Good Habits That Will Increase Your Net Worth

Good Habits That Will Increase Your Net Worth

Inheritance and high income are not the only things that boost you to the upper tax brackets. Building wealth begins with changing the way you view and spend money. While raises and huge financial wins are great, it is the day-to-day habits that will increase your net worth.

Creating good spending habits mark the difference between financial success or distress. Instead of planning from paycheck to paycheck, you need to have a long-term view and savings plan. Reverse this thinking, and put your financial goals first.

5 Good Habits that Will Increase Your Net Worth

1. Pay Down Your Debt.

Since your net worth is the total sum of your assets minus your debts, it makes sense to pay off what you owe. Debt greatly detracts from  this, so regularly paying down more principle on your debt is a good habit to increase your net worth.

If you have a large amount that you owe, you may consider debt consolidation or speaking with a debt relief agency.  These programs are especially helpful if you carry a lot of high-interest credit card debt. With one phone call you can reduce your interest rates and monthly payments.

2. Evaluate Your Monthly Spending.

Not only is it important to build good habits, but also to identify bad ones as well. So, it is good to get into the habit of performing regular budget checks. These reviews allow you to make sure you are living within your means. Looking over your financial statements and monthly bills is an easy way to track your monthly spending habits. It is also a good way to determine if you have too many unnecessary expenses.

Creating a budget will help you save money and move towards your long-term financial goals. This does not mean that you have to give up everything you love, but you may discover monthly memberships or subscriptions you can do without. If you want to establish good spending habits that will increase your net worth, then you must also break the ones that negatively impact it as well.

3. Max Out Retirement Contributions.

Another crucial step in building your net worth is through your retirement accounts. While this may not seem a high priority in your twenties and thirties, it should be. The sooner you begin saving for retirement, the more money you will have for your golden years.

Many employers offer retirement plans with tax-advantaged accounts and contribution matching to help your funds grow even faster. If you do not take advantage of these benefits, then you are missing out on free money you could use to add to your net worth. Furthermore, these investment vehicles save you even more since it defers taxable income until your lowest earning years. Increasing your generative assets puts your money to work over time and exponentially adds to your net worth.

4. Put Your Money in High-Interest Savings Accounts.

Choosing the correct savings account can help build your net worth more than you may realize. Even though current interest rates have not risen to previous levels, you can still earn more with a high-interest savings account than in a traditional one.

If you do not need immediate access to these funds, shop around to see which type of account will earn you the most interest. Leaving your money in low-interest checking accounts or stashed under your mattress actually depreciates the value of your earnings over time. Simple changes like this will maximize your earning potential. However, you also need to set the habit of contributing regularly to the account to reap the greatest benefits from it.

5. Look for Ways to Increase Your Earnings.

The bottom line is that if you want to increase your net worth, you need to look for ways to earn and save more. It starts by optimizing your savings strategy to best suit your long-term goals. However, you must also find ways to increase your earnings and assets. You could bring in more income by asking for a raise at your current job, looking for a side job, or earning passive income.

In addition to generating more income, any financial advisor will tell you to also invest when appropriate. There are numerous options of where to invest your money, but make sure you do not put all your eggs in one basket. Diversification protects your assets and earns more interest than savings accounts ever could. Let compounding interest help increase your net worth.

Consult with a Financial Advisor

If you ever find yourself with more questions than answers, it may be time to seek professional guidance. Setting up a consultation with a financial advisor can give you an objective assessment of your finances. Asking for help and getting expert advice are also good habits that will increase your net worth.

Many financial planners will offer a no-cost initial consultation free of charge. If you decide to use their services, they can help you evaluate new investment opportunities, begin retirement planning, and ensure you are getting the most our of your portfolio. Even if you are on the right path, expert advice can keep you moving towards your long-term financial goals.

Don’t Wait to Start Creating Good Habits

No matter what plan of action you choose, the most important thing is not to procrastinate in acting on them. It is easy to tell yourself that you will start working on your financial goals later. However, “later” can quickly become “never.” There will always be financial demands that seem more important, but there is no time like the present to start establishing good habits to increase your net worth. It does not require huge sums of cash to start planning for your future. Start small and build on that, using the small gains as momentum towards your savings goals. As you see financial progress and meet milestones, it will reinforce these good habits and keep you on on the right track.

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How To Earn While Supporting Your Local Business

Earn While Supporting Local Business

I value supporting local businesses. Additionally, I love to “shop small” whether that’s local or during my travels. This value has heightened during the COVID-19 pandemic. After all, so many local businesses are in danger of shutdown due to prolonged closures. Therefore, I was excited to learn about The Small Business Bond (SMBX). This is a way that I can earn money while also supporting small, local businesses. It’s right up my alley.

