Want to become rich? Not just financially rich, although that’s a part of it. I’d argue that it’s probably the smallest part of it. But, really, really rich. To me, rich means to have financial freedom, to have people around you who you love, and who love you, close friends, purpose, empathy and action for less fortunate, and a whole slew of things you can’t put in your bank account. Stay tuned to this blog, because I’ll be writing much much more these other non-financial topics, and how they relate to money. For now, let’s discuss money, and growing actual monetary wealth.
I wrote an in-depth, and detailed post titled ‘7 Essential Steps to Build Wealth.’ It was well-received, and afterward people asked me where to go to take action on some of those steps that I outlined, and what specific companies or products that they should use. I hadn’t ever been able to recommend specific products in the past on this blog, but now I can! So I wanted to write a shorter form post with a few actionable steps, tools, and specific products that you can consider to help you accomplish some of those essential steps to building wealth. What is knowledge without action, right?
What follows is a recap of some of the steps of the 7 Essential Steps to Build Wealth post (maybe a bonus tool or two), that is designed to be relatively concise, and super helpful. Each step will have some context, but more importantly, links to help you take action on that particular step. To check out any of the tools listed below, simply click on the logo or the link found in that particular section. It will take you directly to that tool’s website.
Each tool that I list or recommend is either a tool that I use personally, or I’ve done extensive research on it, and believe in it wholeheartedly… that’s why I’m recommending it. If you know anything about my story, you know that I only recommend tools I believe in.
The 7 steps outlined in the 7 Essential Steps to Build wealth post, are what I’ve seen and used with hundreds of people to drive positive financial results. I’ve seen it work, over and over again. It might be a good idea to head on over to that post and just re-read the intro.
Now let’s get into it.
You know by now that a budget is crucial to financial success, especially if you are just starting out to build your wealth or change your financial picture.
I recently wrote an entire post all about budgeting. You can find that post here:
The primary tool that I use to budget is:
Everydollar – Everydollar is an awesome app that I personally use to budget each month. Just as the name implies, ‘Everydollar’ is assigned to a task each month. You give every dollar home with this system. Whether you are assigning dollars to go toward paying off debt, assigning dollars to your Roth IRA, or to you emergency fund, each month, every dollar that you bring in knows exactly where to go…because you’ve told it where to go! The budget that you create in one month is automatically replicated to the next month, which is super helpful. They have a paid version of the app, which syncs with your bank account so it tracks your spending for you, real-time, so you don’t have to go into the app and indicate your “spends” like you do in the free version. Either way, this is an awesome tool and it has worked great for our family.
Mint.com – Mint.com is probably the best known budgeting tool, and for good reason. It’s so user friendly and effective. Mint syncs up with your bank accounts and it tracks spending, real-time. It can even automatically put your transactions into their proper categories within your budget. Mint has a beautiful look and is fresh and fun to interact with. At least I think it’s fun. Mint can also alert you of certain bills that might be coming due, which is also super helpful, to help you avoid being late with payments. I think that one of the coolest features of Mint.com is it’s ability to let you move money around within the system and then see how it might impact the rest of your budget. What if you put another $200 towards your emergency fund for the rest of the year? How might that impact your ability to pay the rest of your bills? You can experiment with these types of scenarios within Mint, and I think that’s pretty cool.
GET OUT OF DEBT
Paying off your debt (everything but your home…for now) should be financial priority #1! Use a budget to help you with this. Getting out of debt is key to long-term financial success. Think about it: does it make much sense at all to be PAYING the credit card company interest? You should be EARNING interest. Getting out of debt is priority #1 and the second major step! Here are tools to help you get out of debt faster.
Dave Ramsey – Money Makeover: This book is all-time! Dave Ramsey is the king of the debt-free life and this book will walk you straight through how to do it effectively. This book has helped and guided my family’s finances, and I recommend it to everyone looking to get a hold of their finances. I’ve even gifted it for a wedding gift! Yeah, I’m a fan.
You can find it by clicking HERE.
