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13 Basic Rules To Grow Your Wealth Effectively

13 Basic Rules To Grow Your Wealth Effectively

Perhaps you started this year vowing to grow personally, expand professionally, or simply grow up.  Do you also want to grow your wealth?

While no two financial pictures are exactly the same, healthy portfolios do have similarities. Follow these 13 rules to grow your wealth effectively.

Think of money as a tool.

That’s all those papers and coins are — a tool to get you what you want. They aren’t the only way, but it is a universally accepted exchange. Thinking of money as a tool empowers you to avoid many of the negative, intense emotions that can be associated with it, and to make rational, calm spending and saving decisions free of emotion. Money is a tool. That’s it.

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Accept that it takes time to expand your tool kit.

It takes time to grow wealth. Period. “Time” in this case means years, sometimes decades. This can be a frustrating concept for young folks who are rarin’ to earn that cash, accustomed to getting what they want with the click of a button and bombarded by stories of internet sensations who made it big overnight and photographs of 20-somethings with luxury cars and diamonds in their ears.

Define “wealth”…

Do you desire a fat bank account, for uses to be determined in the future? The ability to fund an expensive hobby, like horses or photography? The chance to take years off work and afford time to raise your young children? Your definition of “wealth” may, or may not, be a McMansion and six sports cars. Whatever your definition is, congratulations! You’ve established a goal that is yours. Your definition of “wealth” is the one that matters.

… then define “wealth” again.

Accept that you will end up spending vast amounts of money on unplanned expenses. Your car will break down. You will have kids before you’re financially ready. You or a loved one will incur a hefty medical bill. This is called life. Money, that tool we keep in our pockets, will help us meet life challenges. So take a deep breath, relax, and accept the fact that your financial goals will change time and time again. Staying calm during times of unexpected spending will help you keep your eye on the long-term prize; freaking out or giving up on your savings plan in the face of adversity will not.

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Acknowledge that cash is king.

If you can’t pay cash for it, you can’t afford it. Treat your credit cards like cash; this means sticking to a lifestyle that suits your income level so you don’t rack off more than you can afford, and paying them off regularly. Do your best to avoid assuming car loans — if you can’t pay the sticker price, search for a used car or take advantage of public transportation for as long as possible. If you have a take a home loan, keep it modest, and wait to look at homes until you can afford to put at least 20% down.

Save.

This is frequently repeated advice, and for good reason — the secret to growing wealth is to accumulate it. Read up on the latest from accountants and peruse personal stories online, check books out of the library, or hire a consultant through your bank to help with financial planning; however you do it, you must develop a savings plan. Once you have at least six months of living expenses for you and your family readily available, you can start to grow your wealth through different types of funds, according to the level of risk you want to assume.

Diversify your tool kit.

Talk to a certified professional about the benefits and drawbacks of savings accounts, stocks, certificates of deposit, IRAs, mutual funds, and any other number of savings and investment options. The key word here is “diversify.” You want to build a broad foundation, so that if something unfortunate happens to any one area of interest, your financial ship simply bobs along in a different direction, it doesn’t sink (and neither do you). Remember that purchasing land or a rental property, or upgrading a home you currently own are also ways to invest.

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Shop around until you find a no-fee, cash back credit card.

Avoid complicated rewards point structures, or even airfare cards unless you are a frequent traveler; it can be difficult to gauge whether you will actually use these rewards and the value back on each dollar that you spend can be minimal. Annual fees add up and mean you often end up paying for your plane ticket or hotel room yourself with the fee. Once you find a card you like, stick with it for maximum benefit to your credit score.

Shop around, period.

It is tempting to purchase what we want, when we see it. Online shopping, however, means that nearly every product can be compared to a competitor, whether in your community or across the globe. Take the time to compare prices before you buy, especially on big ticket items. Once you have a good feel for the market, don’t be shy about negotiating for a lower price from a local merchant if you find an item cheaper elsewhere.

Expand your mind.

Get creative in seeking out ways to increase income — there are a lot of ways to earn money out there. Make a list of your skills, whether learned in a professional setting or elsewhere, then hop online to do some research, and talk to everyone you meet about how to possibly leverage those skills. Your local chamber of commerce, or meet up groups advertised online, can be good places to start. It’s a freelancing nation, and you may be surprised at what and how much you can pick up on the side of conventional employment.

