A personal financial statement shows an individual’s net worth and their general financial position. It also shows the breakdown of the individuals’ total assets and the total liabilities. Personal financial ratios help to make sense of the individuals’ personal financial position. Think of these accumulated wealth tips for growing your personal financial statements and improving your personal finance ratios.
5 Wealth Tips to Help You Build Your Wealth from Nothing
I love tracking my net worth and income using WeVest. This is a great way to follow your personal financial statements and personal financial ratios to ensure you are on track for financial freedom.
As you improve your personal financial ratios you get closer to achieving financial freedom.
So, you are probably wondering…
Why you need wealth tips and personal financial ratios
Personal financial ratios are comparisons between the two figures in the personal financial statements. The ratios give a percentage of an individual’s financial ability to achieve a specific financial goal.
They also can help a person to map out the best path towards their specific financial goals and to track the progress that you are making with each step you make towards them. These financial ratios are the key money benchmarks. Personal financial statements are crucial examples of how your assets and liabilities are allocated.
Here are several other wealth creation tips to understand when planning your future.
There are dozens of personal financial ratios that can help you to establish your true financial health. You can read about our 19 favorite personal financial ratios here. When you think about financial freedom and personal financial ratios, you must think of them together as one. You cannot achieve financial freedom without some level of personal financial ratio analysis.
The challenge, however, is not having the knowledge of the financial ratios but translating it into meaningful results of accumulated wealth. Accumulating wealth requires you to:
- Translate the wealth building principles into actionable rules that will guide to your financial goals.
- Ensure that you are living by those rules.
Accumulating wealth tips are simple financial goals and objectives that anyone can pursue. However, it is easier said than done for a majority of people.
To motivate you on the financial freedom path, read the numerous quotes on financial freedom by people who have achieved and people who want to achieve it. You’d be shocked at how these simple accumulated wealth tips can help you instantly.
5 Wealth Tips to Improve Your Personal Financial Statements AND Personal Finance Ratios
Accumulated wealth takes time, but it is not hard. You just need to have patience and a plan. Review our case study on what accumulated wealth truly means.
Let’s have a look at the 5 sure-fire tips to accumulate wealth and to make your personal financial statements thrive.
These accumulated wealth tips are used by successful people that have already achieved FIRE (Financial Independence Retire Early).
1. Increase Your Investing Activity
This is probably one of the most important accumulated wealth tips out there. You must position yourself to make your money work for YOU.
Personal financial statements may help you track your progress to meet your investment goals. It is important to invest with some future financial goals in mind.
Personal financial ratios can help you to quantify your investment goals and gauge your ultimate financial position after you invest.
There are numerous investments to add to your portfolio that can help you accumulate wealth such as investing in common stocks, bonds, dividend stocks, and alternative investments like cryptocurrencies, hedge funds, real estate and many others.
You can also invest in a business or engage in passive investing. There are numerous investments to make, just find a financial expert to guide you on the best to pick based on your risk tolerance and financial goals.
Increasing your investment portfolio can help you accumulate wealth and achieve financial freedom.
I love using a platform like Wealthsimple. I can pour money into the platform and my investments are completely automated. You can’t go wrong with that. Here are some of the best robo-advisors compared to help you choose the best one for you.
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Combining both dividend investing and real estate can be a great way to invest your money. Here are several other tips on how to invest money to allocate your assets.
2. Reduce Debts
One key way to build wealth is to reduce or pay off debts. If you allow debts to accumulate too much, they may hinder you from achieving your financial goals.
Some debts are considered to be good like a mortgage to purchase real estate, a credit line to start a business, a student loan to fund a college education but that is if there are solid plans in place on how it will be repaid and if the interests are low enough.
A high-interest debt like credit card debts, personal loans, etc can really weigh your financial position down. Pay off the debts with high interest as quickly as possible and avoid adding such debts to your liabilities.
Reducing your debts can help you accumulate wealth because it can save you from making interest payments.
Less debt on the books makes the first tip (increasing investments) a lot easier. Reduce insurance premiums by selling your settlement.
3. Create a Savings Plan
An ideal savings plan could also result in a better financial status. According to a 2013 survey by America saves, only about one-half of Americans (54%) proclaim to having a savings plan in place to meet specific financial goals.
Make savings a priority in order to build wealth. Some of the key savings plan you should consider is to have an emergency savings fund that can help you cater for emergencies like a job loss, an illness or any other unexpected occurrence.
Here is a personal financial plan example to help you.
