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Why So Few People Feel Secure About Money — Even When They Have Lots of It

Why So Few People Feel Secure About Money — Even When They Have Lots of It

And why the neighbors of lottery winners are often worse off.

Sean Kernan  June 21, 2024·

I’m not rich by any means. But I’ve done well enough to be comfortable, mostly because I saved aggressively early in my career. Yet I still feel like I’m only a stone’s throw from being in poverty, which is slightly irrational.

I remember having no money and having to budget until my next paycheck or risk groveling to my parents for help. It wasn’t a good life. And it still feels like yesterday, even though so many years have passed. Sadly, many people feel this way.

And to some extent — this stress can be constructive. It can mitigate risky spending. You’ll certainly never catch me with problematic expensive hobbies. But I wish I could feel more at ease about my station in life. Many of my friends are in this same psychological boat too. My buddy Brian is a software engineer, who has been making north of $180K per year — for years on end — while living in a low-cost area, and he’s still as cheap as he’s ever been.

So why are we like this? How do we level up and counteract this financial anxiety?

Why So Few People Feel Secure About Money — Even When They Have Lots of It

And why the neighbors of lottery winners are often worse off.

Sean Kernan  June 21, 2024·

I’m not rich by any means. But I’ve done well enough to be comfortable, mostly because I saved aggressively early in my career. Yet I still feel like I’m only a stone’s throw from being in poverty, which is slightly irrational.

I remember having no money and having to budget until my next paycheck or risk groveling to my parents for help. It wasn’t a good life. And it still feels like yesterday, even though so many years have passed. Sadly, many people feel this way.

And to some extent — this stress can be constructive. It can mitigate risky spending. You’ll certainly never catch me with problematic expensive hobbies. But I wish I could feel more at ease about my station in life. Many of my friends are in this same psychological boat too. My buddy Brian is a software engineer, who has been making north of $180K per year — for years on end — while living in a low-cost area, and he’s still as cheap as he’s ever been.

So why are we like this? How do we level up and counteract this financial anxiety?

The origins of the problem

People tend to downgrade their financial standing. For example, per a survey by the financial firm Ameriprise Financial, only 13% of American millionaires classify themselves as wealthy. Even among those who had more than $5M in total assets — many still said they didn’t feel rich.

These weren’t people living in Silicon Valley, where $5M only gets you a shack. These were everyday people from all around the United States — still feeling underfunded.

Part of this is because of the disappearance of pensions — and fear that we’ll live on our savings and social security to get us through to old age. Both of my grandfathers had pensions, with one of them having two full separate pensions (military and government). But we are now the 401K generation — in a system that is more stressful than ever.

Why do people who have so much still feel sad about their financial standing?

Elizabeth Dunn, psychology professor at The University of British Columbia, and co-author of Happy Money: The Science of Happier Spending, looked into this very question. She found that social comparison, in particular, drives much of our financial dissatisfaction.

How we compare our income to others of similar age, education, and region of residence, greatly shapes our self-perceptions and satisfaction. Unsurprisingly, those who compared themselves to groups of higher income, tended to be less happy and more anxious about money.

Unfortunately, a majority of people tend to do upward comparisons. The severity of this impact was most notable: “The income of the reference group is about as important as one’s own income for individual happiness.”

It pains me to admit it: I’m 100% a victim of this statistic. I often watch videos of lavish mansion tours on YouTube, despite knowing the likelihood of me ever owning such a property is slim (unless I somehow write the next iteration of Atomic Habits). But I still enjoy oohing and aahing over the stunning architecture, classy furniture and paintings hanging on the walls. It’s entirely possible this admiration is only heightening my anxiety about money.

Yet I know as well as you that the person in that mansion isn’t likely to be happier than the rest of us. Within a year of becoming rich, or facing tragedy, the vast majority of people return to their baseline happiness.

What’s most telling is that winning the lottery can significantly impact your neighbor’s wellbeing. One study in Canada found that as the magnitude of someone’s lottery winnings went up, their neighbors odds of financial distress and borrowing increased alongside it.

To Read More:

https://www.yahoo.com/lifestyle/story/why-so-few-people-feel-secure-about-money--even-when-they-have-lots-of-it-212029309.html

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Are You Rich? Here's What Americans Think You Need To Be Considered Wealthy

Are You Rich? Here's What Americans Think You Need To Be Considered Wealthy

Jeannine Mancini   Tue, Jul 2, 2024,

Bill Gates Was The 'World's Richest Man' For A Record 18 Years. His Secret To Success? 'Saving Like A Pessimist, Investing Like An Optimist'

Bill Gates, co-founder of Microsoft and one of the most influential figures in the tech industry, is renowned for his business acumen and unique approach to financial management. After dropping out of college at 19, Gates cofounded Microsoft with Paul Allen, transforming it from a small startup into a global tech giant.

In the United States, the concept of being rich is often a subject of discussion, curiosity and, sometimes, aspiration. Charles Schwab's 2023 Modern Wealth Survey provides insights into this topic, revealing that the average American equates being wealthy with a net worth of approximately $2.2 million.

Are You Rich? Here's What Americans Think You Need To Be Considered Wealthy

Jeannine Mancini   Tue, Jul 2, 2024,

Bill Gates Was The 'World's Richest Man' For A Record 18 Years. His Secret To Success? 'Saving Like A Pessimist, Investing Like An Optimist'

Bill Gates, co-founder of Microsoft and one of the most influential figures in the tech industry, is renowned for his business acumen and unique approach to financial management. After dropping out of college at 19, Gates cofounded Microsoft with Paul Allen, transforming it from a small startup into a global tech giant.

