8 Ways To Take Your Finances To The Next Level

  Chances are if you read our blog, you have your finances in pretty good shape. Maybe not perfect, is there such a thing? But the basics are probably down and you are committed to improving your situation. And if you don’t try, then no one will! For example, a person would have steady employment. Secondly you are contributing to your 401k or IRA automatically. Thirdly, you are living within your means and managing the debt levels. So in other words, things are going pretty well and on track to a relatively secure retirement.
But as humans, once we reach a certain level, we sometimes want to take our game to the next level. So what are some actions we can take to strive for the next level of personal finance greatness? What skills or techniques can we learn and deploy? Here are a few ideas:
But keep in mind all investing has some level of risk, so should be approached with caution. Before any kind of investing, one should probably consult a financial fiduciary professional. In other words, one with your interests aligned with theirs. These are ideas to deploy with 10-20% of capital, after all the fundamentals and plain old vanilla low cost index funds are maxed out, emergency funds built, debt levels low, etc.  

1. Consider a dividend portfolio

There is an amazing world out there of bloggers that focus on building high quality dividend stock portfolios, us being one of them. Dividends are magical to me for one simple reason. In a matter of minutes anyone can build a small passive income machine using dividends. I understand it takes quite a few shares to build up a healthy cashflow. But let’s say someone bought 200 shares of Pfizer stock for about $7,000. The value of the asset may grow over time and the investment would send you about $72 ever few months. Yes, not a ton of money, but an instant passive income machine for really very little effort once you have the investment dollars. I am personally slowly building a dividend portfolio through Robinhood at a few shares at a time. There are no commissions and the dividends are automatically deposited back into my Robinhood account. Check out my current dividend portfolio at: My Dividend Portfolio Update  

2. Get ahead of the game and increase contributions (super saver mode)

If you have all the basics down and are feeling comfortable with level of spending and meeting short term wants; why not up the 401k or IRA contributions? Become a super saver! Most financial experts recommend at least saving around 8-10% every month. What if you could push the boundaries a bit and get that to 12%, 15% or even 18%. The more one can push the savings the faster they reach critical mass amounts like $500k or even $1 Million. And the exciting thing is at these levels of assets, the compounding really starts to take on a life of its own.  

3. Roth out…

Once the basics are covered, it is a great idea to consider a Roth IRA. Basically when you invest in a Roth, you are betting that taxes will be higher in 10, 20 or 30 years. You pay taxes on the funds up front, but then everything you withdraw at a later date once you reach retirement age is tax free. Roth IRA Key Characteristics
  • Money can be withdrawn starting at age 59 (and 1/2, don’t understand the 1/2 part).
  • Money withdrawn is free from federal, state and capital gains taxes.
  • IRA does not count as “provisional income” therefore doesn’t cause your Social Security to be further taxed.
  • You do not get a tax deduction at the time you place the funds in the IRA. This is opposite the advantage of a 401k, that reduces your tax liability that year. But the 401k money is taxed when you withdraw it later.
  • Under 50 years of age, Congress will only allow someone to contribute $5,500/year in a Roth IRA. Remember when something is a good thing, they have to put limits on it 😉
For more on Roth IRA’s: Rock Out With Your Roth Out…  

4. REIT’s or rental property

Real Estate Investment Trusts & owning actual real estate should be placed in the category of stocks in terms of risk. They are risky investments with the potential for long term reward. But in the short run can be costly and volatile depending on the market. In other words I made the case last year that the return on investment for investing in REIT’s (which are similar to dividend paying stocks) can be similar to owning and renting out an actual piece of property. Obviously in the long run, there may be more to gain by owning the actual real estate. BUT, this comes with large upfront costs in terms of money and time. And the investment is very specific to the particular market you are in.  

5. New Skills

It cannot be said enough, the world as we all know is changing rapidly due to technology. I know of no other way to thrive than to get on the train and continue to learn. Knowledge is power. Think about those words: knowledge is power. Those who run the world have capital and knowledge. Related: Are Your Preparing For An Exciting Future?  

6. Saving For Child’s College

You know the old saying, they really do grow up too fast. I can’t believe where the last several years have gone and how our kids have grown. So, another great way to get ahead and leave a legacy is to designate funds for your children’s college. I am not sure what the future of college costs will look like. Part of me thinks the traditional model will be restructured to allow for more distance and online learning, which can drastically reduce the costs. I had a great experience working on a Master’s degree online. Yes, it seems great to sit in a great big room and frolic around an ivy campus, but that is just not a reality many of us can truly afford. Consider a 529 college savings plan. Financial experts do suggest you have your own retirement secured prior to finding a child’s college. So this is another example of taking things to an advanced level. If a 529 is used to pay for qualified education expenses, no federal income taxes are owed on the distributions, including the earnings. So if you have 10 years until a child goes to college, you could place $20k in a 529 plan. Let’s say the $20k grows to $40k by the time the student begins school. As you distribute those funds to pay for college, the money is used tax free. This alone is a significant benefit, but there are other tax benefits that you may want to consult your tax professional with.  

7. Side hustle

Do you have a passion or interest in something? Is there some way to make it into a kind of side hustle? Perhaps you have a craft or artistic side? Side hustles are typically not big money makers, but it sure can be fun to learn, grow and make a little extra at something on the side. I experienced some tremendous success and satisfaction writing and illustrating a children’s book that introduces kids to the world of Shakespeare! Look!, you can buy your own copy here at Amazon: I know, shameless plug 😉  

8. Passive Income

Once all the basics are down, it may be time to consider building other passive income machines. One of our major themes at The Money Vikings is to encourage folks to consider building passive income machines. These can take many forms and can start small. In fact I believe all of them start small and you begin to grow and build over time. As we discussed before, the simplest passive income machine is a high quality dividend stock. Jerry has been able to get his coffee paid for and his AT&T phone bill by building clever mini passive income machines: How I Got Starbucks To Pay For My Coffee Addiction How I Got AT&T To Pay My Cell Phone Bill What are some other strategies you are deploying in order to take your finances to the next level?  

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