Dave walks you through, step-by-step, on where to start, what to focus on, and practical tips to help you get out of debt! You’ll find that I share a lot of the same principles that he shares. Good financial advice doesn’t change from year-to-year. It is consistent, simple, and it works. Dave is a no-nonsense type of guy, and that’s one of the things I like about him. So if you’re wondering where to start, and how to get out of debt, I highly suggest you pick up a copy of this book. Check it out and see for yourself. In my opinion, one of the most powerful ways to get out of debt, is to consistently be inspired. When you feel like you should be making more progress, or your frustrated that you’re budget is so tight, listening to other real people describe their debt-free journey can be really motivating and inspiring. So in addition to picking up this book, check out Dave’s podcast or radio show.
SoFi – SoFi is a company specializing in student loan refinancing. If refinancing is a part of your plan to get out of debt, then I’m A-okay with it. It’s not a crutch, it’s not a gimmick, and you had better be sure to actually pay it off. I’ve seen people refinance with the intention of paying it off, but they find another way to spend that extra $200/month that should have been going as extra payments. Refinancing debt should a catalyst for paying off that debt faster. It should be your first leap towards paying that debt off, if the interest rates are high. Refinancing is essentially taking one or multiple higher interest rate loans with one or multiple entities, and consolidating them into one loan, hopefully with a lower interest rate. This can be a very powerful tool to lower your interest rates and hopefully your payment. But remember, you’re going to be paying extra each month, and really working your budget to pay these loans off early. Nonetheless, SoFi can help you refinance at very reasonable rates. You can go HERE and check what your rate might be.
Remember from my monster 7 Essential Steps post, how important the emergency fund is? Well it is. It’s so important and needs to be one of your main priorities, after debt payoff. Now, if you want to go and open a separate savings account at your local bank, by all means do it. What I almost always recommend, is that your emergency fund be a separate account, often with a separate institution. I recommend making it a little more difficult to get at than your everyday checking account. This helps to avoid transfers on a Friday night to accommodate your night of extra spending.
To help you make the leap to open an account elsewhere, here is a resource that might make a good solution.
Ally Bank is offers a one heck of a high interest rate checking account. They offer one of THE highest interest rates for savings accounts out there, and their user experience is awesome. Their current rate is 1.15%. That’s pretty good for a cash-equivalent account! Their savings accounts offer FDIC insurance up to $250,000. In all, they are a great solution for your emergency fund, because your money is very liquid, out of sight, and earning interest. I don’t typically recommend having your emergency fund in anything other than a cash-equivalent instrument, so if that’s the case, why not have it in one of the highest paying option, like an Ally bank account?
Credit Sesame is a tool that you can use to monitor your credit. From my experience, someone who is just getting their finances back on track will check their credit score and will get a wake-up call. Having a solid credit score is important if you want to buy a car, buy a house or even get a job… yes, many employers are now considering credit score in the hiring process, so you want to have it in check. I’ve also encountered plenty of wealthy people who have a very solid handle on their credit and check it regularly. Will Credit Sesame you can start with your credit score, and then it can help you get your entire financial picture back on track. They offer help by providing resources and information on home loans, personal loans, credit cards, advice to improve your credit score, identity theft, and so much more. Their credit monitoring software is 100% free and it’s 100% worth it. If you want to get rich, and stay rich, it starts with having a handle on your credit and monitoring closely.
This is a big one, and one that I used to hate! You see, I used to be in the life insurance business. Yeah, one of those super annoying, sometimes pushy, but definitely annoying life insurance agents. I hated almost every moment of it. I didn’t hate the concept of life insurance, I just hated the products I was forced to sell. I’m not forced to sell ANYTHING now, and my belief in the need for life insurance is strong. If you have someone, or something (debt) relying on you to be around to care for them or it, you need some amount of life insurance.
Haven Life – Term life insurance is the way to go. It’s cheap and lasts for a specific amount of time. For example, 15, 20 or 30 years. It’s the best way to get the most amount of coverage, for the least amount of money. Haven Life is an online life insurance platform that is super simple to use. Their goal is to take out the complexity and confusion of buying life insurance. You can get quotes for free, apply right online in 20 minutes, and if approved, start coverage right away. They even have pretty great calculators to help you figure out how much coverage you need.
When thinking about life insurance, some people think about the following when considering how much coverage to get: replacing your income for a period of time for your spouse to continue the same lifestyle, covering any debt that you may have, allowing your significant other to take time off of work to grieve, paying for children’s college, or another financial goal.
