You are not going to win the lottery.
Your kid is not going to be a professional athlete.
And no, your rich uncle is not leaving you an inheritance.
So it’s time to start making your own luck.
I’ve put together 6 Money Moves you can make THIS YEAR to seriously boost your bank account and help your money grow!
1. Get On A SMART Budget and Master your Money
How many times would you pair the word “budget”, with the word “rich?” For some reason, the word “budget” connotates a negative reaction, as if a doctor just prescribed you a lifelong prescription of “no fun pills.”
But in reality, living on a budget will make you a happier, wealthier person.
I passionately write about money on this website. Not because I like to see people simply get on a budget, but because I ABSOLUTELY LOVE seeing people experience the freedom of mastering their money and building a plan for a brighter future.
The first step toward any goal is making a plan.
I am going to recommend you PLAN on spending the next few weeks getting your money right by signing up for the Free SMART Budget Course.
You’ll learn how to:
- Set goals that MATTER to you
- Track where EVERY dollar is going
- Build a SMART budget based on your life priorities and your goals
- Cut waste while enjoying your money more
- Learn about the tools I use to keep track of our money and SAVE more of it
2. Start Investing In Your 401k (up to the match
Here’s a startling statistic. Only 32% of working Americans invest in their 401k, according to the Census Bureau.
This is a tragedy!
The 401k is an investment plan that (most) employers offer as a great place to put money for retirement.
There are 3 AWESOME advantages to the 401k plan:
- The money is invested straight from your paycheck (you’ll never have to think about it!)
- The money is invested BEFORE the government taxes your paycheck (that’s a GOOD thing)
- Most employers will MATCH your investment funds up to a certain amount (FREE MONEY!)
Yes, a 401k plan gives you FREE MONEY!
So if you want to build wealth, and really see your savings gain momentum, investing in your 401k is a MUST.
And you need to start NOW.
- Contact your company’s payroll department, and ask about the 401k plan. (p.s. I do know some companies don’t offer a 401k, but many offer a similar plan that comes right out of your paycheck and saves on taxes).
- Ask them what the “match” is, and how you can start contributing on your next paycheck.
- The match is usually something like “for every dollar you contribute up to 6% of your paycheck, we’ll match is for $0.50 on the dollar.”
- For example: Bill invests $300 per month. Bill’s company then invests $150 (50% match) per month as well. Bill is now investing $450 per month.
- Note: This is an instant 50% return on investment. You will NOT find those kind of gains on your money ANYWHERE! Some will even match dollar for dollar for an instant 100% return. You need to start this like YESTERDAY!
- Make sure to ask what the “vesting” period is. This is just a fancy word that means “how long until you actually OWN your company match dollars.“
- For example, a company may have a 2 year vesting period, meaning you need that 401k open for at least 2 years until you OWN the matching dollars. If you quit or get fired before 2 years, those matching funds are GONE.
- Follow their instructions to start investing up to the match percentage, and make sure to start on your very NEXT paycheck.
If FREE MONEY does not convince you, let’s have some fun with numbers and show you how a little money can go a LONG way toward building REAL wealth.
John has a job. John wants to get rich.
John decides to invest in his company’s 401k plan up to the matching fund amount.
John’s income: $50,000 per year
Company match details: 100% match up to 6% of paycheck
John gets paid twice a month, so he simply contributes $125 per paycheck to his 401k plan. This amounts to $250 per month. John’s company ALSO contributes $250 to his 401k plan with their matching funds.
John in now investing $500 per month!
But, since this is “pre-tax” money (meaning it comes out of his paycheck BEFORE taxes), his paycheck is NOT $125 smaller each time. It’s actually closer to $105 less per paycheck!
John is now investing $500 per month, and his take home pay only went down $210.
I don’t know about you, but I think this is INCREDIBLE!
But it gets better. Let’s see how John’s $500 per month is doing closer to the end of his career.
If John continues investing his 6% for the next 30 years, EVEN WITH NO RAISE, John’s 401k will grow to a WHOPPING $734,000*!
It’s a no brainer. If you want to get rich, invest in your 401k.
3. Open a Roth IRA
Now that you are putting a small amount away in your 401k (and with the tax savings, you hardly notice that your paycheck is slightly smaller), it’s time to look at investing a little more.
I recommend opening a Roth IRA with Vanguard.
Vanguard is the BEST place to invest, as they are basically a non-profit company, making sure your investing dollars aren’t lost to high fees.
And the Roth IRA is a special way to invest, that has some GREAT benefits:
- The Roth IRA allows you to invest using “after-tax” (your “take home pay”) dollars. But then it grows TAX FREE, meaning whatever gains you get from the investment can be taken out with NO TAXES at retirement
- The Roth IRA can double as an Emergency Fund if needed. Any money you put in yourself is called the “principle”, and you can withdraw that “principle” any time you need to.