In the United States, the concept of being rich is often a subject of discussion, curiosity and, sometimes, aspiration. Charles Schwab's 2023 Modern Wealth Survey provides insights into this topic, revealing that the average American equates being wealthy with a net worth of approximately $2.2 million.

Although the most recent data from the Federal Reserve reveals the average American household is a millionaire with a net worth of $1.06 million, looking at the median or midpoint value portrays a more accurate picture. Based on the October report from the Federal Reserve, the median net worth of U.S. households overall is $192,900.

But how spot-on are Americans’ perceptions of wealth?

Top 2% wealth: The top 2% of Americans have a net worth of about $2.472 million, aligning closely with the surveyed perception of wealth.

Top 5% wealth: The next tier, the top 5%, has a net worth of around $1.03 million.

Top 10% wealth: The top 10% of the population has a net worth of approximately $854,900.

These figures illustrate a dramatic wealth gradient in the U.S., indicating a substantial increase in net worth needed to move from the top 10% to the top 2%.

Understanding Wealth Beyond Numbers

Wealth is not solely about the figures in your bank account or investment portfolio; it's also about how you perceive and use your resources. Here are some tips and perspectives to understand and potentially achieve wealth.

Savings and spending habits: Being able to save, that is, spending less than you earn, is a foundational aspect of accumulating wealth. Establishing robust financial habits like budgeting and goal-setting can pave the way to wealth, regardless of the specific dollar amount.

Living below your means: In a world where consumerism is rampant, living below your means is a key principle. This might involve cutting unnecessary expenses, like reducing monthly subscriptions or dining out less frequently. Such habits not only bolster savings but also prepare you for financial emergencies.

Affording desires: The ability to save and spend wisely often leads to the capacity to afford what you desire, whether it is a new vehicle or a vacation. Achieving financial goals is a strong indicator of wealth.

Life goals over money: Wealth is not just about accumulating money but also about fulfilling life aspirations. Whether it's running a business, becoming debt-free or saving for retirement, having a clear vision is crucial.

Preparing for retirement: A key aspect of being wealthy is having a solid retirement plan. This involves understanding how much to save and starting early to build a financial foundation for the golden years.

https://finance.yahoo.com/news/bill-gates-worlds-richest-man-155055431.html

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5 Biggest Money Mistakes When Retiring in the Midwest

5 Biggest Money Mistakes When Retiring in the Midwest

Gina Hagler  Mon, July 1, 2024

Retiring with little to no savings is a situation that even Americans who made the effort to save can find themselves in. Creating a nest egg is the important first step, but there are a number of ways that you can end up poorly managing it — before and after retiring.

Some of the universal mistakes include taking on too much risk or withdrawing too much, too soon. While the Midwest is attractive to retirees for its relative affordability, retiring still requires careful planning.

If you’re retiring in the Midwest, these are the biggest areas of concern through which you could slip up, according to Johnson Wealth and Income Management.

5 Biggest Money Mistakes When Retiring in the Midwest

Gina Hagler  Mon, July 1, 2024

Retiring with little to no savings is a situation that even Americans who made the effort to save can find themselves in. Creating a nest egg is the important first step, but there are a number of ways that you can end up poorly managing it — before and after retiring.

Some of the universal mistakes include taking on too much risk or withdrawing too much, too soon. While the Midwest is attractive to retirees for its relative affordability, retiring still requires careful planning.

If you’re retiring in the Midwest, these are the biggest areas of concern through which you could slip up, according to Johnson Wealth and Income Management.

Retiring Too Early

A Bureau of Labor Statistics survey found that the average boomer-aged worker in Iowa switches jobs roughly 12 times, while a Federal Reserve Bank of Minneapolis survey recently indicated that workers are struggling to find jobs that offer higher wages and stronger benefits among the rising cost of living.

It’s recommended to not change jobs or leave the workforce without fully assessing the options you have available. You could end up losing out on 401(k) employer contributions and stock options without remaining employed for a certain period of time.

Not Accounting for Taxes

If you have a 401(k), traditional IRA or other tax-deferred account, you need to be mindful that taxes will eat a portion of your balance. If your tax bracket will be higher post-retirement, a Roth IRA or Roth 401(k) is a good idea so that your withdrawals will be tax free. If your tax bracket will be lower, opt for a traditional IRA or 401(k) so you pay lower taxes after retiring.

South Dakota is a Midwestern state with no personal income tax. This contributes to it being seen as a good place to retire, according to Travel + Leisure, but don’t forget that you still have to consider the overall tax burden (i.e., property taxes).

Not Considering Future Healthcare

To Read More:

https://finance.yahoo.com/news/5-biggest-money-mistakes-retiring-190108821.html

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I Grew Up Rich: 6 Money Lessons I Learned After I Lost It All

I Grew Up Rich: 6 Money Lessons I Learned After I Lost It All

G. Brian Davis  Sat, June 29, 2024

An oft-cited statistic states that 70% of wealthy families lose their riches by the second generation, and 90% lose them by the third.

Why? Because the first generation earns it, the second generation spends it and the third finds itself back at square one.

It turns out that earning money and shepherding money long term require two different skill sets. All too often, no one in any of those three generations learns how to protect and grow wealth long term.