To find out how big is your emergency fund, take cash on hand and divide by the monthly expenses. The general and the recommended rule of the thumb is to have a portion of your emergency fund that can cover your expenses for 3 to 6 month.
Then, set up your automated transfers from your checking using your routing numbers. Just make it automated so you can focus on the bigger things in life.
A savings plan like an emergency fund that is too small puts you at risk of not managing to offset financial setback and if it’s too big, then you are losing money to opportunity cost.
4. Earn More
Another way to accelerate your wealth is to find avenues to earn more through education or training, increase your job skills, ask for a raise or change jobs, work overtime, convert a hobby into income, start a side business, a part-time or freelance work.
Finding extra sources of income can help you build wealth and achieve financial freedom.
For example, we give you 23+ online jobs without investment. In the digital age, finding work should not be difficult. You can connect with people around the world and start working right away!
Use these freelance websites to get started right now.
Related: How to Make Money
5. Reduce Spending
Another crucial way to accumulate your wealth is to manage your expenditure. Find ways to help you reduce your spending. One way to reduce your spending is to create a budget and stick to it.
A budget helps you to document your income and expenditure and to allocate funds on what you need to buy and cut on what is not necessary. If you reduce spending, you can complete the first four steps at a larger scale.
You will be surprised at how much-reduced spend can help your personal financial ratio analysis.
You also need to align your values and goals with spending. Adjust your spending habits where necessary. Use accountability to stay disciplined. It’s important to categorize your spending so as to be able to track and know where to make adjustments.
Doing so will help you manage your finances and live within or below your means. Never use credit cards to extend your purchasing power and never buy lifestyle on credit.
Eliminate wastage in terms of fees and subscriptions by avoiding late fees, banking fees, credit card fees among others that can be avoided by getting an alternative or by adhering to terms and conditions.
For example, an overdraft can cost you a fee of $32.20, using an ATM outside your network can cost you an extra $4.13 and a late payment penalty for credit cards can go as high as $35.
Conserve natural resources is a great way to instantly save money.
Here are a few subsections of how to reduce your spending and save money on various fees:
Investment accounts cost money, reduce those costs
The average 401(k) plan charges a 1% fee according to a study by the Center of American Progress. The average mutual fund expense fee was 63% according to a study by the ICI.
A good way to find out the hidden fees that you’re paying is to get a free 401(k) audit from bloom as it helps identify any fees that you’re paying and compares them to the industry’s benchmarks.
Another way is to use Personal Capital’s FREE fee analyzer to learn investment fees outside of your 401(k). These little charges can seem too minute but can significantly alter your budget.
Here is how I use 401(k) fee calculators to boost my retirement accounts.
Reduce spending by living frugally
Don’t always buy everything new. Buying second-hand items can sometimes help you save. For example, you can buy a second-hand car instead of a new car. Some experts say that a new vehicle loses its value within the first two years.
Many of the pre-owned items cost 50-75% less than the price you would buy them if they were new. Repair old items instead of replacing them with new ones. Sell your unused stuff to generate more income.
Try flipping items to generate profits and side hustle income.
Take advantage of freebies like the reward points from loyalty programs or credit cards. Take advantage of couponing and other sale offers.
Don’t claim the standard deduction on your tax returns when you can qualify for an itemized deductions that could significantly lower your tax bill some more. You can also claim tax refunds if you have any and other assets.
According to the National Association of Unclaimed Property Administrators, there is over $41 billion worth of unclaimed assets that include old tax refunds paychecks, forgotten stocks and certificates of deposit among others that are being held by the state.
Try a search through MissingMoney.com to find out if there are any unclaimed assets that belong to you and then go claim it. By reducing the amount of money you’re spending, you will increase your savings and accumulate wealth which will help you to achieve financial freedom.
Are you a Dual Income No Kids (DINKS) couple? If so, you could be running into a number of different financial issues. Read more about our steps to avoid the financial issues faced by DINKS.
Here are several other proven ways to start increasing your net worth.
Conclusion on Wealth Tips to Build Your Wealth from Nothing
These are just but a few tips on accumulating wealth that can help you achieve financial freedom and which makes your financial statement to thrive.
I hope that these tips will guide you in achieving your financial goals. These tips can help you improve your net wealth and start earning more income.
Our wealth management resources can help you manage your personal financial statements and personal finance ratios. Our accumulated wealth tips will help you achieve financial freedom.
Financial planning should be fun and exciting. Make the most out of it.
Did our wealth tips help you? These strategies helped us achieve our personal finance goals.
Related Resources
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- Follow These Money Hacks from Millionaires
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