7 Things To Do Now To Make Your Future Self Rich
Written by
Jake Safane
Edited by
Amber Barkley
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To become rich in the future, you don’t have to be rich now. Even on a relatively modest salary, there are ways to become rich down the road, such as by saving and investing aggressively for retirement. If you can invest $2,000 per month at a 7% return for 30 years, for example, you’ll end up with over $2 million.
“When it comes to securing your financial future, shavings can make a pile — meaning, the small habits you implement daily, weekly, monthly and yearly can make a big impact over time,” said Steve Sexton, CEO of Sexton Advisory Group.
While not everyone will or should take the same financial path, depending on their financial circumstances, some general wealth-building practices that Sexton recommends include the following.
Set a Realistic Budget
Being rich and budgeting might sound like opposites at first glance, but if you want to secure wealth for yourself in the future, you should make sure you’re earning more money than you’re spending. That way, you can build your savings and assets, rather than going into debt.
“It’s important to be accurate in your assessment, so ‘guesstimating’ won’t help you much here. Once you’ve established a budget that works with your income and lifestyle, hold yourself accountable to keeping it,” said Sexton.
As you try to build a realistic budget that you can maintain, you might find that the numbers don’t work in terms of staying out of the red. In that case, you might need to make some changes, especially as the cost of living rises.
“If budgeting and cutting back on costs isn’t cutting it, it may be time to consider getting a second job or consider moving to a more affordable state,” added Sexton.
Conduct Regular Reviews
In addition to budgeting, it can help to regularly review your progress to make sure you’re on track to reach your financial goals.
“Many of my clients take themselves on a monthly ‘money date’ every month — meaning they set aside 30 minutes once a month to review bills, credit card statements, pay off any debts that aren’t already automated, plan for future expenses, cross reference sinking funds for vacations or other big purchases, and check in on their retirement accounts,” said Sexton.
“Reviewing your finances monthly empowers you to know where you stand financially,” he added. “In the long run, this saves you from sweating over every single dollar and frees up your headspace to focus on other things, like spending quality time with loved ones.”
Save and Invest Unexpected Funds
To boost your wealth beyond what you’re regularly saving and investing, look for ways to add unexpected sources of income to your wealth-building pile.
“Save and invest any money you didn’t expect to receive — or at least most of it,” said Sexton. “Whether it’s through an inheritance, Social Security payments or a tax refund, I always tell my clients to prioritize saving and investing it first.”
Consistently Save for Retirement
To be rich when you eventually retire, it helps to start saving early in your career. By being consistent about contributing to your retirement accounts, which typically have tax advantages, you can give yourself time to take advantage of compound interest to build wealth.
“Contribute to your retirement accounts consistently, aiming to max out your contributions every year if you can,” Sexton said. “If you work for an employer that offers 401(k) contribution matching, make sure you take advantage of this to boost your retirement savings in the long run.”
Build a Fully Funded Emergency Fund
Another way to help yourself become rich in the future is to make sure you’re in a good place now to avoid going into debt. By building a fully funded emergency fund — many experts recommend saving around 3-6 months’ worth of living expenses — you can stay on track with other financial goals, like saving for retirement, even when emergency expenses come up.
Having a fully funded emergency fund “will come in handy when unexpected expenses arise — spoiler alert: they always do. This will also help you lower your chances of racking up debt in the event of an accident, medical emergency or job loss,” explained Sexton.
Pay Off Debt
While you generally want to avoid going into debt when it comes to emergency expenses, you might already have debt and thus need to work on paying that off to become rich in the future.
Debt, particularly high-interest debt, “can be a major obstacle to obtaining wealth in the long run,” said Sexton. “My motto is it’s always better to earn interest than pay interest; when you’re in debt, every dollar that goes to paying interest is a dollar that can’t be saved or invested.”
Watch Out for Lifestyle Inflation
Lastly, avoiding lifestyle inflation can help you become rich in the future. It’s easy for bigger houses and fancier cars to eat away at extra income. If that happens, you might earn more in the future, but you might not have as much cash to save and invest.
“While increased discretionary spending can sometimes be a natural part of making more money, it’s important to not let your expenses run your life,” said Sexton.
Many people struggle to put these steps into practice, but it’s not that they’re typically complex. In many cases, building wealth involves following basic practices with discipline. If you can remind yourself that these small steps can add up to big results, that could help you stay on track and become rich in the future.
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