“I grew up in a wealthy family where my grandfather was the chairman of the largest textile processing mill in our city,” explained Muhammad Ali, sales director at George Digital. “Our business, established in the 1950s, was a significant player in the industry from 1970 to 2001 … However, our fortunes drastically changed, and by 2012, my father’s income dwindled to just $300 a month.

I Grew Up Rich: 6 Money Lessons I Learned After I Lost It All

G. Brian Davis  Sat, June 29, 2024

An oft-cited statistic states that 70% of wealthy families lose their riches by the second generation, and 90% lose them by the third.

Why? Because the first generation earns it, the second generation spends it and the third finds itself back at square one.

It turns out that earning money and shepherding money long term require two different skill sets. All too often, no one in any of those three generations learns how to protect and grow wealth long term.

“I grew up in a wealthy family where my grandfather was the chairman of the largest textile processing mill in our city,” explained Muhammad Ali, sales director at George Digital. “Our business, established in the 1950s, was a significant player in the industry from 1970 to 2001 … However, our fortunes drastically changed, and by 2012, my father’s income dwindled to just $300 a month.

“In 2013, amidst our financial crisis, I developed an interest in programming. Unfortunately, we couldn’t afford a laptop, and we had to live with my grandparents, along with my father’s brothers and their families. This challenging period taught me several invaluable lessons about money and resilience.

“Eventually, I was the first person among my grandfather’s children and grandchildren to get a chance to study in the U.S.

“Here are some key money lessons I learned after losing it all.”

Diversify Your Income Streams

“Our family focused solely on the textile business, and when it failed, we had no backup.

“In 2015, I came across Russell Brunson’s book ‘DotCom Secrets,’ which sparked my interest in an online business. By September 2016, Adam C. Miller introduced me to the world of digital marketing. Despite the lack of resources and guidance, I persevered, slowly learning about digital PR … I also delved into local SEO (search engine optimization) and e-commerce business models.

“After our family’s textile business shut down, there was no one to restart the hosiery textile business. However, years later, I decided to reignite this passion to continue my family legacy and started Molani Enterprises, a textile sourcing and trading company. Alongside my ventures in PR and e-commerce, reviving the textile business was a way to honor my family’s history and rebuild our presence in the industry.”

Maintain a Financial Cushion

Everyone needs an emergency fund. Whether you keep two months’ or two years’ worth of living expenses in it depends on how stable your income and expenses are, but you need that cash cushion to carry you through the inevitable nasty surprises that life throws at you.

“Always keep cash savings to cover basic living expenses and emergencies. This reserve should not be touched for business investments. This lesson was crucial for me, as I witnessed bad financial decisions during our business downfall, where more money was sunk into a failing enterprise.”

Seize Opportunities

They say that when an opportunity knocks at your door, it does so dressed up like work.

To Read More:

https://www.yahoo.com/finance/news/grew-rich-6-money-lessons-210008891.html

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6 Ways To Build Wealth After Getting Laid Off — That Don’t Include a New Job

6 Ways To Build Wealth After Getting Laid Off — That Don’t Include a New Job

Vance Cariaga   Thu, Jun 27, 2024

Layoffs are a fact of life in the modern economy — even when the economy is growing and unemployment is low, like now. The list of companies that have announced layoffs this year alone reads like a “who’s who” of corporate titans and includes Amazon, Walmart, Microsoft, Alphabet (Google), Tesla, Bristol Myers Squibb, Nike and Disney.

The disconcerting thing for workers is that employers sometimes announce layoffs even when they’re doing well financially. In some cases, businesses announce layoffs to make up for past hiring sprees. In other cases, they simply replace workers with AI or other technologies.

Given the size and frequency of layoffs these days, it’s understandable that some folks who have been given the pink slip have decided to stop looking for jobs altogether. If you fall into that category, here are six ways to build wealth that don’t include getting another full-time job.

6 Ways To Build Wealth After Getting Laid Off — That Don’t Include a New Job

Vance Cariaga   Thu, Jun 27, 2024

Layoffs are a fact of life in the modern economy — even when the economy is growing and unemployment is low, like now. The list of companies that have announced layoffs this year alone reads like a “who’s who” of corporate titans and includes Amazon, Walmart, Microsoft, Alphabet (Google), Tesla, Bristol Myers Squibb, Nike and Disney.

The disconcerting thing for workers is that employers sometimes announce layoffs even when they’re doing well financially. In some cases, businesses announce layoffs to make up for past hiring sprees. In other cases, they simply replace workers with AI or other technologies.

Given the size and frequency of layoffs these days, it’s understandable that some folks who have been given the pink slip have decided to stop looking for jobs altogether. If you fall into that category, here are six ways to build wealth that don’t include getting another full-time job.

Find a Side Hustle Instead

Unless you were given a generous severance package after getting laid off, you might need to bring in some immediate income to help navigate the initial rough patch. That doesn’t mean you have to get another job, however. There are plenty of side hustles available that let you work on your own schedule and be your own boss.

If you have expertise in a particular field, for example, you could serve as a consultant and earn up to $100 an hour or more. If you have a strong background in social media and a large network of online friends and followers, consider becoming an influencer. It’s not uncommon for successful influencers to earn six-figure incomes through sponsored promotions, brand collaborations, merchandise sales and other means.

Rent Out Part of Your House

If you are a homeowner, one of the best ways to earn immediate income following a layoff is to turn your house into a moneymaker. As the Virtual Vocations website noted, sites like Airbnb and Vrbo let you list single rooms in your house to travelers and traveling workers. You can earn an average of about $924 a month renting a room with a bed, bathroom access and cleaning services.

