Many of us want to grow our WELLth, but we may not know HOW to get there or even WHERE to start. A few strategies are typically given: save more, spend less, and invest in your 401(k). Often, knowing what to do and getting started are two separate things; people know what they need to do but do not know how or where to start. We put together 6 tips to help you start to grow your WELLth.
Create a Budget (Save More and Spend Less)
Creating and sticking to a budget is one task that will help you save more and spend less consistently. If you have never created a budget before or are unsure of where to start the 50/30/20 rule can be your guide. This rule breaks down as follows, up to 50% of your income should be for your needs (groceries, rent, etc.), up to 30% of your income can be spent on your wants (gym, streaming services, etc.), and finally up to 20% of your income should go towards savings and debt repayment. When establishing your budget be sure to look at everything you spend money on, even small amounts. You may not think that $10 streaming service should be included in your budget but that, along with your weekly coffee or lunch out can start to add up quickly.
Build Your Cash Savings
If you’re following the 50/30/20 rule, putting away 20% of your income towards savings and debt, you can expect your cash savings to increase as you pay off debt. To start building your savings determine how much you can save on a monthly basis and then calculate how much that would add up to at the end of the year. Knowing how much you can save annually will allow you to track your savings and make sure that you are on pace to hit your goals. We typically recommend having ~6 months of living expenses saved in cash. Having cash on hand not only helps you grow your WELLth but it can also provide a secure foundation to meet unexpected expenses.
Invest in Your 401(k)
Investing in your 401(k) is another way to help you build your WELLth. 401(k) contributions leverage one of the most powerful tools in money management…automated contributions. Automation takes the emotion out of the saving process and helps to ensure contributions are consistent over time. In addition, many 401(k) plans provide an employer match, meaning they will match your contribution up to a certain percent. If you are not investing in your 401(k) the first step is to talk to someone at your company, usually in HR, who is familiar with your 401(k) plan to find out how to get started. You will want to find out if they offer a match and how it is calculated. After you have your account set up and are getting the max employer match it is a good practice to increase your deferral each year, even if by only 1%. Utilizing your 401(k) is a great starting point to building your WELLth.
Invest in Yourself
Growing yourself can lead to growing your WELLth. Setting clear career goals and knowing your worth can be another way to grow your WELLth. If you have not set career goals, now is the time. Map out where you would like your career to be in 5 years and then create a timeline to work backwards. If there are certifications or additional degrees that you need to get to where you want to be add those to your plan. After you have a set plan talk to your manager to define your goals. As your career and skillset grow your salary and 401(k) often grow with it.
Create Your Financial Plan and Keep It Updated
Regardless of your age having a financial plan will be a benefit to you. Your financial plan should include all your financial priorities. Many of us have the same long-term goal of Financial Independence (AKA Retirement), but our short-term goals may vary based on what stage of life we are in. Therefore, your financial plan will not only evolve with you, but it will serve as a roadmap for you as you work towards achieving all your financial goals.
Start Today!
Our last tip is the one we believe is the most important of all – take action and start today. There will always be a reason to delay a budget or to push off adding to your savings. But the more you delay the less likely you will get started and the less time you will have to meet your goals. Today is the BEST day to get started on your WELLth journey!
If you need help getting started or are not sure where to start to grow your WELLth – contact us. We welcome the opportunity to help you invest in your future.
Meet the Author:
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Investing involves risk including loss of principal. No strategy assures success or protects against loss.
Wealth management (i.e. WELLth) services are provided separately from retirement plan consulting services you may receive from SRP as a result of participation in your employer's retirement plan. They may involve an advisory agreement and/or an additional fee.