In all, I’ll go back to phrase that I heard used by an old boss, regarding life insurance and it’s necessity: “Life insurance is the only product that provides for the financial need at the EXACT moment it’s needed.” I think that’s pretty powerful and right, and something you should consider.
One more note on costs: A healthy 35 year old male may pay $22.25/month, for a 20-year policy, with a $500,000 death benefit. (the death benefit is the amount that your beneficiary would receive if you pass away)
Investing is a crucial step toward wealth creation. I should tell you though, the investing that I recommend WON’T make you rich any time soon. The prudent, responsible investing is not a get rich quick scheme. It’s not an infomercial and frankly, it’s boring. This is something that takes a very long time to work. But here’s the kicker: you have to start! The sooner that you start investing, the better… exponentially better:
I recently wrote a post called, “How to Start Investing with $1,000” I suggest you check it out, as I give some very specific advice around investing and how you should begin. I also wrote a massive post on investing called, “9 Pillars of Investing You Must Know.” You can check that out too, to learn almost everything that you might need to know about it.
To help you with your investment needs, there are a couple of companies that I recommend you look at.
Betterment: A fully automated and completely awesome tool. They use math and decades of academic research to build and manage portfolios aligned with your specific goals and objectives. They help you create a proper portfolio for you, by asking you a series of questions. They use Vanguard funds inside the portfolio, which you know I’m a fan of. This is an excellent solution for someone who wants a very, very professionally managed investment portfolio, with excellent investments, an intuitive and beautiful online experience, for a very low-cost. Their fees start around 0.25% of your account balance/year, and go DOWN from there as your account balance increases. And Betterment recently added additional Premium services, where you get access to a Certified Financial Planner and help with other investments, like your work 401(k) plan. Their premium service starts at 0.40% of your balance/year, and goes down from there with higher account balances.
Motif: Motif is also an online investment provider, but they do things a little differently. I like them specifically for their Impact Portfolios. For people who want to invest with Socially Responsible Investments, Motif offers portfolios with that theme. You can select a portfolio based on what is important to you. Motif begins by asking you a series of questions to determine a specific cause, then it recommends a portfolio that includes companies that abide by that particular portfolio’s criteria. Their portfolios are typically built with a basket of individual stocks or funds that meet the criteria of the ‘Motif’ or theme. Their pricing is great and their user experience is wonderful. Definitely worth a look, especially for the socially conscious investors.
Monitor Your Finances
One of the final and most important steps to building wealth and becoming rich, is to know what you have and keep motivated. Monitoring tools help you stay on top of your finances and they can even provide motivation to continue positive change, even when you don’t want to. Too many people bury their heads in the sand, and just think, “If I don’t look at it, I’ll feel better, and maybe it’ll change.” That’s not going to happen. You need to stay on top of your finances, and monitor closely. The successful people that I’ve encountered all have a very, very good understanding of where they are financially. They didn’t obsess about their numbers on a daily basis, and I completely believe you shouldn’t obsess daily. They did, however, have the ability to look at everything they have on any given day. They used tools like:
Personal Capital is, IMO, the best solution for monitoring your entire financial picture in one snapshot. Their app is awesome to use. It’s beautiful, engaging, and shows you bank account information, investment account information, even loan information. They are an aggregation tool, so you can link all of your accounts, and have them in one spot. Personal Capital helps you set financial goals, then it tracks them for you, real-time, with the accounts that you’ve linked.
Mint.com also provides an awesome monitoring service. This is more of a budgeting tool, but definitely has the chops to aggregate all your finances into on picture.
Bonus Tool – Save More Money
Trim Financial Manager is a tool that I’ve written about before, but it’s awesome. It throw it in here because it’s awesome. Once you give Trim read-only access to your bank account, it scours it looking for expenses that you can cut. I know it has helped me identify recurring expenses that I frankly forgot about, and I’ve cancelled them. If getting ahold of your finances means cutting expenses, then Trim can help with that and truly save you some coin.
These tools are all tools that I’ve either used, currently use, or have researched extensively and can recommend to you without hesitate at all. I hope that you’ll take a look at some of these tools to help you TAKE ACTION towards your financial goals. You have to start! Don’t wait, don’t over-analyze, don’t ponder for months, just do. Get the things done that you know you should, and that you know will put you on the path toward financial freedom and real wealth!
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