According to The Business Insider.
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Tiffany Aliche’s “Making Money with Money” lays out exactly what it takes to build wealth and pass it on.
Budgeting and saving come first. Then, make a plan to get out of debt and invest for retirement.
And start looking for a financial planner to check the beneficiaries of your investment accounts.
Managing money can seem overwhelming. But maintaining a good relationship with money can be broken down into several steps.
Financial expert, podcaster and author Tiffany Aliche (Tiffany) – The Budgeter – outlines nine steps in her new book, “Making Money with Money,” that she says are essential for anyone who wants to increase their money and make it last. Fortunately, they are doable steps you can take in an afternoon or two.
- Make a budget you’ll use
Budgets apply to everyone at every income level, and it’s vital to be clear about where the money is coming from and where it’s going.
If you’re not familiar with budgets, Tiffany suggests outlining how much income you earn, how much you spend each month, and then reviewing your expenses. From there, you can break things down into essential and non-essential expenses.
You can then decide how much you want to spend on savings & investments, and how much to spend. From there budgeting can take many different forms, whether you choose to use a budgeting program to measure your spending, or a zero-based budget or the traditional envelope method, tracking your own spending is essential.
- Set up automatic savings
Once the budgeting issue is addressed
The most important part of saving is practice, and automatic deposits can ensure that they are completed weekly or monthly. Tiffany writes, “The move is usually a very easy procedure that only requires you to enter information about your account, and the amount of money you need to deposit, and you’re done. “
Tiffany recommends using an online bank’s high-yield savings account to get the highest possible interest rate.
- If you have debt, call creditors or seek refinancing
This is important if you have high-interest debts (such as personal payments or credit card debt). Debt can quickly add up to more than you have invested or saved.
Tiffany recommends making a quick call to the company with the debt and asking for a lower interest rate to pay it off. It doesn’t hurt to call the creditor’s customer service line,” she says. “
Debt consolidation and refinancing can also help lower the total interest you owe. For credit cards and other types of consumer debt, shifting balances from one card to a card with a lower interest rate can help. Private student loans can also be refinanced, although experts recommend that you wait to refinance your federal loans because payments aren’t due until September 2021.
- Check your credit score
If you haven’t checked your credit score recently, Tiffany recommends that you do so. Think of your credit report as a kind of monetary transcript, similar to your high school transcript, which shows what classes you’ve taken and what grades you’ve earned,” she writes. “The higher your score, the better your creditors and even insurance companies will think of you.
During the pandemic, with credit fraud and reporting errors on the rise, it doesn’t hurt to check scores more frequently now. And, until 2022, you can check it once a week for free.
If you find it’s lower than you thought, Tiffany says the first step is to check for errors in your full credit report. From there, you can dispute the error.
- Make sure you have (and are depositing into) a retirement account
With high-interest debt, you can start focusing on investing for both long-term and short-term goals.
If you haven’t started saving for retirement, that’s the first place to start. It’s crucial to start early to give yourself the freedom to stop working in the future. Tiffany writes, “Caring for older people is the job of your youth. “
Check with your workplace for a 401(k) plan and any available matches, and set up automatic deductions from your paycheck. If there are no plans available at your job, consider opening an IRA to be saved.
- Purchase a life insurance policy
Life insurance may not sound like a tool for building wealth, but it’s critical. It can protect the wealth you are building and can even help you build a legacy that can continue.
There are several options, including term life insurance, that can help build wealth by helping you protect your family when you have children or obligations that eventually expire, and by creating a permanent life policy.
- Calculate your net worth
Reviewing your assets is like taking your body temperature with a thermometer; if it rises, you may want to check with your doctor,” writes Tiffany. Net worth may be inversely proportional to temperature – after all, you want the temperature to rise – but it works similarly by indicating larger problems.
Calculating your net worth is as simple as adding up all your assets (what you own) and liabilities (what you owe) and finding the difference between the two. Understanding and calculating your net worth also allows you to have great conversations with your partners and, later, your financial planner.
- Seek a financial planner
Having a good financial planner is like having a good doctor – it’s someone who understands your situation and how to help. Finding a financial planner is an important step for anyone who wants to grow and keep their money, says Tiffany.
She recommends finding a fee-based financial planner because these planners can’t sell products or earn commissions. She also recommends finding someone with whom you are willing to talk and share personal information.
- Check the beneficiary forms on your investment accounts
Estate planning is a complex process that involves items all the way from writing a will to planning a long-term care plan. While some steps require the advice of experts and attorneys, you can easily complete one step today.
Tiffany suggests starting by examining your investments and the form of beneficiaries on your bank accounts. The people you are listed as beneficiaries actually replace what is written in your will,” she writes. “It’s as simple as logging into your investment account and viewing the person listed. You can update or change this person to reflect your life today at any time, and it only takes a few minutes.