The credit and spending culture of the 2020s is one in which working adults save very little of their income. This hasn’t always been so. A generation ago, young, middle-aged, and retired individuals saved more of their paychecks, spent less, and didn’t rely as much on credit as they do today. The good news is that it’s still possible to be part of the saving culture and build a solid financial future. It takes effort and focus, but conscientious folks do it every day.
What are the most realistic and effective tactics for creating an abundant lifestyle amid a culture that encourages avid consumerism? One path is entrepreneurship, which represents the creation of a new business entity for the sake of turning a profit. Others include adding real estate to your retirement account to balance the portfolio and gain several other benefits. Fixed percentage savings plans and investing in the stock market are two other strategies that can help hardworking people create wealth. Here are the pertinent details.
Starting a small side business and growing it, over several years’ time, into an income producing operation is the most common way to boost personal income. In the digital era, millions of hardworking professionals devote a few hours per week to launching online startups as resellers, affiliate marketers, or service providers of various kinds. If you choose this path, make sure to begin with a detailed business plan, keep your day job, and only launch after you have enough funding to sustain operations for at least one full year without income.
Real Estate in Retirement Accounts
Most working adults don’t think of real estate when pondering what kinds of assets to add to their retirement accounts. IRAs (individual retirement accounts) and 401(k)’s are the two most common variations, but traditional versions of each plan do not allow for holding real estate assets within the accounts. Both tax-advantaged arrangements offer significant savings based on current laws. However, there is a way to get even more out of retirement accounts and include real estate in portfolios.
While traditional IRAs can only hold assets like mutual funds, stocks, and various bonds, an SDIRA (self-directed IRA), sometimes called a checkbook IRA can include many other asset classes, even property and real estate. Why real estate? One reason is that the segment has experienced more favorable returns during the past two decades than traditional stocks and bonds. Retirement accounts are the ideal vehicle for getting the most out of real estate because people tend to leave deposits in them for many years. That’s why so many working adults are choosing to place their retirement money into SDIRAs. It’s a wise move that allows you to hold numerous alternative types of assets in a retirement portfolio.
Fixed Percentage, Automated Savings
One of the oldest wealth building tactics and part of planning for the life you want long-term is steady, fixed percentage savings. A modern twist on the method is to use automated deposits from each paycheck to make the process seamless. Experiment with different percentages. Most discover that 5% is a good beginning point. Slowly increase the amount toward the 10% mark or above. Use careful budgeting and frugal spending to maintain the contributions.