You Can Achieve Long-Term Financial Success

Finances are involved in almost every aspect of your life. Though money isn’t everything, having enough of it means you won’t have issues affording the things you need and want. Unfortunately, most Americans are so busy trying to survive the here and now that they overlook or put off thinking about longevity. As hard as it may seem sometimes to pay your bills and manage your debts, learning how to make your money grow and work for you ensures that you can live the life you want. Below is a look at some steps you can take to achieve long-term financial success.

Live Within Your Means

One of the biggest problems people have with their finances is living beyond their means. Spending more on goods and services than you actually have available creates problems. You’ll borrow money, use credit cards, and even stop paying on certain bills to compensate for your expensive spending habits. Whether you’ve purchased a home that takes up more than 30% of your income, a car with monthly payments you can’t afford or splurged on a flat screen television, it sucks up income that could be used to better your future.

So, the first step to long-term financial success is to learn to live within your means. Review your household income and expenses and get really honest about your spending habits. Cut out spending on anything you can’t afford to pay for from your own income. This may mean significant changes for some including the need to return an expensive car, downsize to a smaller house, and even skipping out on things you want (shopping for clothes, shoes, electronics, eating out, traveling, etc.). It may be difficult, but in the end, you’ll find that you have excess income which can be used to help you grow your wealth.

Invest Your Money

Just because you’ve freed up cash by learning to live within your means doesn’t mean that you’re financially set for life. Now it’s time to take that extra income and make it work for you. Investing, commonly mistaken for something meant for the rich or the elderly, is a method of saving money in a manner that will allow it to grow from compounding interest.  Here are some of the most common ways to invest your money:

• Stock market – You don’t have to be a stock market wizard to start investing in the stock market. This is a collection of markets and exchanges where the equities and stocks of public companies, bonds, and other classes are issued and traded. When you purchase stocks, you’re essentially buying into the ownership of an organization. This partial ownership entitles you to a percentage of their earnings and assets. Though there are risks of loss, the right strategy can reap large returns. There are lots of platforms you can turn to that will do most of the work for you. However, you’ll need to know important things like stock market trends, stock market holidays, and basic guidelines so that you too can monitor your money.
• Savings Accounts– Here’s an investment method that won’t require as much effort: opening a savings account. There are several types of savings accounts, each with a different set of requirements and interest rates. There are personal savings accounts, college savings plans, retirement accounts, and money mutual accounts. The more interest an account offers, the more your deposits will grow over time.
• Real Estate– Another common investment source is real estate. Growing increasingly popular, many families have turned to this option to grow their money. Purchasing a property at a fair rate, making upgrades, and either selling or renting the property can produce a large lump sum of cash and/or long-term income.

Increase Your Income

So you’re living within your means and you’ve looked into investment opportunities. There’s one more thing you can do to increase your wealth: make more money. Putting all your eggs in one basket (your employment income) is never a good idea as you never know what could happen. Having other streams mean you always have money coming in from somewhere.

There are two forms of income to consider here, active and passive. Active income is income you have to work for. It is a full or part-time job, a side hustle, or a small business. Passive income is income that you continue to receive with little to no effort on your end (like the rental income discussed above), affiliate marketing, proceeds from a book you wrote, or interest on a peer to peer lending opportunity. Finding streams such as these gives you more income to work with.

Long-term financial success goes beyond budgeting and paying down your debts. If you’re going to live the life that you want, you need to make your income work harder for you long-term. From your first investment to your active and passive income streams, you’ll be able to generate additional money which can be used to pay for what you need and want while also preparing you for whatever life may have in store.