Invest In Dividend Stocks

You don’t have to be a stock market expert to find securities that can provide immediate income. The best way to do this is to build a portfolio of dividend stocks that let you collect regular passive income, which can compound into substantial long-term wealth.

Use your dividend payments to purchase additional shares through a dividend reinvestment plan (DRIP), and keep adding new capital. Modest initial investments can snowball into diversified six- and seven-figure portfolios over time.

Invest In Real Estate

To Read More:

https://finance.yahoo.com/news/6-ways-build-wealth-getting-220008576.html

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25 Things You Should Never Do With Your Money

25 Things You Should Never Do With Your Money

Roger Wohlner  Sat, June 29, 2024

Do enough digging and you’ll find that there is possibly an endless list of things you shouldn’t do with your money. From bad habits to decisions based on wishful thinking, some of the bigger missteps can really cost you.

To find out the biggest money mistakes you should avoid, GOBankingRates asked financial experts for their best advice.

Never Cash Your Paycheck Right Away

If you cash your paycheck right away, you might burn through it too quickly.

“You will most certainly spend it all if you cash your paycheck rather than have your employer directly deposit it into your bank account,” said Barbara Friedberg, a personal finance consultant. “Even better is to automatically transfer a percent of your paycheck into a retirement investment account and direct-deposit the remainder into a bank account.”

One advantage of having a workplace retirement plan, such as a 401(k), is that money is automatically deducted from your pay and invested. You don’t see it, so you won’t spend it. You can use a budgeting template to get the most mileage out of your paycheck.

Never Fall For ‘Special’ Finance Deals You Can’t Afford

25 Things You Should Never Do With Your Money

Roger Wohlner  Sat, June 29, 2024

Do enough digging and you’ll find that there is possibly an endless list of things you shouldn’t do with your money. From bad habits to decisions based on wishful thinking, some of the bigger missteps can really cost you.

To find out the biggest money mistakes you should avoid, GOBankingRates asked financial experts for their best advice.

Never Cash Your Paycheck Right Away

If you cash your paycheck right away, you might burn through it too quickly.

“You will most certainly spend it all if you cash your paycheck rather than have your employer directly deposit it into your bank account,” said Barbara Friedberg, a personal finance consultant. “Even better is to automatically transfer a percent of your paycheck into a retirement investment account and direct-deposit the remainder into a bank account.”

One advantage of having a workplace retirement plan, such as a 401(k), is that money is automatically deducted from your pay and invested. You don’t see it, so you won’t spend it. You can use a budgeting template to get the most mileage out of your paycheck.

Never Fall For ‘Special’ Finance Deals You Can’t Afford

Promotional finance offers that provide zero or low interest rates on a big purchase might sound like a great deal — until you wind up paying more than you expected. That’s what happened to Grayson Bell, founder of personal finance website Debt Roundup.

“Don’t finance a new vehicle, or watercraft in my case, based on the low promotional monthly payment,” he said. “I financed a new $10,000 Jet Ski with no money down and no real way to pay for it based on a radio ad promoting a super low $69 per month payment. What I didn’t read was the rate was only for two years, then it changes to include retroactive interest based on the loan amount.”

“Those financing deals can ruin you if you’re only looking at the monthly payment,” he continued. “Go through the math and read all of the fine print. They get you in with the low monthly payments, but keep you paying for much longer than you anticipated.”

Never Co-Sign a Loan You Can’t Afford

Michelle Schroeder-Gardner of personal finance blog Making Sense of Cents said you should never co-sign on a loan for someone unless you have the means to pay it back fully.

“The fact is that you never know if the person will be able to pay every single payment, so it’s best to prepare yourself,” she said.

Never Live Above Your Means

One of the tenets of building wealth is to live below your means. Saving and investing should be your priorities so you can help pay for your children’s college costs and live comfortably in retirement, said Cathy Curtis, a certified financial planner and author of “The Happiness Spreadsheet: How To Create A Budget Aligned with Your Values, Beliefs and Ideals.”

Never Rely Only on Cash When Traveling

Sure, carrying and using cash is a good alternative to running up credit card bills. But Curtis suggested using traveler’s checks or credit cards as an alternative to cash.

Holding substantial cash when you’re traveling can invite unfortunate situations. You could lose it or be a victim of theft, which is not uncommon in certain tourist areas.

To Read More: 

https://www.yahoo.com/news/finance/news/25-things-never-money-143113401.html

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I Grew Up Rich: 6 Money Lessons I Wish My Parents Would Have Taught Me

I Grew Up Rich: 6 Money Lessons I Wish My Parents Would Have Taught Me

Cindy Lamothe   Fri, June 28, 2024

There’s no doubt that being born with a silver spoon in your mouth gives you a leg up in the world — but it can also have its downsides, financially speaking.

Growing up rich has many perks, but it can also hinder a person from learning essential money lessons.

GOBankingRates spoke with people who come from privilege but recognize their upbringing didn’t equip them with the necessary financial skills to set them up for long-term success. Read below for their insights on money lessons they wish they had learned.

Appreciating the Value of Money

“Having grown up in a wealthy family and now working for my own business, I have unique insights into the financial lessons often missed when money is readily available,” said Ben Hilton, founder and managing director of Switch Jam Digital.

I Grew Up Rich: 6 Money Lessons I Wish My Parents Would Have Taught Me

Cindy Lamothe   Fri, June 28, 2024

There’s no doubt that being born with a silver spoon in your mouth gives you a leg up in the world — but it can also have its downsides, financially speaking.