Why Shop Small and Support Local Businesses 

I’ve been a “shop small” person for almost as long as I can remember. My father is a custom woodworker who has always done local business. Local stores have charm, closeness, and unique items that you just can’t find in big box stores. Yes, the big bookstore will always have (or order) the book you want. However, the small bookstore has the best recommendations, the shelf of books by local authors, and staff that know your taste in reading and can recommend the perfect book at the perfect time. Local stores promote community.

One of the things that I loved about San Francisco when I first moved here was the limitations on large chain businesses. Although that’s changed some over the years, San Francisco is still a city vibrant with small local businesses of all kinds. I support them through purchases, social media promotion, and word of mouth. San Francisco shut down earlier and longer than most other cities during the COVID-19 pandemic. As a result, many small businesses have suffered. So, the opportunity to support them in a new way – while also earning money myself – really excites me. That’s what The Small Business Bond (SMBX) is all about.

What Is The Small Business Bond (SMBX)?

The Small Business Bond (SMBX) is a platform to invest in local small businesses. Small businesses borrow money through bonds that you invest in.

If you’re not familiar with bonds, then think of them as loans. However, instead of going to a big bank to get that loan, the small business owner gets it from everyday investors. You, should you choose to try a platform like The Small Business Bond, are one of those everyday investors.

How SMBX Works

The process is relatively simple:

  • Sign up as an investor on the SMBX platform. There’s no charge to create an account.
  • Browse through the available small businesses. Choose which ones you want to invest in. You can start investing with as little as $10.
  • The small business that you support will receive that loan money to help stabilize or grow their businesses.
  • Each month, you’ll receive a payment. The payment includes your monthly principal repayment as well as interest payments. Interest payments vary; they may be as high as 9%.

Here’s a closer look at what the experience of investing in local businesses through SMBX has been like for me so far:

Signing Up as a New SMBX Investor

I went to the website and clicked the “start investing” button. A new window opened up and showcased some of the most recent bonds along with the time remaining for funding and how much has been raised to date. On one hand, this seems like an extra page because I clicked “sign up.” However, the pause to glance over this page and see the businesses getting help right now was inspiring. It reminded me why I was doing this.

Upon clicking signup, a popup window opened. It asked me to choose whether I was investing as an individual or on behalf of an organization. I love that both options are available. I selected “individual.”

The next popup window let me know that there are three steps to investing in the local business through SMBX:

  1. Create a profile.
  2. Establish limits on investments.
  3. Link a bank account or credit card to the profile.

Step One: Create a Profile on SMBX

Easy peasy. So I did those things. I entered a username, email, and password. Next, I gave my legal name, birth date, and address. The site let me know that FINRA requires a U.S. address for all investors on the site.

Step Two: Set Investment Limits

This quick pop-up window asks four questions:

  • Approximate annual income
  • Approximate net worth
  • If you’re an accredited investor (which I am not)
  • Amount invested in crowdfunding in the past year

This established my investment limits. Next, I agreed to the various terms and risks. I received an email that I clicked on to confirm my email address. My account was all set up and ready for investing.

Step Three: Payment

After clicking on my email, I went to a new page of bonds. At the top of the page was a profile option, which I visited to set up my payment. I assume if I hadn’t done so then at some point I would have been prompted to add that.

The entire sign-up process took less than fifteen minutes.

Choosing Local Businesses to Support

On the bonds page, I chose from the available local businesses to support. SMBX is a new platform. Therefore, I only had a handful of options for supporting local businesses. I’m excited for more businesses to join. On the other hand, I’m also excited to be getting in on the ground floor of helping small businesses.

The Financials

When you click on a small business from the bonds page, it opens to that business’s page on the site. Here you see the financials on the right side of the screen. This shows the minimum and maximum amounts to raise, the bond duration, yield, unit par value, and total unit value. For example, clicking on ChildWise, I see that they’re raising between $50,000 and $100,000. The bond duration is 60 months, the yield is 8%, the unit par value is $10 and the total unit value is $12.17. In other words, if I invest in one unit at $10 and get repaid with 8% interest then I’ll receive $12.17.

The Businesses

Although there were only a handful of businesses to choose from, I still wanted to be discerning about where to invest my money. It’s important to me that the companies share my ethics. Therefore, although I appreciate the important financial information, I looked most carefully at “our story”. This, along with supporting documents, shows what the company is all about. It covers how they want to use their money. This is what matters to me.

