How to financially get ahead — 9 personal finance and investing tips to get ahead financially and reverse the crush within 10 to 20 years. I am not a licensed advisor and this article is not investment advice. This article may contain affiliate links.
Most financial gurus have a their preferred way for how to financially get ahead.
For example, David Ramsey has his baby steps plan to build a $1,000 emergency fund and then pay off all debt.
In this article, I’m going to share my own version of how to financially get ahead.
As always, I am sharing what I am doing with my own money and not offering financial or investment advice.
As such, these steps are tailored towards an average income earner who wishes to reach financial independence.
Let’s dive in.
How To Financially Get Ahead
How To Financially Get Ahead
Below are my 9 steps to get ahead financially.
Let’s call them the 9 reverse-the-crush steps to FI.
Pay Yourself First
The core of my personal finance philosophy is built around paying myself first.
Through allocating a percentage of every pay cheque towards saving, I can ensure that my plan is always moving forward.
If you are building wealth from nothing on a modest income, paying yourself first is the way to do it.
To successfully pay yourself first, save a percentage of your income each time you get paid. Just take it off the top of your income and pretend it never existed.
You will be surprised how easily it will become a habit and with how fast your savings build up.
Related article: Pay Yourself First – How To Pay Yourself First
Save At Least 15% Of Your Net Income For Retirement
To give you a more specific idea of how much you should save, you should save at least 15% of your net income for retirement.
If you want to reach financial independence as soon as possible, save at least 50% of your net income.
If you are OK with slow FI, save at least 15% of your net income so you have a chance to reach financial independence in twenty years.
Furthermore, I believe in paying myself first and saving a minimum percentage even with debt.
Of course, all additional income besides the minimum percentage should go towards paying off the debt.
But I still think saving is important because it forms the right habits and takes advantage of compound interest.
Pay Off All Debt
Before you get serious about investing, pay off all debt.
More importantly, get rid of high interest debt.
Simply put, the more debt payments you have to make, the less free cash flow you will have to save and invest.
So, besides a minimum saving amount for retirement, pay off all debt as soon as possible.
Invest Your Retirement Savings
It’s great to be a saver.
However, if you are a saver alone, you might as well spend your money.
If you spend your money on products and services with today’s income, at least your money is not devalued by inflation.
Hence why it is important to invest your retirement savings in assets that increase in value over time. In turn, the buying power of your money is not decimated by inflation.
As such, you should invest your retirement savings to get ahead financially.
Live Within Your Means
If you are trying to get head financially, the last thing you want to do is be wasteful with money.
What you need to do is live within your means.
Furthermore, you don’t want to worry about how the Jones’ are doing.
Focus on spending your money on what you value and limit the rest.
Budget & Track Spending
In order to consistently save money and live below your means, you will need to budget and track your spending.
Simply put, you must know where your money is going to successfully manage it.
Consequently, you should learn how to create a budget and how to track finances.
Then you will have an idea of how much you can afford to spend and save.
Increase Your Savings Rate Once Debt Is Paid Off
Once you have paid off your debt, you should save a lot more than 15% of your income.
Ideally, you should save at least 35% to 50% for retirement if your debt is paid off.
A high savings rate will lead to reaching financial independence a lot faster.
Rather than inflate your lifestyle, increase savings after your debt is paid off.
Increase Your Income
In addition to increasing your savings once debt is paid off, you can also choose to increase your income.
This could be through a raise at work, from a new job, or as a result of starting a business.
The higher your income is, the more money you will have to pay off debt, invest, and to get ahead financially.
Buy Assets, Not Liabilities
Incase you haven’t read Rich Dad Poor Dad, one of the key concepts it emphasizes is buying assets instead of liabilities.
Basically, the idea is to buy assets that increase in value instead of liabilities that decrease in value.
In other words, buy stocks or real estate instead of consumer goods that lose value.
To get ahead financially, focus on buying assets rather than liabilities. Over time, these assets should increase in value and put you in a better place financially.
How To Financially Get Ahead — Final Thoughts
In summary, this article discussed the 9 reverse-the-crush steps for how to financially get ahead.
To get ahead financially, follow these steps to revers the crush:
- Pay yourself first
- Save 15% for retirement
- Pay off all debt
- Invest savings
- Live below your means
- Budget
- Increase savings when debts are paid off
- Increase income
- Buy assets, not liabilities
Of course, these are the personal finance guidelines that I follow to get ahead financially.
Post your thoughts in the comments below if you know any other tips for how to financially get ahead.
Similar Personal Finance Articles To Check Out
How To Dig Yourself Out Of A Financial Hole
How To Become Financially Stable
I am not a licensed investment or tax adviser. All opinions are my own. This post may contain advertisements by Monumetric. This post may also contain internal links, affiliate links to BizBudding, Amazon, Bluehost, and Questrade, links to trusted external sites, and links to RTC social media accounts.
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