Living Richer means different things to different people — for some, it might mean finally being debt-free. For others, it might mean finding a career they find fulfilling or having a sizable nest egg saved up for retirement. But no matter what your personal definition is, it’s possible to start Living Richer with careful planning and discipline.
Go Back to Day 1 of 31 Days of Living Richer: The Top 3 Budgeting Tips From Experts
Are you ready to start Living Richer? Here’s how financial experts say you can achieve your money goals.
Start With Small Goals
“What I find when I onboard new clients is that they are basing their joy and happiness on what they don’t have,” said Stephen Dunbar, an advisor with Equitable Advisors. “The typical statement from a new client is ‘I will be happy when . . . I own a home, I have $1 million saved for retirement, I have a new car, or my income is $500,000, etc.’ With this thinking, our happiness — and more importantly our hope and desire for life — could be deferred and ultimately lost if we don’t feel like we are getting any closer to our happiness target.”
And Day 2 of Living Richer: How To Set a Realistic Budget You Can Live With
Instead of being focused on hard-to-achieve, long-term goals, Dunbar suggests starting small.
“What I do is work with clients to set future goals — [such as having] $1 million in retirement — and go the additional step of breaking the goal in shorter time frames,” he said. “For a 35-year-old just starting out and assuming a 7% rate of return, this requires saving $27 a day, $190 a week or $824 a month. Once we have the shorter-term measurements, we focus on tracking and celebrating the process and progress rather than deferring our happiness and sense of accomplishment to the end outcome of saving $1 million.”
Be Aware of Your Money Personality
Understanding your own relationship with money can help you to determine your best path towards Living Richer.
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“Figuring out your money personality can be huge when trying to work toward your financial goals,” said Taylor J. Kovar, CEO at Kovar Wealth Management. “A budget created for a Spender will not work for a Saver. If you’re like me and tend to be more on the Risk-Taker side of investing, you probably don’t have a problem with seeking out investments purely for the fun of it. Will it work? Maybe, maybe not. But at the end of the day, your money personality correlates with how and why you manage your finances the way you do. Which, in turn, can lead to how you achieve those goals and essentially, allow you to live well.”
Take a Four-Pronged Approach
Andrew Wang, managing partner at Runnymede Capital Management, believes there are four parts to living a richer life:
“First, live within your means,” he said. “That means tracking your expenses so you know where your money is going every month. Reduce any recurring services that you aren’t using. Also, periodically negotiate your cable TV and internet, auto insurance and homeowner’s insurance. Pay down your credit card and student loan debt.”
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“Second, focus on making more. Ask for a raise when possible and look for side hustles to supplement your income.”
“Third, invest your money so it can grow while you’re sleeping. Consider investing in index funds, real estate and other assets that can appreciate over time. Take advantage of an employer-sponsored retirement plan or IRA.”
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“Finally, truly living a rich life means aligning your money and actions with your values. Focus your finite resource of time on things that matter most to you. Whether you have a lot of money or not, these steps will make you wealthy.”
Making Saving a Priority
Where To Put Your Money: Savings or Retirement?
“Too many people make the mistake of simply budgeting for expenses and not for saving,” said Robert R. Johnson, Ph.D., CFA, professor of finance, Heider College of Business, Creighton University. “Warren Buffett is quoted as saying, ‘If you want to make saving a priority, take a look at how you budget. Do not save what is left after spending; instead, spend what is left after saving.’ If one truly wants to make savings a priority, it cannot be a residual — what is left over. It should be a line item on your budget. You don’t successfully build wealth by simply taking what you have left after all your expenses. We accomplish what we prioritize. Prioritize savings and invest those savings.”
Choose To Invest Rather Than Spend
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“Instead of spending, invest,” said Thomas Racca, manager of the personal finance management team at Navy Federal Credit Union. “Investing may seem like a daunting task, but this is one way to yield results over time. Starting your investing journey can feel overwhelming, but do your research and don’t forget about building up your 401(k). See what tools your financial institution has to offer you.”
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