It’s the start of a new year, which means new resolutions and new goals. If building up your wealth and equity isn’t currently part of your New Year’s resolutions, then it’s time to jot it down at the top of your list. There’s always time to start building up your wealth through thoughtful financial planning, and the earlier you start, the better off you’ll be by the time you finally retire. You may even be able to retire sooner! So don’t waste a second, and start adopting these top tips to help you get on top of your finances this year.
Start with Personalized Financial Planning
When you first start financial planning, it’s easy to feel lost or like you don’t even have any options. Between tight budgets and rising costs, it’s no wonder that two-thirds of working millennials today have nothing saved for retirement.
Everyone’s financial situation is different, which is why it’s imperative that the first step you take for yourself this year is to invest in personalized investment planning. This can include everything from having a custom financial plan set up, coaching to rely on, and, of course, asset investment management.
Get on Top of Your Debts
One of the first areas you need to focus on when it comes to getting on top of your finances and building wealth is to tackle the debts that are holding you back. Building a smart repayment plan that tackles high-interest debt like credit cards first is essential. This doesn’t mean only pay off your credit cards, but work on overpaying those high-interest loans to remove them from your monthly payments first. If you have multiple such loans, you may want to get on top of them by actually consolidating those costs with a special loan designed to help people pay off multiple debts and exchange them for one loan repayment.
Get Onto the Asset Ladder
We are currently in a K-shaped economy, which means that those who own stock and assets are seeing their wealth grow, while those who rent and don’t trade on the stock market are struggling more.
The good news is that Iowa is home to one of the highest millennial homeownership rates today, with around 63% of millennials owning their own homes. It’s also ranked highly for affordability, making it a great place to start building your wealth through equity. If you don’t already own your own home, stake in stocks or other businesses, then it’s time to consider. You don’t need to be a homeowner per se, of course, so if your goals sit outside of homeownership, discuss this with your financial planner.
Diversify Investments
While owning a home is a great way to reduce your outgoing expenses and, most importantly, stop the yearly rent increases from eating into your working budget, it’s not the only asset you should own. Diversify your investments, or have your asset manager do so for you. Just a few of the investments you should be making, for example, are your 401(k), which you should max out as much as you can, while also investing in health savings accounts, life insurance, and even stocks. Your goal is to essentially start building an asset portfolio that can handle a few hits and setbacks. It’s the classic: don’t store all your eggs in one basket recommendation.