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Five Tips for Increasing Your Wealth

Taxable-Income-300x199Most people want to be wealthy. This doesn’t mean that they want to be able to afford a mansion on the beach and drive exotic cars, although that could be nice. Instead, wealthy, to most people, means being able to have financial freedom. They don’t have to worry about money, they don’t have to worry about working, and they don’t have to wonder where their next paycheck will come from.

Unfortunately, most people will never be wealthy. The vast majority of Americans don’t save nearly enough to meet their retirement needs. Instead, they spend (and over-spend), and ultimately will rely on government programs to meet their needs when they are physically unable to work any longer. If you would rather save now so you can have a comfortable retirement, pay attention to these five tips from your accountant in Billings, Montana.

Boost Your 401(k) Contributions

When is the last time you looked at your 401(k) contributions? Are you even contributing? Most people put in the bare minimum: between 1 and 3%. For some reason they feel that increasing their contributions will make them suffer greatly and not be able to afford their expenses. This couldn’t be further from the truth; the math is simple.

If you make $30,000 per year, and you put in 3% of your income into a 401(k) and your employer matches 3%, you are saving $1,800 per year. If you increase your contributions to 5% (and you get a 3% match), then you are now saving $2,400 per year, but your take home pay will only decrease by about $40 per month (assuming a 20% tax rate).

Every six months, increase your withholdings by another 1%.

Pay Down Your Debt Rapidly

Most Americans have debt. Most Americans hate their debt. Yet for some reason people keep charging, keep buying more car, boat, or ATV than they can afford, and keep getting into mortgages that strain their finances. At the same time, those people are all paying minimums on their debt, and racking up huge interest charges.

Instead of floundering through your debt, pay it down rapidly! It can be done with a little dedication. Take for instance the story of Joe Mihalic. He graduated from Harvard with $90,000 of debt. Within 9 months he was debt free.

That may mean earning more money.

Bring in Money on the Side

Something that has become more and more popular over the last few years is earning more money on the side. For many it seems impossible, for those who have done it, they know it is actually pretty easy.

Take something you are good at, and start asking around for those who would pay to have it done for them. Can you push a lawnmower? A handful of lawns mowed on a Saturday morning could bring you a few hundred extra dollars per month. Are you a wiz in the kitchen? Many people hate to cook, prepping their meals a few nights per week could bring in some extra cash. Are you a fantastic artist? Freelance designers are always in demand.

Choose a skill, hone that skill, market that skill, and be on your way to an extra $500 to $1,000 per month with only a few extra hours of work each week.

Be Passionate and Create Value

Many people don’t want to work outside of their regular job. But then they get to their place of employment and complain through the day. They don’t like their work, they hate going to work, and they do the bare minimum to scrape by. This attitude is guaranteed to leave you at the bottom of the ladder while your peers move up.

Instead, find a job that you can be passionate about. Create immense value by breaking away from traditional methods and employing those that clients need and want. By becoming an expert, creating value, and showing your enthusiasm and passion, you will show that you can be trusted with more and more.

Negotiate Expenses

If you want to be wealthy, quit throwing away your money. Now this doesn’t mean that you need to use leaves at toilet paper, take cold showers, and sit in the dark so you don’t spend money on electricity. What it means is that you need to slash expenses whenever you can.

When is the last time you looked at your car insurance? You could likely be paying several hundred per month more than you need to. Have you checked your phone plan lately? Many carriers have offered upgrades for free, but won’t give them to you unless you ask. At the same time, you may be able to get the same plan for cheaper. Do you really need cable TV, or can you get everything online for a fraction of the cost?

Take an hour to slash your expenses and you could save thousands per year.

Practical Taxes is Here to Help

When you get your tax refund, you probably have an idea of where it will go even before the check comes. If you are truly intent on building wealth, have us prepare your taxes. We can find most of our clients a bigger refund, and in the end they gain wealth much faster than if they spend hours trying to do their taxes on their own.

Practical Taxes is a full service accounting firm in Billings, Montana. We offer payroll services, accounting, bookkeeping, and much more. 406-894-2050.

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