click here Wise Money Tips is a personal finance blog which aims to impart diverse and useful information in the areas of investing, taxes, insurance, retirement, saving, and other money matters. Knowledge gives you power. This is true whether we’re talking about personal finance or any other aspect of life.
There are so many aspects of personal finance which require decisions on a regular basis. Make poor choices, and you could be sabotaging your financial future and wealth potential.
Reach Your Maximum Wealth Potential
Everyone has their own unique personal finance circumstances and goals. Some people make high incomes, others earn more modest money. The same is true on the expense side as well. Some spend frugally, others lavishly. But whatever situation you are in, you can take steps to maximize your wealth.
The mere mention of the word wealth often conjures up images of mansions, expensive cars, yachts, and exotic vacation spots. And yes, for many this is their only definition of wealth. A select few actually achieve such affluence, and maybe someday you will too if you haven’t done so already.
However, we believe that wealth is a rather abstract concept, and therefore often has different meaning to different people. For some, wealth can mean being debt free or being able to comfortably support a family. For others, it may mean having enough to live or retire comfortably without having to work. Whatever your definition of wealth, we hope that the information on this website will help you in your financial endeavors.
Enjoy Life But Be Financially Responsible
Wise Money Tips advocates enjoying life but also living responsibly and within one’s means. We believe individuals should establish a financial safety net before planning for future goals. Investing in longer term and risky types of assets is usually reserved for meeting long term goals. Such investments may include stocks, bonds, and stock and bond mutual funds and ETFs.
Some examples of long term goals are retirement, college planning, big ticket purchases such as a vacation home or a boat, etc. But before you can focus on meeting such goals, you must get your present finances in order. You must protect what you and your family already have.
Take action by paying off any credit card debt and establish an emergency cash reserve fund. Also manage risk by purchasing any required insurance policies. Do not buy any unnecessary coverage, and get quotes from multiple insurers to reduce costs.
Look into potentially acquiring term life insurance, health, disability insurance, property and liability insurance, and any other necessary policies. This insurance protection can help to preserve your present way of life if misfortune were to strike. Once the safety net is in place, we can focus on the other very important longer term objectives.
Save and Invest for Long Term Goals
For long term goals, you have many options. For example, you can invest in equities or fixed income directly, or via mutual funds and ETFs. Real estate is another attractive option for long term investing. You can be a direct active owner of real property, or you can invest passively via REITs or limited partnerships.
These types of investments have historically allowed investors to generate positive inflation adjusted returns on average over long time horizons. With regard to long term investing, Wise Money Tips advocates diversification and income (i.e., dividends, rents, interest), and minimizing costs. Also very important is starting early and reinvesting income. This will allow the power of compounding to work for you over time.
Finally, we do not advocate short selling or buying stock on margin due to the inherent risks of these strategies. Being forced to sell at the most inopportune time is a recipe for disaster. Buying real estate or other investments with excess debt is also very risky.
Use Available Strategies to Lower Taxes
We also espouse that you take advantage of any vehicles created by the government which help you to save for financial goals on a tax deferred basis. This includes well known ones such as Individual Retirement Accounts (IRAs) and 401k plans which are generally for employees. Self-employed individuals can use Simplified Employee Pensions (SEPs) among other plans.
When saving for education, you can use Section 529 College Savings Plans or a Coverdell Education Savings Account. For medical expenses, you can establish a Health Savings Account (HSA) and contribute to it directly or through your employer. You should also participate in any applicable fringe benefit plans such as health insurance offered through your employer. They are usually provided on a pretax or tax free basis.
All of these vehicles provide some type of tax break. And who doesn’t like tax breaks? Speaking of taxes, you can build your wealth faster when you cut them to the legal minimum. The tax code is so large that almost anyone can find strategies to help reduce that tax bill.
Increase Your Earned Income
Earned income is the money you make from your job or a business that you own. You may be content with the income that you currently earn. You are able to meet your financial obligations and also regularly save for future goals.
But maybe you want to increase your income for any number of reasons. Sometimes you can cut expenses as much as is reasonably possible, and still not have enough. At least not for investment purposes. Or maybe you have enough but just want some more breathing room. More of a cushion. Maybe you want to be able to help others. And sometimes it’s just the personal satisfaction you’re searching for. You just want to earn more to show everyone that you can!
So how do you go about doing this? Well, there are many ways. But following are some of the more common ones:
- Earn a promotion and/or ask your current employer for a raise
- Leave your current job for one that pays more
- Get a second job
- Start a business full-time or part-time
- Obtain skills via additional schooling or training to enter a more rewarding field
Personal finance can be a complex and intimidating topic for many individuals. We try to make it less so! Look around and pick up as many wise money tips as you can. Knowledge can be a very powerful tool. But unless you act and implement what you learn, nothing will change. You will not get any closer to your financial goals. Only by doing will you achieve your goals and dreams. Click here to see some of our most recent wise money tips.