Written by Joanne Augustin
Securing the bag is always a primary goal, regardless of the year, quarter, month, week, or day. As it should be. Contrary to popular belief, the consistent checks isn't what’s going to sustain you in the long-run—wealth is.
In order to flourish financially and reach that “coasting” stage that we all long for, we need to set ourselves up for success and that requires a mind-shift in how we view our personal finances.
“Your money management strategies should include building wealth for the long-run.”
The general goal behind building wealth is to come out of your investments with more money than you started with. However, that’s just scratching the surface.
“Building wealth is about creating a strong financial foundation that will support the rest of your life, not just one health emergency.”
You build wealth to set yourself up for a solid financial comfort for life—essentially creating a relatively stress-free retirement.
As a self-employed creative, it may come as a struggle to distinguish between your business finances and personal finances. Separating the two is the first thing you need to do to start creating a system of success for building wealth long-term. You can essentially implement this by separating your bank accounts—one for your business expenses and one for your personal expenses.
Here are a few fundamental wealth-building tips to get started:
Switch to a Zero-Sum Budget. No “free” money over here. A zero-sum budget ensures that every dollar is accounted for. The goal is to make the income minus the outgo equal zero. So, if you cover all of your expenses for the month and you have $500 left, that’s not free money—allocate it somewhere else. For instance, you can send it to your emergency fund.
Open a High-Yield Savings Account (or a few). Make your money work for you. Most banks have an extremely low interest rate for their saving accounts (national average of 0.06%). However, High-Yield Savings accounts, like Marcus by Goldman Sachs, earn rates much higher than the national average (1.5%). They also operate as a low level investment, because the banks are using your money to trade in their affairs, so they are able to guarantee you a high interest rate. There are four important things to consider when searching for a high-yield savings account: annual percentage yield (APY), minimum deposit required, minimum balance required, and withdrawal options.
Create Multiple Streams of Income. Keep the money flowing. Is there a skill that you’re extremely good at? You have the potential to monetize it by teaching that skill for compensation. For instance, there are elearning platforms, like Skillshare, that offer classes to people looking to learn a new skill. Teaching on something like this can become a source of passive income, as they pay royalties based on viewership. Or maybe you have great design skills that you can put on merchandise and sell on sites like Society6? Whatever direction you decide to go in, increasing your income streams leads to more wealth.
Invest in ETFs (Exchange Traded Funds). By putting money into long-term investments, it’ll work harder than it would be just sitting in a regular bank’s savings account. Make sure to check out low-cost ETFs as an introduction to investing in stocks. Be sure to look for a provider that charges low fees and has no account minimum.
Building wealth is essential to your financial future, retirement plan, and overall comfort. Make your personal finances a priority. Don’t just secure the bag, multiply it!
ABOUT THE AUTHOR
Joanne Augustin is a self-employed Copywriter and Content Strategy Coach for small business owners, who specializes in promotional copywriting, such as website landing pages, email campaigns, and ghost blogging. When she's not writing compelling content for her clients, you can find her hosting her podcast, No Sugar Added: Raw Conversations about Self-Employment. Keep up with Joanne on Instagram and LinkedIn.