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Get your hands dirty.

Nothing is ever “too small” or “beneath you” in the money-growing game. Do not shirk from the hard jobs, the dirty jobs, or those that pay only a little in the beginning — pick them up, see where they go, and remember to save, save, save.

Find a good accountant.

Once you have money, you don’t want to give it away, do you? That’s exactly what you do come tax time — give your hard-earned cash back to the government. Tax codes are complicated, to say the least, so make sure you are giving exactly what you owe and not a penny more by enlisting the help of a seasoned professional. Though Certified Public Accountants are more expensive than do-it-yourself options, what they save you this year and in the years to come truly make this investment worth it.

Treat money management like a job.

Set aside time each week to review your financial accounts. If you’re starting out, this time may be as simple as going over your credit card statement to confirm that every charge is legitimate; if your financial picture is intricate and complicated, this could mean a weekly meeting with your financial planner or bank. Take time to study articles online, read a book from the library, or attend a local class that will teach you more about what all of those financial terms mean and how they apply to you.

Want to make progress today?  Find out The #1 Thing Stopping You From Becoming Rich Right Now 

Featured photo credit: Alan Cleaver via Flickr

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Last Updated on January 2, 2019

How Personal Finance Software Helps You Get More Out of Your Money

How Personal Finance Software Helps You Get More Out of Your Money

Do you know what mental health experts point to as the biggest cause of stress in the United States today? If you said “money,” then ding, ding, we have a winner!

Three out of four adults today report feeling stressed out about money at least part of the time. People are either worried about not having enough money or whether they’re putting the money they do have to use in the best possible way.

Your money is either in charge of you or you’re in charge of it, there’s no middle ground. Using some type of personal finance software can help alleviate some of that money stress and better allow you to manage your money effectively. Without it, you may just be setting yourself up for constant financial worry. Life is already tough enough and there’s no need to make it more difficult by simply hoping your money issues will all work out in your favor. Hint: they won’t.

This guide will help you to understand how personal finance software can better assist with both accomplishing long term financial goals and managing day-to-day aspects of life.

Whether it’s tracking the savings plan for your child’s college fund or making sure you won’t be in the red with the month’s grocery budget, personal finance software keeps all this information in one convenient place.

What Exactly is Personal Finance Software?

Think of it like the dashboard in your car. You have a speedometer to tell you how fast you’re going, an odometer to tell you how far you’ve traveled, and then other gauges to tell you things like how much gas is in the tank and your engine temperature. Personal finance software is essentially the same thing for your money.

When you install this software on your computer, tablet, or smartphone, it helps to track your money — how much is going in, how much is going out, and its growth. Most personal finance software programs will display your budget, spending, investments, bills, savings accounts, and even retirement plans, levels of debt, and credit score.

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How It Leads to Financial Improvement

It shouldn’t come as a surprise, but people who regularly monitor their finances end up wealthier than those who don’t. When you were a kid, keeping track of all of your money in a porcelain piggy bank was pretty easy. As we get older, though, our money becomes spread out across things like car payments, mortgages, retirement funds, taxes, and other investments and debts. All of these things make keeping track of our money a lot more complicated.

Some types of personal finance software can help make things a little less complicated, setting you up to meet financial goals and taking away some of the stress associated with money.

Even if you already have a Certified Financial Planner (CFP) some type of personal finance software can be of great benefit. Whereas CFPs focus on the big picture of your money, they don’t handle the day-to-day aspects that determine your overall financial health.

It’s also not nearly as complicated as you might think and can take out a lot of the tedium that comes with doing everything on an Excel spreadsheet or with a pad and pencil.

Types of Personal Finance Software

When it comes to personal finance software, it generally fits into two categories: tax preparation and money management.

Tax preparation software such as Turbo Tax and H&R Block’s software can help with everything from filing income taxes to IRS rules and regulations and even estate plans. Plus, there’s the benefit of filing online and getting your refund check a lot faster than if you were to mail off your forms after waiting in line at the post office.

For the purpose of this article, however, will be focusing more on the personal finance software that aids with money management.

