Yes, it’s true that money isn’t everything; and it doesn’t bring happiness. On the other hand, it sure makes life easier when it’s readily available in large sums— just in case. But seriously, with money comes power. In addition, having it gives you more options: you can either use it to improve the world or simply blow it on extravagances for your own little circle. But if you are not born with it; there are very little choices in terms of building wealth.
One of the best ways to do it is to dream up some sort of great “idea”. Try channeling Steve Jobs who wasn’t born wealthy. The following are five tips from the experts on how-to “Make a Dollar out of 15 cents,” and at least retire wealthy.
1. Make the Doughnuts
Unfortunately, there is no easy way to do it.
The trick, however, is to get a part-time job or use any talents that you might have to earn extra income. This also helps with those pesky situations that always seem to occur when you are broke: Your car breaks down, you are laid off or even worse, you get fired from your full-time job. According to Forbes’ contributor, The Muse, it’s a good idea to have a side gig “whether you’re trying to save a little extra cash, fill your time, or break into a new industry."
2. Pay It Off
Filling for bankruptcy might seem like the easy way out when you are overwhelmed with debt. And you are not alone. According to the legal technology provider Epiq Systems, as reported by the Association of Credit and Collection Professionals, over 900,000 Americans filed for bankruptcy in 2014, which was a 12 percent decrease from over 1 million in 2013. The problem is that most people who file for bankruptcy often end up occurring new debt; and the cycle starts all over again.
It will do little good to have a plan to pay off your debts, while you are continuing to incur new ones,” Jeff Rose, a Certified Financial Planner and CEO of Alliance Wealth Management, LLC., told CBS News. “And if you might be unable to commit to a debt payoff strategy, simply avoiding new debt and making your minimum monthly payments will eventually get you out of debt.”
In other words, paying the minimum balance each month is more effective than the “avoidance strategy.” And if you add an extra $30 to $50 bucks, you will be able to reduce the balance sooner.
3. Don't Buy It!
Yes, it would be awesome to have it. The question, however, is do you really need it?
Don’t fall into the trap of an instant gratification society and succumb to societal peer pressure,” Philip Herzberg, a certified financial planner with the Lubitz Financial Group in Miami, Fla. and president of the Financial Planning Association of Florida, told Market Watch.
Instead, try saving the money. And if you must have it, then purchase it after you have saved double the amount. But if your ultimate goal is to build wealth; you will have to save, save now, and save often, says Leslie Beck, a certified financial planner with Compass Wealth Management in Wood Ridge, N.J.
The primary reason I am in, relatively, good financial shape today, despite life’s ups and downs, is because my parents instilled in me a savings habit,” said Beck. “I contributed the max to my employers’ savings plans from the very beginning, and it has made a difference.”
So how do you save the little bit of money that is left after paying your monthly bills?
4. Buckle Down
It is critical that you take a really close look at your monthly spending habits. Once you figure out where your money is going, you can determine what needs to be purged.
Reducing or eliminating expenses is one of the best ways to improve your financial situation,” Jeff Rose, a Certified Financial Planner and CEO of Alliance Wealth Management, LLC., told CBS News. “Pick three expenses that you are currently paying on a regular basis, and get rid of them.”
It’s all about the necessities. Do you really need all 626 cable channels and Netflix?
Eliminating expenses will free up more of your budget for more wealth-building purposes, like savings and investments,” said Rose.
5. Ride the Bull
Did you buy Apple’s new iPhone 6? Well, so did over 61 million other people across the world. As a result, according to CNN Money, Apple’s net income increased to over $13 billion, or $2.33 per share; and the ground-breaking company ended the quarter “with a jaw-dropping $193.5 billion in cash -- just about enough to buy Disney (DIS)."
Caution here: Investing in the stock market is not for wimps; and it requires research.
Half of all coin-flippers will win their first toss; none of those winners have an expectation of profit if he continues to play the game,” said Warren Buffet for “8 Investing Tips from Warren ‘The Oracle of Omaha’ Buffett."
Take advantage of your employer’s retirement plan. You can increase your 401(k) contribution by as little as 1 percent or you can aim for the full match; and have it automatically deducted from your paycheck. All that you need to do is enroll.
And since the contribution is tax-deductible, at least part of the amount will effectively be paid by the government,” said Rose. “For example, a 3 percent contribution may have been net effect of a 2 percent reduction in your net pay, after accounting for the tax benefit.”
If your employer doesn’t offer a 401(k) plan, Rose recommends that you open a non-retirement payroll savings plan and fund a self-directed traditional IRA or Roth IRA.
You can simply have the money deducted from your pay and transferred to the IRA account, where you will be free to invest the money as you choose,” said Rose. “And since the contributions will be tax-deductible, you can expect a larger tax refund in the spring.”
See also: How to Manage Your Personal Finances
The sad truth is that while it’s easy for some to accumulate wealth, it’s really hard work for others. But by all accounts, it is attainable with immense dedication and unwavering commitment. The question is: When you become well-to-do during retirement, how will you spend your money?