- Once the Roth IRA has been open for 5 years, you can withdraw ANY of the money (principle AND investment returns) Penalty and Tax Free as a “first time homebuyer.” The IRA says if you haven’t owned a home within the past 2 years, you are a “first time homebuyer.”
- Note: You can only use up to $10,000 of the Roth IRA over your lifetime for this.
So how do you get started growing your money with a Vanguard Roth IRA?
- Log on to https://investor.vanguard.com/ira/roth-ira and select “Open Your IRA Today.”
- Walk through the prompts to open a Roth IRA account.
- You will end up creating an account and setting up your first deposit into your new Roth IRA account
- Don’t hesitate to give Vanguard a call (1-877-311-0014). They are extremely helpful and can help answer any questions you may have.
- Once you have opened the account, select an initial amount to transfer over. It will drop into a Money Market account (like a savings account), and then you can choose where to invest it.
- Now, this isn’t official advice (SEC says I can’t tell you what to buy), but I put all my money into Vanguard Index Funds to keep it simple. Again, talk to the kind folks over at Vanguard and get some suggestions.
Now that your Roth IRA is open, I suggest making your investments AUTOMATIC. Log into your Vanguard account, and setup a recurring transfer from your bank account to invest THE DAY AFTER you get paid.
This will allow your paycheck to clear your account, and then automatically tuck away a set amount before you can get your hands on it!
And the same principal applies as the 401k growth. Put away a little every paycheck, and the long term rewards will be HUGE!
If you simply put away $100 per paycheck (24 paychecks per year), over 30 years that will grow to over $293,000!* (if you put that same amount each paycheck under your mattress, it will only amount to $72,000)
Add that to your 401k balance, and YOU ARE NOW A MILLIONAIRE!
4. Ask For A Raise or Get Promoted
Over the past 8 years I was able to secure 2 raises and 6 promotions.
This was not by accident.
I learned what it meant to be an EXTREMELY VALUABLE employee. I was able to ask for a raise, and also interview with confidence to secure a promotion almost every year.
I don’t say this to brag in any way, but to show you that you CAN make more money by following a few simple principles and working both SMARTER and HARDER.
Provide more value than everyone else
Now don’t read this the wrong way. I didn’t say “work more hours” or “show more effort” than everyone else. That is a losing man’s game and will only burn you out.
Instead, find out what is IMPORTANT to your company (sales numbers, efficiency, increased productivity) and make it your life’s mission to provide your company with results in those areas.
Make it your sole focus to build solutions, remove roadblocks and help boost what is most important to your company, and you will be seen as a top performer.
How do you find out what you company actually cares about?
While most people want to just “do their job” and not get hassled, you should be asking your manager what problems can you help solve to drive the company forward.
Which leads me to point #2…
Ask for more responsibility
Make it known that you are passionate about moving up in the company, and that you want to take on more responsibility that your current role offers.
This is a great way to show that you aren’t just there to punch the clock, but to really make a difference and grow the company’s bottom line.
This can also have the side benefit of creating a new role in the company. I was able to do this a few times, essentially getting enough new responsibility that my role was no longer the same, and I was “promoted” to take on the new role full time.
Apply for every job opening you can
There was a point in my life where I didn’t make enough to pay the bills.
Not only did I get 2 more jobs (this blog, and preparing taxes), but I started applying for EVERY job I was even remotely qualified for within my company. I was rejected for 4 of them, but eventually I got a job a few months later.
After showing how much I wanted to be promoted, I was the top candidate for this position once it finally opened up, and I was able to breeze through the interview process as the interviewers knew me pretty well at that point.
Practice your negotiation skills
When asking for a raise, or applying for ANY job, you need to know your worth. And since ANY company that is trying to make a profit wants to keep their costs down, they place a HIGH priority on acquiring talent at a discount.
Communicating your worth to a company is not something most people know how to do. To make it simple, I’m going to refer to the experts here. Watch the 2 videos below by Ramit Sethi to get the scripts you need to negotiate a higher salary, and how to properly ask for a raise.
In today’s world, unfortunately, loyalty is all but dead. Companies can (and WILL) “reduce headcount” anytime a new CEO comes on board, or something happens in the market. The days of “working 40 years for a company and retiring with a pension” do not exist (outside of government work).
Loyalty simply does not pay well.
So if you feel you’re stuck in a dead-end job, or have hit a “glass ceiling” and can’t get further in your career, you can simply switch companies.
The best way to move on is to be recruited, but that means potential employers need to SEE you and your value. The next best way is to apply for jobs at a competing company that your experience matches well.
Here are a few steps to get yourself promoted OUT of your current company and increase your income significantly.
