What’s the Secret to Financial Success? 5 Tips to Grow Your Wealth
Updated on Nov 13 2018
If you are looking to improve your financial life and money-management skills, read these top tips from personal finance expert J.D. Roth, writer and founder of the hit blog, Get Rich Slowly.
If you have struggled with personal finance, you are not alone. Managing finances to grow your wealth is a challenge in America; which is especially disconcerting for the aging population who is approaching retirement.
J.D. Roth is a self-proclaimed ‘accidental’ personal finance expert who stumbled upon finance when he decided to seriously address his own debt problem in 2004. His writing, which documented his journey to digging himself out of debt as an every-day American, resonated with his readers.
Learn How to Grow Your Wealth for Future Financial Success
While financial management is unique to everyone, there are some financial best practices to help you succeed in growing your wealth. Learn some money-saving tips to get your financial future back on track in this exclusive interview:
1. Consolidate and Automate Your Accounts
Roth stresses that simplification is key to being able to manage your finances. From his experiences in his own life and in talking with friends and family members, a general consensus is that investments are likely “scattered all over the place.” He notes:
“Move all your accounts to one central location so it’s easier to manage. Having a lot of accounts can seem overwhelming. Consolidation is key. The more complicated you make things, the more difficult it is to stay on top of things.”
Automation can help simplify finances further. He notes that while automation may be a little intimidating, especially for the older demographics; having your savings and investments automatically deposit into accounts from your paycheck helps take out the ‘human element’ of having to move everything yourself. Roth says he is “absolutely an advocate of automation for retirement investments or saving for any goal.”
2. Avoid Temptation
Roth’s articles on shopping addiction are of particular interest for America’s consumerist culture. He discusses that avoiding temptation to spend money on only things that will make him happy long-term has helped him beat his own struggles:
“Shopping addiction is something I continually struggle with myself. I love reading and used to spend several hundred dollars a month because I’d visit bookstores. One of the biggest tips that helped me was to to simply remove the temptation – I stopped going into bookstores and that helped.”
Online shopping and having credit card information programed for various shopping sites doesn’t help with shopping addiction. Roth explains that today’s digital ‘everything’ makes it particularly easy to spend exorbitant amounts of money without fully realizing it. For example, he has over 700 movies that he bought using his iTunes account. He comments, “I buy a couple movies a week and it adds up over time. It’s important to be aware that online shopping is making temptation too easy, so you need to remove the barriers between you and the purchasing.”
3. Utilize the Gap Between Your Income and Savings
To successfully prepare for retirement, Roth notes that he had a big realization a few years ago:
“Your savings rate is what really matters when it comes to effectively saving. The gap between your earning and your spending is what you really need to tap into to put money away and take advantage of interest. Most people spend right up to what they earn when their salary increases. If you create a gap between your current earning and spending that you don’t spend each month, that gap can be your personal profit.”
When it comes to being frugal, Roth doesn’t think that does enough. Being frugal helps but having a plan where you automatically put money into your unique investment portfolio will make the biggest impact. Ideally, putting away half your income is one of the fastest ways to grow your assets, if you can maneuver this. Roth says these are ways to create a bigger gap between your income and savings for financial opportunity:
- Home – The average family spends 1/3 of their budget on housing. If you can reduce that and put the savings into investments that will really help you build a nest egg.
- Transportation – The average family spends 17 percent of their income on their car. Carpooling or taking public transportation can really help reduce this cost.
- Find Ways to Make More Money – Learning to negotiate your salary or taking a side job can help you substantially increase your income for savings opportunity.
4. Be Future-Focused
Figuring out what you want out of life will really help you zone-in on your priorities and retirement planning and financial needs. Taking the time to do a financial planning overview with your investment time horizon and financial goals in mind will help you properly forecast your retirement needs. Roth says he thinks people need to be more future-focused to take advantage of financial opportunity. He notes:
“Many people don’t know where they want to be and what they really want out of life. I’m a big advocate of prioritization to inform financial wants, needs and strategy.”
About J.D. Roth
J.D. Roth has no formal training in the world of finance. Despite being self-taught, his writing has resonated with readers at Get Rich Slowly, a blog he founded in 2006. His blog is devoted to helping people take control of their finances – just as he did – through organization, prioritization, and education.
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