It’s always fun to look up celebrity’s net worth, whether they are accurate or not, gives a little insight as to how much more money they have than we do. Net worth be figured out by adding up all of your assets and subtracting your liabilities, and hopefully that number is a positive for starters. When it comes to counting your home, you take the worth minus the existing mortgage. As you continue to get older it’s important to increase your net worth so that by the time you retire you have no debt and can live off what you have saved over the course of a few decades to live life to its fullest when you finally are ready to walk away from work.
Plan for the Unexpected
If you have a major charge come up how would you pay for it? Probably put it on a credit card and risk going further into debt, because if you don’t have the money today, you’ll have to pay back over time, and if money is tight as it is, that means a lot of interest coming on that charge. If you are able to set aside a few months’ worth of expenses into an account, you can have a nice cushion if any unexpected charges come up, such as a vet bill or auto repair.
You probably have a good sense of how much money is coming in, but do you know exactly what you spent last month on monthly bills and spending money? The problem with a credit card is that there really is not stopping you from continuing to make purchases, that is until you hit your credit limit I guess. If you can sit down with last month’s credit or debit card statement and go line by line, you can have a pretty good idea of how much are necessary monthly bills and how much you are spending on purchases thereafter.
Reduce Expenses Further
Now that you opened your eyes on exactly how much money is going out each month, you can work on reducing expenses, starting with unnecessary expenses such as eating out. If you add up the amount of times you have gotten lunch, dinner, or coffee out, for a fraction of that price you could have gone grocery shopping and prepared meals at home. From there you can work on reducing monthly bills, and cable is a good place to start, as streaming services have now taken over with the best shows for around $10 a month and you may not need your full cable package any longer.
Contribute More to Retirement Account
While sure, opening a brokerage account and investing in cpxx for example, may be a good place to build your portfolio, but to maximize any potential retirement savings, a good place to go would be your work 401k plan, where employers even offer matching contributions, where let’s say will match up to 6% of your contributions, so missing out on this is leaving free money on the table that could add up to maybe tens or even a hundred thousand over time, depending on how much you make, being able to grow over time. Retirement may seem far away, and it is, but the earlier you can start saving the better in the long run.
Pay Off and Stay Out of Debt
If you are unable to pay off your credit card balance by the statement due date it will carryover next month and interest will be tacked on, probably as much as 16%, which depending on the balance, can be huge. For your mortgage, with a much larger balance, probably at around 4%, would still be hundreds of dollars a month in interest, so the more you are able to pay off any debt you have, the better off you will be, freeing up that extra money to add to retirement savings.
Try to Budget
Money is tight, but if you don’t allocate funds in how much you can spend in each area, how do you know you’re on track for the month? Of course, it may take some tweaking over the months, and probably continuously going forward, you can budget for all expenses, not to mention for planning for birthday gift shopping and Christmas shopping, which can put a burden on your account if it’s done all at once, but if you save up throughout the year, you can make all of your purchases without having to start the new year off in debt.