Growing up rich has many perks, but it can also hinder a person from learning essential money lessons.

GOBankingRates spoke with people who come from privilege but recognize their upbringing didn’t equip them with the necessary financial skills to set them up for long-term success. Read below for their insights on money lessons they wish they had learned.

Appreciating the Value of Money

“Having grown up in a wealthy family and now working for my own business, I have unique insights into the financial lessons often missed when money is readily available,” said Ben Hilton, founder and managing director of Switch Jam Digital.

 “I never felt the need to worry about money as a child, and therefore, I failed to understand its real value. I now wish that someone had inculcated in me an appreciation of the actual work that goes into making money,” he said. “For instance, why did someone waste hours in the pursuit of a better deal or draw up a stringent budget? If I had known better the value of money, perhaps I would have been more enlightened about money management and spending habits.”

Budgeting Skills and Money Management

“I didn’t have to budget because it wasn’t expected or required in my home, and I’m still unaware of how to properly maintain a budget,” Hilton said. “When I first left home and lived alone, I struggled to balance my expenses and income.”

He noted that making sure a person knows how to set up and maintain a budget is a rather important skill that prevents overspending and helps to uphold and support personal financial stability.

Nischay Rawal, CPA, founder and managing partner of NR Tax & Consulting, shared a similar experience.

“Growing up with wealthy parents, I never learned the value of a dollar or what it meant to budget,” he said. “Money was always there for whatever I needed or wanted. As a result, I didn’t develop key financial skills that most people gain from an early age.

“When I started my own business, I had no idea how to forecast expenses, set financial goals or manage cash flow,” Rawal explained. “The first few years were a crash course in Finance 101. I made many mistakes that could have been avoided if I had a better grasp of basic money management.”

Investing Wisely

“While I had the money, I never learned how to invest early. I lost the basis for generating wealth through investment,” Hilton said. “A clear illustration of this is the fact that I was unaware of compound interest when I was 20 years old, a knowledge that could have significantly increased my financial worth.”

Learning investment principles and how to build wealth is crucial, according to Hilton. “How to invest wisely is a critical lesson for long-term financial growth,” he said.

Financial Independence

“Financial security during childhood is typically already wealth-dependent,” Hilton said. “I wish somebody had taught me about financial independence very early. For instance, in the early days of my career, it became easy to reach out to family for money and support instead of struggling and fighting to succeed financially independently.”

To Read More:

https://www.yahoo.com/news/finance/news/grew-rich-6-money-lessons-180010744.html

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How To Achieve Financial Freedom: 9 Steps Towards Financial Independence

How To Achieve Financial Freedom: 9 Steps Towards Financial Independence

Sheiresa McRae Ngo   Thu, June 27, 2024   Bankrate

If you’re like many people, you dream about reaching a point where you don’t have to worry about money, and you can quit your 9-to-5. According to Bankrate’s recent Financial Success Survey, 41 percent of Americans would consider themselves financially successful when they never worry about their finances.

Most Americans say they wouldn’t feel secure until they’ve made at least $233,000 a year, according to Bankrate’s Financial Freedom Survey. To feel rich and financially free, Americans said they would need to earn an average of $483,000 a year.

Fortunately, it’s possible to achieve financial freedom. With careful planning, disciplined savings and wise investments, you can reach your goal. Here’s how you can become financially independent.

How To Achieve Financial Freedom: 9 Steps Towards Financial Independence

Sheiresa McRae Ngo   Thu, June 27, 2024   Bankrate

If you’re like many people, you dream about reaching a point where you don’t have to worry about money, and you can quit your 9-to-5. According to Bankrate’s recent Financial Success Survey, 41 percent of Americans would consider themselves financially successful when they never worry about their finances.

Most Americans say they wouldn’t feel secure until they’ve made at least $233,000 a year, according to Bankrate’s Financial Freedom Survey. To feel rich and financially free, Americans said they would need to earn an average of $483,000 a year.

Fortunately, it’s possible to achieve financial freedom. With careful planning, disciplined savings and wise investments, you can reach your goal. Here’s how you can become financially independent.

What is financial freedom?

Financial freedom means different things to different people. Some define it as never having to work again, while others say being financially free means eliminating debt.

Among Bankrate’s Financial Success Survey, 19 percent of Americans say having enough money to quit working represents financial success while 41 percent say living without debt fulfills this goal.

“Financial freedom describes having enough wealth to live without having to work actively for necessities,” says Dennis Shirshikov, head of growth at gosummer.com and finance professor at the City University of New York. “It means having the means to afford the lifestyle you want for yourself and your family.”

“Achieving financial freedom allows you to make decisions that are not solely based on financial constraints,” Shirshikov adds. “For example, you can choose to pursue passions, hobbies or even career changes without worrying about the financial repercussions.”

What is the FIRE movement?

The Financial Independence, Retire Early (FIRE) movement is a lifestyle and financial strategy that aims to achieve financial independence and early retirement. The goal is to save and invest enough money to provide a sustainable income for the rest of one’s life, allowing for retirement at a much earlier age than the traditional retirement age.

FIRE gained attention after the publication of the book Your Money or Your Life by Vicki Robin and Joe Dominguez. The movement emphasizes assessing each purchase by analyzing the working hours needed to make the purchase.

Followers of the FIRE movement typically aim to save 50 percent to 70 percent of their annual income and plan to retire when their savings reaches around 30 times their yearly expenses, or roughly $1 million. Once retired, they make small annual withdrawals (usually around 3 percent to 4 percent) from their savings to cover living expenses.

