartending or mowing lawns. If you have something that you already enjoy doing, it can make a great side hustle that won’t feel quite so much like work.
Avoid New Debts You Can’t Afford
While you can’t go back in time and avoid any debt you already have, you can avoid taking out new debt, especially if you can’t afford it. To finish the year richer, you should keep spending to a minimum. Don’t spend more on your credit card than you can afford to pay.
As the Federal Reserve continues raising interest rates, credit card APRs are getting higher. This makes it difficult to pay off your bill once you fall behind. Avoid overextending yourself on things like the price of a new home or a new car. You should be able to comfortably afford these bills.
Plus, with the debt you’ve already accumulated, make it your mission to pay them down as quickly as possible.
“Many of us are saddled with debt that can be difficult to manage or pay down,” said Scott Allen, co-founder and licensed agent at Seniors Life Insurance Finder. “But this is an important step for taking control of your finances and creating a stable financial future for yourself. Start by prioritizing your debt and focusing on paying off the highest interest debts first, as this will save you money in the long run.”
Invest in Non-Retirement Investments
Non-retirement investments can cover a wide variety of investments, including stocks, bonds, buying real estate or investing in a business. Non-retirement investments can help grow your wealth for short-term, medium-term or long-term financial goals.
Keep Your Emergency Fund in a High-Yield Savings Account
High-yield savings accounts typically offer interest rates that are much higher than the national average. If you keep your emergency fund in a high-yield savings account, you can access it at any time that you want, but the money will still earn significant interest while it is deposited in the account.
“Creating a financial cushion in case of any unforeseen circumstance is the first step to building wealth,” Allen said. “It’s recommended that you save up at least three to six months’ worth of your living expenses as an emergency fund. This will help prevent you from going into debt if something unexpected happens and provide some much-needed security should disaster strike.”
The Bottom Line
There are many ways to get richer, but these are going to be the easiest to start today. Increasing your income while decreasing your expenses and investing for the long term will help you increase your wealth.
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