5 Ways to Make Your Money Go Further
- Put together a financial savings plan
- Refine your spending plan
- Invest in stocks, ETFs, and other investment vehicles
- Consolidate debts, pay off credit cards
- Review your tax savings & planning opportunities
Put together a financial savings plan
Refine your spending plan
Invest in Stocks, ETFs, and other investment vehicles
One idea would be determining your risk tolerance and time horizon and investing in low-cost ETFs and stocks. There are so many options to select from that often times it can feel overwhelming deciding where to start. This is where we come into the picture. Depending on what you are trying to achieve, there are low-risk/low-growth, high-risk/high-growth investments, and everything in between that you can put your money in, such as ETFs, stocks, bonds, etc. We are not speculators and invest for the long-term of 5+ years.
Consolidate debts, pay off credit cards
At the minimum, paying down credit card debt, while it may seem trivial is huge. The average credit card from Wells Fargo, Bank of America, JP Morgan, and others charged around 25% APR. Credit cards are quite literally robbing your future wealth, one monthly payment at a time. Now, granted, if your credit card balance is $100, then this is not the same case. I’m referring to individuals with high credit card debt, over 5% of their net worth.
Review your Tax Savings & Planning Opportunities
John Smith has a job that pays him $150,000 in wages. John also earns $40,000 in a self employed business he started that sells computer parts. John’s wife does not work. They have 2 children, ages 6 and 8.
Depending on John’s circumstance, he may qualify and decide to open an HSA account under a family plan. HSAs are pre-tax and roth all in one when used for medical. John may also determine that he can add money to his wife’s IRA under the spousal IRA provision, thus saving them even more on taxes. If eligible, John could also add money into a backdoor Roth IRA for himself, and lastly, he may determine that he is eligible to max out his employer 401k, and also open up a self-employed 401k for his other income. All in all, John could shelter up to $62,000 from tax. Assuming he is in the 32% bracket, this would indicate savings of $19,840. John, being the disciplined saver he is, decides that if he puts the $19,840 into a taxable brokerage account, just his tax-saving alone compounded for 20 years at 7% will be worth $813,350. Add that $19,840 to the $62,000 per year in retirement that John is contributing and now after 20 years, he will have a grand total of $3,355,000. By maxing out retirement and taking advantage of the already given tax rules, John can amass a very nice retirement for himself and his wife.