Once you’ve chipped away at your financial stress and found the peace of mind that comes with financial wellness, it’s time to take the next step toward securing long-term wealth. A part of that equation is making your money work harder. That means looking at your current money and then identifying where you can make it go further. Here are six ways you can get started.
1. Reduce Credit Card Debt
Your money can’t work for you if it’s being eaten up by debt. Carrying credit card debt from one month to the next can dilute the amount of money you have. That’s because interest charges typically get tacked on to credit card balances that don’t get paid from one month to the next. To avoid this, try to pay off credit card balances in full every month. Paying off credit card debt is a smart way to make your money work harder for you.
In addition, if you wind up with extra money, such as a bonus at work or a tax refund, consider putting that money toward slashing your credit card debt.
2. Create a Budget
Setting up a household budget that considers your monthly income and expenses can help prevent overspending and keep you on track toward financial goals, such as saving enough to retire early.
You can develop a budget with a tool as simple as a spreadsheet, or you can download any number of budgeting apps. Once you’ve established a budget, stick to it so that you make your money work as hard for you as possible.
Just make sure to revisit your budget regularly. “Budgeting isn’t a one-time action; it is a continuous process of engaging with your expenditure habits every day,” Forbes notes.
3. Automate Your Savings
A set-it-and-forget-it approach to making your money work harder for you is automating your savings. You can accomplish this by setting up regular automatic transfers from a checking account to a savings account (such as once a week or once a month) or funneling part of your direct-deposited paycheck into a savings account.
As noted by financial services provider Discover, automating savings helps prioritize contributions to your savings, thereby decreasing the temptation to spend the money. Try to put your savings in a high-yield account so that you earn a healthy amount of interest.
After you’ve automated your finances, personal financial advisor Ramit Sethi recommends “optimizing your savings by leveraging a sub-savings account” to allow for specific goals or life events. Automate this account, too.
4. Contribute to an Employer-Sponsored Retirement Plan
You could be leaving money on the table if you don’t divert some of your paycheck into an employer-sponsored retirement plan, such as a 401(k) or IRA. How so? In many cases, employers match a certain percentage of the contributions you make. That’s free money. Talk about making your money work harder for you!
Also, be sure you’re chipping in the maximum amount you can each year to your employer-sponsored plan. That, too, can make your money work harder for you. For 2021, the annual cap for 401(k) contributions is $19,500, with an additional $6,500 allowed as a catch-up contribution if you’re at least 50 years old. And for IRAs, the limit on annual contributions to an IRA is $6,000 for 2021. The additional catch-up contribution limit for people 50 and over is $1,000.
5. Consider Funding a Precious Metals IRA
A self-directed precious metals IRA lets you purchase alternative assets, including gold and silver. Either a Roth or a traditional IRA can hold IRS-approved bullion coins or bars made from gold, silver, platinum, or palladium. The benefits of a self-directed precious metals IRA include the ability to diversify your portfolio and to potentially claim tax benefits. For example, you may be able to take a tax credit for making eligible contributions to a precious metals IRA.
6. Convert Cash to Physical Precious Metals
One of the advantages of purchasing precious metals is that, unlike some other asset types, you don’t need to frequently buy and sell them to keep pace with market conditions. That’s because precious metals have a history of retaining long-term performance potential. Plus, precious metals can diversify your portfolio, serve as a hedge against inflation, offer a method for storing wealth, provide protection against global political and financial upheaval, and let you own a tangible asset.
All of these factors can make your money work harder for you while you barely lift a finger.
Incorporating precious metals into your portfolio is one of many ways you can make your money work harder for you. Whether you purchase physical gold and silver to hold at home or choose to fund a precious metals IRA, learn more with help from U.S. Money Reserve. Call now for a free one-on-one consultation with one of our knowledgeable Account Executives.