“One would have to live significantly below their means and be aggressive when it comes to their asset allocations,” says Steven Charlton, certified financial fiduciary and founder of Wisdom Financial. “The FIRE movement can be utilized to find financial freedom by growing assets proportionately in order to be able to live off interest and dividends. This way you won’t have to live off the income when you decide to retire.”

How to create financial freedom

Achieving financial freedom involves careful discipline and planning. The following steps can help you reach this milestone.

To Read More: 

Our writers and editors used an in-house natural language generation platform to assist with portions of this article, allowing them to focus on adding information that is uniquely helpful. The article was reviewed, fact-checked and edited by our editorial staff prior to publication.

https://www.yahoo.com/finance/news/achieve-financial-freedom-9-steps-175605001.html

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100 Ways To Live a Rich Life in Retirement — Without Spending All of Your Savings

100 Ways To Live a Rich Life in Retirement — Without Spending All of Your Savings

Preston Hartwick   Tue, June 25, 2024 

You may have more free time when you retire, but retirement certainly isn’t free.

Around half of retirees report that their overall spending is higher than they anticipated, according to the Employee Benefit Research Institute. At the same time, the top concern of retirees is that the increased cost of living is making it harder to save money.

Ideally, you’ll have started preparing for retirement well before you hit the magic number. But even if you haven’t saved as much money as you would have liked, there are a multitude of ways to make your savings last.

While you may not be able to eat out at fancy restaurants every night or take big vacations every year, you can still live a rich, fulfilling life on a modest budget. Being smart with your money and taking advantage of free activities and experiences are keys to maintaining a satisfying lifestyle and healthy bank account balance.

100 Ways To Live a Rich Life in Retirement — Without Spending All of Your Savings

Preston Hartwick   Tue, June 25, 2024 

You may have more free time when you retire, but retirement certainly isn’t free.

Around half of retirees report that their overall spending is higher than they anticipated, according to the Employee Benefit Research Institute. At the same time, the top concern of retirees is that the increased cost of living is making it harder to save money.

Ideally, you’ll have started preparing for retirement well before you hit the magic number. But even if you haven’t saved as much money as you would have liked, there are a multitude of ways to make your savings last.

While you may not be able to eat out at fancy restaurants every night or take big vacations every year, you can still live a rich, fulfilling life on a modest budget. Being smart with your money and taking advantage of free activities and experiences are keys to maintaining a satisfying lifestyle and healthy bank account balance.

Hello, World!

Design Your Ideal Lifestyle

Before you make all the small decisions that will affect your quality of life in retirement, you need to take a step back and think about the big picture. How would you design your ideal life, within reason, given your current finances?

How do you envision your post-working life? Is it filled with new experiences, activities and travel to exotic locations? Or is it simpler, quieter and closer to home? Do you dream of moving to a sunnier climate, or would you want to downsize to a smaller house?

You don’t have to stick to your initial vision forever, but it’s helpful to think through your standard of living before planning your budget, as it will inform your purchasing decisions and lifestyle choices.

Know the 4% Rule

One common calculation for estimating how much money you’ll need in retirement is known as the 4% rule. This generalized guideline suggests that you should spend roughly 4% of your retirement savings every year if you expect your savings to last 30 years.

For example, if you have a retirement fund of $750,000, you could take out $30,000 as your budget for the first year. The next year, multiply that $30,000 by the inflation rate to find your annual budget.

Of course, this is more of a suggestion than a rule. Your individual circumstances will vary, but you can use this calculation as a starting point for thinking about your retirement budget.

Make a Budget and Stick to It

Budgeting is the key to saving money. Start by listing groceries, rent, insurance, utilities and other essentials. Then, review your past spending to see how much you typically spend on other expenses. Don’t forget to factor in taxes and annual inflation rates, and include room in the budget for fun and relaxation.

Currently, Social Security retirement benefits average $1,867 per month. Calculate how this will impact your budget and see whether you can cut down spending in nonessential areas.

Trick Your Mind Into Saving by Paying Yourself a Salary

To Read More:

https://finance.yahoo.com/news/100-ways-live-rich-life-213005303.html

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Advice, Personal Finance DINARRECAPS8 Advice, Personal Finance DINARRECAPS8

7 Things You Must Do When You Start Making 6 Figures

7 Things You Must Do When You Start Making 6 Figures

Heather Taylor   Wed, June 26, 2024

Once your salary reaches $100,000, you need to take certain steps to ensure you keep building wealth and stay in good financial health.

There’s a chance you already might be making some of these money moves, even if you’re earning a little less. Make sure you start taking these actions as soon as you begin earning $100,000.

7 Things You Must Do When You Start Making 6 Figures

Heather Taylor   Wed, June 26, 2024

Once your salary reaches $100,000, you need to take certain steps to ensure you keep building wealth and stay in good financial health.

There’s a chance you already might be making some of these money moves, even if you’re earning a little less. Make sure you start taking these actions as soon as you begin earning $100,000.

`1. Eliminate High-Interest Debt

Those who just started earning six-figure incomes will need to quickly pay off any high-interest debt. Think student loans, credit card balances or any other outstanding debt where the interest rate is extremely high.

Alissa Krasner Maizes, financial planner and founder of Amplify My Wealth, said eliminating this debt yields the quickest return on investment. Not sure where to begin? Krasner Maizes recommends automating monthly payments beyond the required minimum payment due.

