Ever wonder how rich people get ahead? Don’t know why they’re able to stay there? Do you want to be one of them?
Never fear! Club Thrifty is here with some simple money hacks you can use to start building wealth now. Enjoy!
#1) Protect Your Credit
Credit scores are used for more than loan applications and credit cards. Your credit score could affect your insurance rates, your living situation, and even your employment opportunities. Of course, protecting your credit is a lot easier than fixing it. I use CreditSesame to get free my free monthly credit score. They also send me alerts when new accounts are opened or my score changes, helping protect me from identity theft.
#2) Create Multiple Streams of Income
This may be the biggest secret to building wealth: Instead of relying on just one paycheck, rich people are great at creating multiple streams of income. This helps them make more money, AND it protects their income in case one stream dries up. Of course, you don’t have to be rich to do this. Everybody should try to earn money on the side – the more passive, the better. Here are a few ideas to get you started:
- Survey Junkie – Taking surveys is never going to make you rich. Still, it takes almost no effort, you can make a few hundred dollars a month, plus it builds the “side hustle” mentality. Follow the link to start earning cash with Survey Junkie now.
- Drive for Lyft – Make money in your spare time driving your car for Lyft. In just a few hours a week, you could easily earn an extra $400 a month. For a limited time, new drivers get a $250 bonus when they apply through the link above.
- Start a Blog – Blogging is a fun and creative way to make money. For less than $5 a month, you can start your own blog. We did, and now we make a six-figure income blogging full-time. Follow the link for an easy step-by-step guide to getting started!
#3) Protect Your Assets
When you’ve worked hard to build wealth, the last thing you want is to lose it all. That’s why it’s important to protect your assets with the right insurance policies. Term life insurance is extremely cheap and will protect your family during your most important earning years. We recently shopped around and added an additional $750K in coverage for under $30 a month! That’s insanely cheap for a ton of financial security. Compare life insurance quotes for free here. (It takes less than 5 minutes!)
#4) Eliminate High-Interest Debt
All those little balances are destroying your ability to get ahead. With high-interest debt, you’re paying far more than you need to. The cycle of debt steals money from the things you really want, so you should actively look for ways to pay it off or avoid it. SoFi offers fixed rates as low as 5.49% APR* to help you save money and pay your credit card debt off fast. If you’re stuck with debt at a rate of 10% or higher, you may be able to lower your payment, save on interest, or both.
#5) Diversify Your Investments
Savvy investors can potentially diversify within the stock market AND outside of it. For this purpose, we love owning real estate. Even if dealing with tenants or getting another mortgage sounds like torture, you can still potentially take advantage of real estate investing. With investments as small as $5,000, a company like RealtyShares helps you gain access to real estate investing without the possible baggage that comes with it. As with any investment, there are risks to investing through RealtyShares; be sure to read the full offering materials.
#6) Avoid High Investment Fees
You may already be saving for retirement, but do you know how much you’re paying in fees? Huge management fees topping 3% could mean you’re losing out on over half the growth of your retirement funds. That could mean hundreds of thousands of dollars in lost savings! Seriously, if that doesn’t get you motivated, I don’t know what will. Wealthy people seek to avoid these huge fees and find ways to reduce them wherever they can.
#7) Live Below Your Means
This may shock you, but the average rich person isn’t all that flashy. Instead of driving fancy cars and sporting baller diamonds, most rich people look like the person next door. They understand the value of money, and they always make sure to save on things that don’t matter so they can spend on the things that do. Above all, they realize that by living below their means, they’ll always have plenty of money when they need it.
#8) Learn to Budget
I know, I know – you hate the dreaded “B” word, right? Well that may be because you don’t really understand what it means. Being on a budget doesn’t force you to stop spending. A budget is simply a plan for the money you make. Instead of shooting from the hip, budgets help you understand how much you make compared to what you spend. By creating a monthly action plan for your money, you provide each dollar with a purpose. This reduces waste, increases savings, and allows you to get ahead quicker.
#9) Know What You’re Spending
After creating a plan, it makes sense to analyze whether or not it’s working. When it comes to budgeting, this happens by tracking your expenses. By taking an active role in your personal finances, you’ll know how much money is coming in and going out during the month. Tracking your spending is key to ensuring that you’re following your monthly plan and not overspending. You can do this with something as simple as a pencil and paper. Or, try using an app like this one that helps you automate both.
#10) Don’t Use Your House as a Bank
Look, I know it’s tempting to pull the equity out of your house. There are so many things you could use it for, like a new kitchen or windows, right? Here’s a tip: Don’t do it. You’ve worked your tail off to build up your equity. You’ve probably paid interest on that money already. Why, why, WHY would you want to do it again?!? Your house is not a bank. Don’t use it like one. Save up the money and pay cash instead.
#11) Pay Cash
Speaking of paying cash, this is another trick you can use to get ahead. A 0% financing offer may seem like a good idea, but it’s really a trap. Financing removes the pain from the purchase. Even if you’re not paying interest, you’re bound to spend more than you could otherwise afford. And when you’re constantly paying money to somebody else, you can’t save that money or use it to buy assets. So, the next time you think about financing a new washer and dryer, save up the money, buy what you can afford, and feel the pain. Then, use the extra to buy assets instead.
What do you think? What other money hacks have I missed? Make your voice heard in the comments below!