I invested $50 to start. You’re allowed to invest in $10 increments. I chose to invest:

  • $10 in vegan cheese company Jule’s Foods
  • $10 in San Francisco ice cream shop Humphry Slocombe
  • $30 in childhood education business ChildWise

When I entered how much I wanted to invest in any given company, a pop-up window reminded me of the terms I saw on the company’s business page. Upon agreeing, a page pops up reminding me when my companies will fund. At that time, if their funding minimum has been met, my payment will get processed.

Risks and Rewards 

Should all three companies receive funding and successfully return their bond money, my $50 will become $60.69. Each transaction has a 4% transaction fee. So, I’ll only earn a little bit of money. But I’ve also only invested a small amount. I’m testing out the waters, and if it goes well then I’d love to invest more. It could be a great source of passive income. More importantly, either way, I’ve supported local businesses that I believe in, so the money isn’t wasted.

5 Things You Can Stop Paying For That Will Save You Money

Things You Can Stop Paying For

In today’s day and age, there are certain services and items that we can all stop paying for right now. Technology and access to the internet have completely changed the way we communicate and find entertainment. Some of these resources are even free! So, if you need to tighten the purse strings a bit, take a look at how much you spend on the following things each month. Chances are that you could eliminate many of these expenses and save yourself a ton of money.

5 Things You Can Stop Paying For Today

1. Music

Music is one of my greatest passions. I love finding new music, supporting local artists, going to concerts, and organizing my playlists. Although I don’t spend nearly as much for live music these days, I am constantly looking for ways to support my addiction without breaking the bank.

There are a MILLION options to explore new music: Spotify (my personal favorite), Pandora, YouTube, Grooveshark, 8tracks, and Soundcloud just to name a few. By all means, continue to buy albums and support these people. But also remember that when you play their songs to completion on sites like Spotify or Pandora, these artists are receiving money through royalties. You can still support your favorite bands and singers using these convenient apps.

2. Books

Can you remember the last time you physically went into a library? Yes, they still exist. Libraries are amazing and full of amazing resources. One cool trend popping up in Atlanta is roadside libraries. If you have seen them, they look like birdhouses, but they are full of books! You drive up, drop off your books, and pick one to read. It is a great idea and definitely builds a sense of community. If you don’t have these available in your neighborhood, you can create your own. If you don’t want to build a road-side library, that’s fine. You can set up a book exchange in your office, neighborhood, or social circles instead.

If you are more interested in e-books, there are also a ton of free resources online. This list not only directs towards the best sites, but can even help you choose titles tailored to your tastes.

3. Fast Food

This is a convenience for which  you pay a premium. Fast food is usually more expensive than cooking at home, and very rarely healthy. Furthermore, you pay even higher prices if you order through food delivery services. A little foresight and meal planning will help you cut this unnecessary convenience out of your life for good. Do yourself and your wallet a favor and make fast food one of the things you can stop paying for.

4. Cable

cut cable

I was once the type of person who religiously watched my favorite TV shows each week, anxiously waiting for new ones to be released. However, after cutting the cord, I’ve found a million other uses for my time. I can honestly say I’m a much happier person because of it. Instead of going home from work and vegging out on the couch, I do more meaningful tasks such as: cooking, walking my dog, gardening, or catching up with friends. It is so simple and so fulfilling. I do not miss the tube at all. However, I still subscribe to Netflix, I can get my fix of TV if need be. For $8.99 a month, the basic membership gives me access rather than spending $100+ for cable packages.

5. Gym Membership

This has been the hardest for me, but the extra work I’ve put in so far has been worth the savings. Not only do I save on membership fees, but also on the commute time and gas money. I am fortunate to have a gym at my office, but without this I would still be able to stay fit. There are so many resources and free exercise routines available online that you can still get a full workout at home. Simply look up your favorite activity on YouTube. I bet you will find a dozen free channels to get your started. Whether you enjoy yoga, jazzercise or free weight training, there is certain to be something out there for you.

The Budget Breakdown

My savings this year from the changes I’ve made: (January – March)
Cable ($360) – Netflix ($36) savings = $324
Spotify Subscription savings = $30
Books (I was a frequent Amazon book buyer) savings = roughly $50
Fast Food = roughly $40
Gym membership savings = $180

That is over $600 in savings for almost three months. The savings speaks for itself, but I am also living a much more fulfilling and healthier lifestyle. However, it can be a struggle to get started. But, the only way to get a handle on your finances is to tackle the problem head on. First, you need to collect all your financial information and sit down to balance your books. This means calculating your total take-home income after taxes. Then, you need to add up all your monthly expenses and subtract it from your income. Creating a budget does not need to be another tedious task. You may be surprised when you look at your daily expenditures and find even more things you can stop paying for.

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