Improving your net worth is a chicken and egg scenario for many people. You want to have more money to invest in the financial markets, but you don’t feel like you earn a good enough salary to have a higher savings rate. With the U.S. personal savings rate hovering below 5 percent most years, most Americans are in the same boat.
Here are some ways to improve your life situation to free up more cash to invest.
Live Closer to Where You Work
Several of the more successful personal finance bloggers, including Jacob Lund Fisker of Early Retirement Extreme, managed to move towards financial freedom sooner by swapping the dream of an automobile for a bicycle. Riding a shorter distance to work and picking a rental property nearer to their employer, they reduced transportation costs and commuting time.
Sometimes Fisker even went home for lunch or put time into pet projects with the additional free time he had not sitting in evening rush-hour traffic. The money saved on transportation – one of the top five expenses in the budget for most people – was shoved into cash savings and investments. It only took a few years for Fisker to achieve financial independence.
Choose a Career That Pays Better & Is in Demand
Whether you wish to choose a better paying career or just one that’s growing in demand and not being outsourced to Asia, you’ll be in a strong position. A mechanic or someone who helps with handyperson projects is unlikely to ever get outsourced abroad because it requires a person under 50 (in most cases, to be flexible enough) and who works locally (they cannot remotely fix a vehicle).
Another area that is growing in demand is healthcare because of the number of boomers retiring from the workforce leaving an unfilled position. People over the age of 65 tend to need more frequent care in hospital, so the requirement for medical staff is growing across the country, not declining.
One of the healthcare roles that’s growing in popularity is the Ultrasound Technician who uses a sonographer to scan inside the human body. The Ultrasound Technician schools in NJ accept students who are willing to invest 2-4-years into their medical education. Upon graduation, the job opportunities are good, and the pay is better than many non-medical positions.
Evaluate What Delivers Value in Your Life
While the notion of evaluating value might sound a little too touchy-feely, it really isn’t. What we’re suggesting is that we all go through life with many actions running on automatic. Our spending in one of these actions. Running on automatic can be dangerous to our financial wealth as we continue to spend money on expenses that deliver little value.
When you look at your personal expenses more closely, you can begin to see what you spend money on and consider whether you received real value from it. Keeping a spending record over a month of what you paid out, including both cash and electronic-based payments, provides a more accurate picture than a spending plan. Many times, spending cuts worth 20 percent of your budget can be achieved by removing low-value purchases and being smart about other ones using discounts and deals, which can considerably boost your overall savings rate.
Improving your career is often about applying yourself with better education, looking for opportunities to move up and being willing to change career when necessary. On the financial side, while being in a role that pays more is perhaps best, job satisfaction also matters because you won’t retire in a couple of years. Making best use of the salary you receive, you can increase your savings rate to build investments faster.