Start with your highest-interest debt and, once you eliminate this debt, move on to paying off debt with the next highest amount of interest. Keep going until you have paid off all high-interest debt — and find yourself debt-free.

2. Maximize Retirement Contributions

Once you have cleared any outstanding debt, Krasner Maizes recommends maximizing your retirement contributions. Those earning a six-figure income should contribute the amount their employer matches for their retirement account.

“Ideally, maximize your contributions to tax-advantaged retirement accounts and consider the advantages of a Roth option as you will pay tax now,” Krasner Maizes said. “As long as you follow the necessary rules, you will not pay taxes on the growth or when you withdraw the money for retirement.”

3. Create a Holistic Financial Plan

When you start earning six figures, it’s a good idea to make sure you have a solid plan in place for your future. There are free financial tools you can use to help ensure your money is well-managed and invested.

A financial services company called Empower has free tools that let you check your net worth, plan your savings and retirement and do a checkup on your investments. It also offers professional wealth management and various investment products.

Its portfolio analyzer lets you assess your overall risk, analyze past performances and model individualized asset allocations. There’s also a free investment-return calculator that estimates how much money you can earn over time, based on the amount of money you invest and the expected rate of return.

If you’re trying to develop a long-term plan for your money, this is a good place to start. You’ll learn how much money you really have, how much you should be saving, make sure you’re properly invested and gauge where you’re at in your retirement-savings journey.

To Read More:

https://news.yahoo.com/news/finance/news/6-things-must-salary-reaches-130028760.html

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Advice, Personal Finance DINARRECAPS8 Advice, Personal Finance DINARRECAPS8

7 Things You Should Never Do in Retirement

7 Things You Should Never Do in Retirement

Adam Palasciano   Tue, June 25, 2024

Retirement: A magical time of life when you no longer (necessarily) have to work for your money. Instead, decades of hard work coupled with saving and smart investments should mean that your money now works for you.

Careful financial planning can certainly lead you to this outcome. However, there are several things you’ll want to street clear of to ensure that you don’t end up in financial trouble after you call it quits at work.

Here are seven things you’ll want to seriously avoid if you’re approaching retirement or you’re already retired, according to Ameriprise and Think Bank.

7 Things You Should Never Do in Retirement

Adam Palasciano   Tue, June 25, 2024

Retirement: A magical time of life when you no longer (necessarily) have to work for your money. Instead, decades of hard work coupled with saving and smart investments should mean that your money now works for you.

Careful financial planning can certainly lead you to this outcome. However, there are several things you’ll want to street clear of to ensure that you don’t end up in financial trouble after you call it quits at work.

Here are seven things you’ll want to seriously avoid if you’re approaching retirement or you’re already retired, according to Ameriprise and Think Bank.

1. Retiring Too Early

Deciding to stop work too early can have long-term implications on how long your money will last you. If it’s clear that you don’t have enough money saved, consider working for a few more years to augment your retirement savings. As a general rule of thumb, it’s important to save at least 15% of your annual income toward retirement throughout your working life — or more, if you can.

2. Overspending

Many people find themselves on a reduced or fixed income in retirement. So, it’s really important to make sure you’re not overspending. Creating a clear budget can help you track where your money is being spent each month, ensure you’re not living above your means, and help you stay out of debt.

3. Taking Social Security Too Early

It’s possible to collect Social Security as early as age 62. However, you’ll only be eligible for a portion of your maximum monthly benefit by doing so. The longer you wait to collect Social Security, the larger your monthly payment will be for life. So, waiting longer can have huge long-term impacts on your cash flow and financial stability.

4. Underestimating Effects of Inflation

You won’t be immune to the effects of inflation just because you’re retired. It’s crucial to consider how even low levels of inflation ranging from 1-2% can erode your purchasing power. It’s best to consult a financial advisor to devise an investment strategy that mitigates the effects of inflation once you’ve stopped working.

5. Underestimating Medical Expenses

To Read More:

https://www.yahoo.com/finance/news/7-things-never-retirement-182405857.html

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Advice, Personal Finance DINARRECAPS8 Advice, Personal Finance DINARRECAPS8

Ex-Millionaires Are Revealing How They Lost All Their Money, And I'm Actually Speechless

Ex-Millionaires Are Revealing How They Lost All Their Money, And I'm Actually Speechless

BuzzFeed   Tue, June 25, 2024

Reaching millionaire status is a feat people dream of achieving. But unfortunately, having millions of dollars doesn't mean you're invincible, as evidenced by redditor u/HypnoticMushrooms, who asked people to share how they or someone they knew became an "ex-millionaire." I'm genuinely surprised at how some of these people weren't responsible with their money. Here are some of the most insightful stories:

1."COVID-19. I built a business that was given a valuation of a few million back in January, but the industry went down, and I'm doing all I can now to avoid bankruptcy."

Ex-Millionaires Are Revealing How They Lost All Their Money, And I'm Actually Speechless

BuzzFeed   Tue, June 25, 2024

Reaching millionaire status is a feat people dream of achieving. But unfortunately, having millions of dollars doesn't mean you're invincible, as evidenced by redditor u/HypnoticMushrooms, who asked people to share how they or someone they knew became an "ex-millionaire." I'm genuinely surprised at how some of these people weren't responsible with their money. Here are some of the most insightful stories:

1."COVID-19. I built a business that was given a valuation of a few million back in January, but the industry went down, and I'm doing all I can now to avoid bankruptcy."

