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Set a realistic budget

“Realistic” strikes a balance between your savings and earnings, and the forces of your family’s lifestyle, fixed bills and the economic climate. The SmartAsset study assumes a budget that attributes 50% to needs, 30% to wants and 20% to savings — a classic formula popularized by Sen. Elizabeth Warren. However, most Americans spend way more than they should on wants: eating out, luxury items and expensive vacations, for example. That leaves barely anything left to add to their savings.

The personal savings rate in America was close to 4.6% as of February, according to the U.S. Bureau of Economic Analysis. Meanwhile, the average family in the country spent roughly 25% of their disposable income on shelter costs like rent or mortgage.

Making a budget even slightly better than these national averages can move the needle towards comfortable living.

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Invest in inflation-fighting assets

Inflation acts as an invisible tax that makes life less comfortable. The current 3% rate, while it reflects a cooling off, still is far off from the Fed’s target and well above the near-zero average of the previous decade.

To maintain purchasing power, investors and savers need assets that resist this pesky headwind. Real estate represents a prime example. Hard assets like homes, warehouses and data centers tend to retain their value when spending power declines. This explains why many experts consider real estate an inflation hedge.

In fact, the average rental yield on a typical American property is 6.12% now that rents have escalated, considered “moderate to good” by the Global Property Guide. Notice how that beats the current rate of inflation.

Of course, investing in commercial real estate has traditionally been reserved for the ultra rich who can afford to drop tens (or hundreds) of thousands on an investment. But these days, new investing platforms make it possible for regular investors to get in on the action.

Consult the experts

Some money-making and management techniques require expert skills that may need to be outsourced — ranging from extra income sources to tax strategies that result in less money going to Uncle Sam.

A CPA or accountant can help with the latter goal, while a professional financial planner can fine-tune (or create) a portfolio that accelerates wealth creation. A business coach, meanwhile, can introduce you to steps that will increase your income from side hustles, passive strategies and entrepreneurial ventures.

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Vishesh Raisinghani Freelance Writer

Vishesh Raisinghani is a freelance contributor at MoneyWise. He has been writing about financial markets and economics since 2014 - having covered family offices, private equity, real estate, cryptocurrencies, and tech stocks over that period. His work has appeared in Seeking Alpha, Motley Fool Canada, Motley Fool UK, Mergers & Acquisitions, National Post, Financial Post, and Yahoo Canada.

Disclaimer

The content provided on Moneywise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.