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Don’t spend more than you earn

If you want to build wealth, you need to live within your means. That starts by taking a good, hard look at your finances. And while that can be uncomfortable, it will give you a better sense of your income versus expenses, so you can stop spending more than you earn — which might mean cutting back on non-essentials or impulse spending.

Most financial planners recommend saving 15% of your income, but if that’s not realistic, save what you can and build from there. If you’re already in debt, you’ll first have to pay it down — consider the snowball or avalanche methods.

Kiss Your Credit Card Debt Goodbye

Millions of Americans are struggling to crawl out of debt in the face of record-high interest rates. A personal loan offers lower interest rates and fixed payments, making it a smart choice to consolidate high-interest credit card debt. It helps save money, simplifies payments, and accelerates debt payoff. Credible is a free online service that shows you the best lending options to pay off your credit card debt fast — and save a ton in interest.

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Leverage the power of compounding

Even if you’re living on a low income, you can leverage the power of compounding interest if you start investing early enough. For example, if you start investing just $100 a month when you’re 18, you could end up with $1.57 million when you retire at 67 (assuming a 10% annual return, not accounting for taxes or inflation).

If $100 is too much, even a smaller amount can help generate a decent nest egg — and you can likely increase your contributions as you get older and boost your income.

Contribute to retirement savings programs

Take advantage of any employer-sponsored retirement savings programs like a 401(k), especially if your employer will match at least a portion of your contributions. Plus, you won’t have to pay taxes on that money until you withdraw it in retirement.

If you’re self-employed or don’t have an employer-sponsored retirement plan, you can open your own retirement account at a bank or brokerage. With a traditional investment retirement account (IRA), you’ll pay taxes when you withdraw that money in retirement. With a Roth IRA, you’ll pay income taxes upfront, but withdrawals are tax-free. If you’re in a low income bracket, you may want to consider after-tax accounts like Roth IRAs since you’ll pay less income tax when you’re in a lower income bracket.

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Boost your income

You could also consider working extra hours or overtime at your current job to bring in extra cash, or training in new skill sets that could earn you a higher-paying position. Or you could pick up a side gig, like working for a ride-share — and deposit your earnings directly into a retirement savings account.

Crunch the numbers

If you want to become a millionaire on a low income, you’ll need to come up with a plan and then stick to it. That means paying down debt, living within your means and making a commitment to saving. It also means finding ways to cover any shortfalls, whether that’s working extra hours or getting a side gig. It may make sense to talk to a financial advisor about how you can meet your goals.

Having a lot of money isn’t necessarily the key to financial freedom. There are plenty of former millionaires who’ve had to declare bankruptcy, often because they were living beyond their means — so don’t let a low income stop you from building a seven-figure nest egg.


This 2 Minute Move Could Knock $500/Year off Your Car Insurance in 2024

Saving money on car insurance with BestMoney is a simple way to reduce your expenses. You’ll often get the same, or even better, insurance for less than what you’re paying right now.

There’s no reason not to at least try this free service. Check out BestMoney today, and take a turn in the right direction.

Vawn Himmelsbach Freelance Contributor

Vawn Himmelsbach is a journalist who has been covering tech, business and travel for more than two decades. Her work has been published in a variety of publications, including The Globe and Mail, Toronto Star, National Post, CBC News, ITbusiness, CAA Magazine, Zoomer, BOLD Magazine and Travelweek, among others.


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