Achieving financial stability sounds simple enough – work 40 hours a week, save money in the bank, and avoid large expenses. Yet as society continues to encounter economic downturns, the reality is it can be far challenging to achieve financial stability today. More and more people are retiring at an older age, toxic government debt and unpaid consumer loans are building up, and job security across different fields and industries are crumbling to an almost non-existent degree. To help combat such a tough economic climate, here are five steps to guide you.
Spend Less Than What You Make
Aiming to get a high-paying job and increase your annual salary is both astute financial goals. However, the more logical and sustainable goal is to increase your net worth by spending less than what you make. Cut back on unnecessary expenses, like buying games for your phone, eating out in five-star restaurants, or taking cabs to get around the city. Individually, these expenses look infinitesimal but collectively can add up over time.
Invest in Assets That Generate Passive Income
The more passive income you have working for you, the less time you need to work. When viewed on a small scale, like a 10 percent return on your $10,000, it doesn’t seem like a powerful strategy that can net you millions in the end. However, if you apply that same 10 percent return on a $1,000,000 account, it’s $100,000 pre-tax, which ultimately affords a better lifestyle despite needing the same level of research. Start investing in stocks, real estate, mutual funds, patents, and other instruments that generate income passively.
Join an MLM Program
Multi-level marketing schemes have gotten a bad reputation over the years, but there are still a handful of MLM companies that offer robust and opportunity-rich programs for distributing products, mostly in the health and cosmetics department. Becoming a senescence distributor, for example, can yield good income while also affording you a flexible work schedule. Joining programs of such nature will require you to be active in networking, but it also means uncapped profit potential for people who are good at pushing product to consumers.
Divide your disposable income into investments and savings, with the former getting a much bigger half than the latter. These savings will serve as an emergency fund for unexpected bills, such as overdraft fees or medicine. Have a set amount of your funds automatically sent from your checking account to a savings account at preset intervals. Once you’ve set this up, forget about it and avoid taking from your savings account unless it’s absolutely necessary. Leave the physical card for your savings account at home so you aren’t tempted to use it impulsively.
If you have any current debt, strive to eliminate it. Unpaid loans and credit cards generate interest rates that can churn up your savings and weigh down your goal to be financially stable. Assess your debt situation and order them from the smallest amount to the largest. Focus on paying off the smaller ones first, even if those debts are in the range of $30 or $50. The more debts you cross off from your list, the more encouragement you’ll get to be more financially responsible in the future.
Becoming financially stable is a matter of choice. It doesn’t take the most intelligent or wealthiest people to achieve such station in life. It simply takes simple yet logical steps to increase your net worth, boost your earnings, reinvest it, and then rinse and repeat. Aside from the five steps aforementioned above, there are many other creative and resourceful ways to achieve financial stability.
Author: Damien Justus