- Build your LinkedIn Profile. If you are not on LinkedIn, sign up for this like YESTERDAY! It’s an online social media platform that most EVERY working professional is on. There are also MANY recruiters and companies on there as well, and they are searching for candidates.
- Make sure to setup your profile with your most up to date Resume, connect with colleagues and other professionals, and list all of your wicked awesome SKILLS!
- Search For Jobs Online. Careerbuilder.com, LinkedIn.com, Indeed.com. These are the largest job search engines around, and can help you find a job tailored to your exact experience and strengths.
- Also, don’t forget to log on to your company’s competitor site and search through their job listings as well. Odds are you are an EXACT match for a role there, as your two companies are competing and your experience may be VERY valuable to them
- Note: make sure you don’t have a non-compete clause in your current employment contract, otherwise being hired at a competitor is a big legal NO-NO!
- Find out what people make on GlassDoor. Make a quick profile on www.glassdoor.com to find out what people are making in the positions you are applying for. Better yet, find out what you SHOULD be making in your current position, and use that as leverage.
- Glassdoor is an anonymous site where professionals submit their REAL salaries and reviews of companies. This lets you know your value based on your experience and position, and can help you negotiate when getting a job offer (or asking for a raise).
What would a 10% raise do to your monthly finances? What about a 30% raise? Or a promotion?
This is going to take some work, and it might make you uncomfortable. But it is worth EVERY OUNCE OF EFFORT you put into it, and will pay dividends for the rest of your life.
5. Read A Book (no, seriously!)
One book can change your life.
In the winter of 2008, I read the book “The Total Money Makeover” by Dave Ramsey.
From that point on, I was able to get on a budget, get married and Live on $14 an Hour, pay off over $40,000 in debt, buy a house, retire my wife to stay at home with our babies, then sell our home to take a year off to travel the country in an RV.
And it all started with a simple book.
Books have a powerful way of getting you to take action. And I think the key is that they can capture your attention in a way that is near IMPOSSIBLE online these days.
For example, I’m almost 2,500 words into this post, and if you’ve made it this far, probably had to fight the distraction of a TON of notifications on your phone or computer.
With a paper book, you can simply get lost in the story and use your imagination, without the distractions of social media and the like.
Since you are looking to improve your money situation and start getting rich, I recommend finding a few good books on money management and simple investing.
As I recommended earlier, Dave Ramsey’s “The Total Money Makeover” was motivation enough for me to REALLY get serious about money.
When I started to look at investing for myself, I was blown away by the simplicity of “Millionaire Teacher“, who made investing NOT SCARY and helped me move all my money to Vanguard.
And to motivate some ways to look at the LONG-TERM, big picture of wealth, I read the book “The Simple Path To Wealth” by my buddy JL Collins. This further solidified my “passive investing with Vanguard” strategy, and showed me how simple building long term wealth really was.
There are tons of great books out there, just find ONE that you can invest in to help push you toward the path of Financial Freedom.
6. Learn to Focus
Focus is not just a buzzword, it is THE key to success.
In a recent documentary called “Becoming Warren Buffet”, there is a story about a time when Bill Gates’ father asked both Warren Buffet and Bill Gates to write down a single word that defined their success, and they both wrote down the same word:
But how do you actually truly Focus on something, and how does it make you rich?
I love this acronym for FOCUS:
Focus takes away ANYTHING from distracting you, and keeps you on course.
But you need to know what course you are on in the first place, and define what “success” is, so here’s how I recommend building FOCUS in your financial life:
Write Down Your Goals
I talk about how to do this in detail in my SMART Budget Course, but you really do need to write down your goals. And these can’t be generic “I want to get rich” goals.
No, they need to be SMART (Specific, Measurable, Attainable, Relevant, Time-Bound) goals.
“I want to retire at age 50 with $1.5M in the bank”
That is a goal that you can build toward.
Reward Yourself Along The Way
People are WIRED to enjoy rewards. This is why behavioral conditioning works.
And since most goals worth achieving take some time, you need to build mini-milestones to keep your head in the game and stay motivated.
For example; on your way to saving up $1.5M, maybe reward yourself with a newer (not NEW) car when you hit your first $100,000. Then take that 4 week European vacation you’ve dreamt about once you hit $250k.
But I recommend starting smaller. For each debt you pay off on your way to becoming DEBT FREE, reward yourself with a date night, or an extra $100 in spending cash for the month.
The long term results of “Following One Path Until Success” is a HUGE bank account, less waste, and more fulfillment along the way.
Start with FOCUS today, and retire a millionaire!
Make Moves, Get Rich!
Financial Freedom is not about staying the course and HOPING something good will happen. It is about taking action NOW to change you financial future.
Don’t just read about how to build wealth, DO SOMETHING ABOUT IT!
Get started on this list THIS WEEK, and let me know what you did to build wealth this year!
*Investing math assumes 8% return. Numbers calculated using this investing calculator