Five Keys to Financial Freedom: Week 4

Key 4 – Start Building Your Wealth

Want to know a secret? By conquering your debt and living within your means, your wealth building has already started. Retiring debt, or slashing outgoing cash flow really increases your wealth. Let’s discuss the next step. This week we’ll cover the tools needed to take your wealth building to the next level. To start investing, start with yourself. By now you’ve made the decision to change your life (week one), and you are getting debt under control and paying yourself first (from week two), and rightsizing your life (week three). What to do with that extra cash? Your first investing goal is to build, or top up an emergency fund of three-to-six months of fixed expenses. Your first investment is and always will be YOU!

Beyond that emergency fund cash cushion, it’s time to utilize other wealth builders. The main candidate is your retirement plan through your employer. Be sure that you are contributing at least to the maximum match amount provided by your employer. Once you are at the match amount, up your contributions by at least an additional 1% each year. If your plan has an automatic increase feature, enroll in or turn this feature on. Over the years your contributions will increase on schedule and you likely won’t even notice the pay difference.

If you do not have a retirement plan at work, you still have options. One option is an IRA. Depending on your age, income and other factors you’ll need to decide between a traditional IRA that may provide you with some immediate tax savings, or a Roth IRA that you contribute to post-tax, but can eventually enjoy tax free distributions. If you are self-employed, you have a lot of options. You may be a good candidate for a SEP IRA or a solo 401(k) for example. Beyond these options, it may be time to consider a taxable investment account. A taxable investment account doesn’t really have contribution limits, and can be incredibly flexible! A consultation with a fee-only financial planner will help you sort out what options are best in your personal situation.

As an independent Certified Financial Planner™, I can help you narrow your choices and find savings and investments that best fit your situation. Contact me and let’s get started! #talktometuesday #Hireaplanner #income #cash #CFPPro #IRA #RothIRA #Roth #401k #emergencyfund #wealth #FiveKeysToFinancialFreedom #FinancialIndependence #CFPPro #goals