2."I dated a guy who unexpectedly inherited $6 million. His parents had been killed in a drunk driving accident when he was a baby, and so their life insurance and money from a legal settlement sat in an account collecting interest for 18 years. He got a call from a lawyer on his 18th birthday, and that's how he found out about it. He went nuts. Every time I saw him, he had a new car.

He bought an extravagant house and insisted on taking these big vacations. He would go to our local comic shop and buy EVERYTHING. His spending was a major factor in why we broke up. It was all too much, watching him blow through money like that. He didn't invest any of it. He blew through all his money in five years. Last I saw him on Facebook, he was destitute."

3."I built a business worth around $3 million, had a house worth $1.4 million, investments worth more than $2 million, and had four nice cars. Divorce laid me low. An ex-wife, a lawyer, and a judge stripped me of at least 75% of that. I was left with a Miata race car, a bit of money, and 51% of my company.

And I still had to pay alimony. I gave up. I negotiated my way out of alimony by giving up more of the company and liquidating everything else.

I bought a boat and fucked off. 26 months later, I sailed back into my life and started over. I've earned enough to live a modest retirement, and that's where I am today. Don't get married, boys. I've done it twice. The first time was a disaster, and the second time was an annoyance. Just my opinion and experience."

4."A family member of mine did very well in tech. He was an incredibly smart physicist but a horrible businessman. He retired, having made his millions, then bought a beautiful antique yacht. 10 years later, he's in debt and has struggled to sell the boat for years. His family is so pissed at him. TL;DR: don't buy a boat.

5."I was close to being a millionaire after selling my company to a bigger competitor. I reinvested most of it since I didn't have much use for the money, but then I got scammed for about half a million on buying some real estate.

I basically bought a fantastic holiday destination facility from someone who did not own said fantastic holiday destination facility. And by 'bought,' I mean that I'd put a substantial down payment to keep other interested parties at bay. Classic."

6."My grandfather died and left everything to my mom. Then, my father died and left everything to my mom. Mom always thought she was a smart gambler that would win. As proof, she won maybe $25k from the lottery once and went out and bought a car. After that, she was hooked. When Dad was alive, he didn't let her gamble; he kept it under control. After he died, my mom found a boyfriend — a former bookie who was a 'professional' gambler.

They used to like going to casinos, squandering every penny and more. Then, my mom sold the big house for another $500k and bought a small condo. She took out a home improvement loan for it for $50k, but no improvements were ever made. Casinos and lottery tickets. A cool million or two gone."

To Read More

https://www.yahoo.com/finance/news/ex-millionaires-revealing-lost-money-025602453.html

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Advice, Personal Finance DINARRECAPS8 Advice, Personal Finance DINARRECAPS8

I’m a Wealthy Millennial: 4 Financial Skills I’m Passing Down to My Children

I’m a Wealthy Millennial: 4 Financial Skills I’m Passing Down to My Children

Heather Taylor   Mon, June 24, 2024

Gen Alpha, and future generations to come, may be on track to receive the financial literacy they deserve.

A new study from Bank of America titled the “2024 Study of Wealthy Americans” reveals emerging trends around generational wealth and its influence on financial strategies. Data from the 2024 quantitative survey shows that 48% of wealthy Americans said they would initiate the conversation when it comes to teaching their children or heirs financial skills.

What kinds of financial skills are wealthy Americans planning to pass down to their children or heirs? GOBankingRates spoke to Dave Fortin, the millennial co-founder of investing app FutureMoney and a new dad, to learn more about the financial skills he plans to pass down to his children.

I’m a Wealthy Millennial: 4 Financial Skills I’m Passing Down to My Children

Heather Taylor   Mon, June 24, 2024

Gen Alpha, and future generations to come, may be on track to receive the financial literacy they deserve.

A new study from Bank of America titled the “2024 Study of Wealthy Americans” reveals emerging trends around generational wealth and its influence on financial strategies. Data from the 2024 quantitative survey shows that 48% of wealthy Americans said they would initiate the conversation when it comes to teaching their children or heirs financial skills.

What kinds of financial skills are wealthy Americans planning to pass down to their children or heirs? GOBankingRates spoke to Dave Fortin, the millennial co-founder of investing app FutureMoney and a new dad, to learn more about the financial skills he plans to pass down to his children.

Delayed Gratification

In March 2024, GOBankingRates surveyed 1,008 American adults on a series of questions related to financial literacy. When asked about the poor money habits they learned from childhood, 36% of respondents said they picked up impulse shopping.

This won’t be the case for Fortin. He told GOBankingRates he plans to talk to his kids about delayed gratification. Beyond avoiding impulse purchases, it’s a lesson that will help his children in many other aspects of their lives.

“By using the language of money, you can show your kids the advantages of saving today for something in the future, and how your money can grow,” said Fortin.ughh

Goal Setting

Another skill Fortin plans to teach his children is how to set goals, which he considers to be important in money and in life.

Learning how to set a goal — whether this is a goal towards going to college, buying a car or purchasing your first home — is only one part of the equation, according to Fortin. He added that it’s important for children to learn how to create a plan that will help them achieve the goal.

Being Good Stewards of Capital

Fortin’s list of financial skills he plans to teach his children include comparing income and expenses, understanding taxes, basic banking products and basic investing principles. Many of these skills are confusing to adults, especially those who lack the proper financial literacy background. As an example, nearly 17% of Americans surveyed by GOBankingRates in March 2024 said they didn’t clearly understand how taxes work.

To Read More:

https://www.yahoo.com/finance/news/m-wealthy-millennial-4-financial-204525798.html

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