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16 money rules you need to follow if you want to get ahead

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Most people want to get ahead financially, but it can be difficult to know what to do, how to invest, and what pitfalls to avoid. Maybe you’re looking for easy ways to grow your bank account or tips for spending less money in general.

There’s no surefire way to build your wealth, but these are some of the most commonly accepted and proven ways to get ahead.

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1. Start saving for retirement early

Retirement may seem a long way off, but that doesn’t mean planning for now is any less important. Saving now allows you to put smaller amounts aside to help pay for your retirement years.

If you start saving at age 25, you’ll probably have enough to retire early. If you start saving now and use the wide range of tax-efficient plans, you might have enough for retirement at age 50.

Be sure to invest wisely, control your expenses and maximize the tax benefits available to you.

2. Track your expenses

Where does your money go each month? You might have a good idea of ​​how much you’re spending on your mortgage or rent, but what about coffee, restaurants, and visits to your favorite boutique?

The best way to know where your money is going is to track your spending regularly. You can write down what you spend in a notebook or use an app on your phone.

Be sure to include all purchases. Then review this information to see where you could save more money.

3. Spend less than you earn

Although this advice is obvious, it is not easy to do. One way to start is to switch to an all-cash budget. If you only buy what you have money for, you will have to give up what you would have put on a credit card.

A cash-only budget forces you to decide if any purchases you make during the month are worth the investment. If you can’t pay off your credit card, those purchases will cost you much more than the original price after adding 15% or more interest.

4. Never carry credit card balances

Consider the cost of credit. If you put money in a bank savings account, you’ll probably earn less than 1% back on that money. However, if you borrow money from a bank, for example when using a credit card, you will be charged a fee of 15% or more.

Credit is expensive. The best way to avoid accumulating debt is to avoid using it or paying off the entire balance each month.

5. Buy car insurance every year

There is no downside to buying car insurance every year. You can save money by finding a policy that still meets your financial needs, but is a fraction of the cost.

Some insurance companies may offer a significant discount if you become a new customer. Or if you’re armed with a quote from a new insurance company, you may be able to negotiate with your existing company for a better rate.

Check out these other creative ways to help you save money on car insurance.

6. Earn money while you sleep

It may seem like a dream, but there are ways to do it. This is called creating passive income, which means you don’t have to work to earn money.

There are different ways to do this. Create a product and sell it online based on your knowledge or experience in a field. If you have a specific skill, create a course and sell it online. You may also be able to earn passive income by owning real estate or investing wisely.

7. Set aside at least 15% for retirement

As you work to manage your budget and increase your income, you should also try to increase your retirement savings to 15% or more of each paycheque.

Setting aside at least that much for retirement can allow you to see a significant increase over time thanks to compound interest.

As your income increases, be sure to increase your pension contributions.

8. Ask for raises the right way

Many people assume that their employer will offer a fair raise, but you can influence the value of a raise if you are prepared. Do some research to show your employer that you should be paid more and by how much.

Using information from job postings for a similar position, show your boss what a competitive salary is in your field with your experience. Be sure to describe your accomplishments over the past six months.

It’s also a good idea to create a formal, written request for a raise so you can make your case clearly. Now is a great time to roll up your sleeves, be confident, and use the research skills you developed in college.

9. Don’t be afraid to change jobs if necessary

There may be times when you should ask for a raise and other times when it is best to look for a new employer. If the market shows you’re not being paid a fair rate and your employer isn’t willing to budge (perhaps the company can’t afford it), it’s time to stretch your legs. .

Or you may want to consider changing jobs to continue developing and improving your skills. New positions may offer greater challenges, more opportunities for advancement, or more interesting tasks. See job changes as a good thing and a way to achieve your career goals.

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10. Budget using the 50/30/20 rule

When creating a budget for yourself, focus on this rule. Spend 50% of your income on your needs, spend 30% of your income on the things you want, and save 20%.

It sounds simple, but when you go this route, you create a way to save a significant amount of money, pay your bills, and not feel deprived of the things you really want to buy or enjoy.

11. Don’t Spend All That Bonus

Getting a raise or a bonus means you get extra money that isn’t built into your current budget. If you are already living comfortably, think about how to use the new money in the way that will benefit you the most.

Sure, a vacation or buying a giant flat-screen TV sounds great, but putting some of that money aside could help you achieve other goals, like building up your emergency fund or saving for a down payment on a house.

Use the new money to pay off debt or invest more in your retirement savings.

12. Start investing

Investing is a great way to grow your money. This can allow you to grow your nest egg and create some financial wealth.

One way to do this is to hire a financial advisor who can assess your level of risk tolerance and suggest investment vehicles. You can also use a robo-advisor or online brokerage to help you get started investing.

13. Create an emergency fund

Using credit can be a serious and costly mistake, but in an emergency you may have no other alternative. One way around this is to have an emergency fund.

Put three to six months of your salary into a savings account or money market account to help cover your expenses if you lose your job, get sick, or just need your car repaired.

14. Make savings automatic

Manually transferring money into your savings account or retirement fund may be a good intention, but you may be forgetting or finding another use for the money.

Instead, automate this process by authorizing your bank to regularly transfer funds to specific accounts. By automating the process, there is less risk of those funds not getting to where they need to go.

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15. Deposit at least 20% when buying a house

There are many loan programs where you don’t have to pay 20%, but if you can, you’ll save money over time.

First, if you’re paying less than 20% of the purchase price, you’ll need to purchase private mortgage insurance. Second, you risk having your house “under water” for a few years, which means you owe more than the house is worth. A larger down payment also means that you reduce your debt.

16. Buy a used car

Buying a used car means you pay a lot less than buying a new vehicle off the lot. New vehicles lose 20% of their value in the first year.

If you simply must own a new car, plan to drive it for at least 10 years to get the most out of that investment.

At the end of the line

There are also plenty of things you can do to save money on day-to-day expenses. When you go shopping, have a weekly menu plan based on what’s on sale and always make a list, so you’re not tempted to overbuy.

While some of these money rules are easier to practice than others, being mindful of the money you’re making, saving, and spending will help you move forward.

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