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Money management personal finance software will help you to see the health of your cash flow, pay down debt, forecast for expenses and savings, track investments, pay bills, and do a host of other things that 30 years ago would have practically required a team of accountants.

When to Use Personal Finance Software

So far we’ve gone over what exactly personal finance software is and how it can be a benefit to your money. The next logical step in this whole equation is determining when it should be used and how is the best way to go about getting started using it.

Below are four of the most common and practical ways to use personal finance software. If all or any of these apply to you and your money, then downloading some type of personal finance software is going to be a smart move.

1. You Have Multiple Accounts

There’s a good chance that when it comes to your money, it’s in more than one place. Sure, you probably have a checking account, but you may also have a savings account, money market account, and retirement accounts such as an IRA or 401k.

If you’re like the average American, you probably have two to three credit cards as well. Fifty percent of Americans also don’t have loyalty to just one bank and spread their money across multiple banks.

Rather than spending hours typing in every detail of every account you have into a spreadsheet, many programs allow you to easily import your account information. This will help to eliminate any mistakes and give you a bird’s eye view of everything at once.

2. You Want to Automate Some or All of Your Payments

Please don’t say that you’re still writing out paper checks and dropping each bill in the mailbox. While it’s noble that you’re doing your part to keep postal workers employed, we’re 18 years into the 21st century and you can literally pay every bill online now.

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There’s no need to log into every account you have and type in your routing number either.

With personal finance software you can schedule automatic payments and transfers between all of your imported accounts. Automatic transfers will help to make sure you have the necessary funds in the right account to ensure all bills are paid on the appropriate date. Late fees are annoying and do nothing but cost you money. It’s time that you said goodbye to them once and for all.

3. You Need to Streamline Your Budget

Perhaps the best feature of personal finance software is that it allows you track everything going in and out of your virtual wallet.

Nearly every brand of personal finance software out there has easy-to-read graphs and charts that allow you track every cent you spend or earn, should you choose. You might be pretty amazed when you see just how much you spent on eating out last month or if you splurged a little more than you should have on Christmas gifts last year.

Every successful business on the planet has a budget and using personal finance software can help you trim the fat on your spending in ways that affect your everyday life.

4. You Have Specific Goals to Meet

Maybe it’s paying off debt or saving for up something like a European vacation. Whatever your financial goal is, whether it’s long-term or short-term, personal finance software programs are one of the savviest ways to go about reaching those goals.

You can do everything from set spending alerts to notify you when you’re over budget to automating what percentage of your paycheck goes to things like retirement investments. The personal finance software that you choose should show you exactly how close you are to hitting those goals at any given time.

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How to Get Started

From AceMoney to Mint and Quicken, there ’s no shortage of personal finance software apps out there. Many of these programs are free to download and will allow you to pay bills, invest, monitor your net worth and credit profile, and even get a loan with the swipe of a finger.

Other programs may only offer you limited services and will require a one-time fee or subscription to unlock all that they offer. These fees can often vary from as little as two dollars to 50 bucks a month.

It’s best to start off with the free version and then gauge whether you’re able to accomplish everything you’d like or if it’s worth exploring one of the paid options. Often times the subscription programs come with assistance from financial planning and investment experts — so that can be a real benefit.

When deciding which personal finance software program to use, it’s also important to look at how many accounts you wish to monitor. Certain programs limit the number of accounts you can add. Be sure that if you have checking, credit card, and investment accounts to monitor, that you choose a service that can monitor them all.

Finally, when looking around for the right personal finance software that meets your needs, make sure that you’re comfortable with the program’s interface. It shouldn’t be expected that you recognize every single feature instantly, but if the features don’t seem readable and manageable to you, then you’re not as likely to use it and get the full benefits.

Final Thoughts

Personal finance software can go a long way in helping you to take control of your money and meeting your financial goals. It’s important to note, however, that some focus more on budgeting and expense tracking while others prioritize investing portfolios and income taxes. Explore several different programs and read reviews to find the one that’s right for you.

In this day and age, managing one’s personal finances in a secure manner that allows the user to have a real-time visual representation of their money is easier than ever before. With the numerous applications that are out there — both free and subscription-based — there’s no reason that every person can’t take control of their money and ensure they’re making smart money moves.

Featured photo credit: rawpixel via unsplash.com

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