Finances

8 Ways to Increase Your Income and Save Money

silhouette photography of jump shot of two persons
Photo by Jill Wellington on Pexels.com

The secret to true wealth is financial freedom, but how do you get it?

Do you want to be free of financial constraints? Do you want the ability to live your life without worrying about money? The sooner you start on this path towards financial freedom, the better off you will be in life.

We’ve compiled eight ways that can help get you on your way to a more fulfilling and prosperous future!

1. Live below your means 

This is one of the pillars on which financial freedom rests. The key to achieving this lies in understanding your needs and wants so that you can plan for them accordingly. This is an important factor when spending money or making decisions about investments with higher risk such as stocks. It also means being aware of how much income will be left after taxes.

2. Save at least 10% of your income for retirement 

This is a golden rule for financial planning. The earlier you start saving, the easier it will be to retire (or semi-retire) in your mid or late 50s. It’ll also make surviving an emergency much more manageable if that time ever comes around without having to deplete all of your savings.

If you are aggressive enough with how much you can save, you can even reach financial independence earlier in life, even in your 30’s.

3. Invest in stocks and bonds, not just cash equivalents (e.g., CDs) 

You might be tempted to put your money in savings accounts and certificate of deposits, but if you’re looking for a good return on your investment, it’s worth it to look at other options. Consider the stock market or bonds.

Cash equivalents like savings accounts and money market funds may be better for short-term goals, but long-term investing is the key to building wealth. That’s what stocks and bonds are about.

Dividend paying stocks and Real Estate Investment Trusts can eventually make a nice passive income that will pay you continually.

You can download Robinhood or Webull, for instance, to get started with stocks.

4. Avoid credit card debt at all costs 

If you can, try not to go into debt. Credit card debt is a surefire way to get yourself in trouble. In an absolute emergency, it’s ok, but really try to stay away from racking up credit card debt.

Use cash as much as possible. If you can’t, try setting up an automatic payment from your bank account to pay off the balance every month.

I have found myself in situations where there were larger property expenses than anticipated and had to use credit cards even after depleting the emergency fund. In these situations, do your best to try and get a 0% interest for 18-24 months if you can. Many times, credit card companies and banks offer different promotions. It doesn’t hurt to ask. Just make sure you pay it off before the special is up.

5. Pay off high-interest loans and credit cards first before you invest or save money

Paying off high-interest credit cards and loans first is a great way to ensure your finances are in good shape. You’ll be able to save money and invest in the future without having to worry about paying off debt.

Getting rid of your high-interest credit cards and loans is an essential part of having a sound financial foundation. It’s like giving yourself a head start for the rest of your finances.

6. Don’t buy a house yet until you are ready

Buying a house is one of the most significant financial decisions you’ll make in your life. Don’t be in a hurry to buy your own home if it’s out of reach financially.

There are many ways to buy a home for low or no money down, but if you are really young and don’t have enough established credit, you may find it difficult. It’s ok to rent a house or apartment while saving up.

7. House Hack your first home

When you are ready to make that home purchase, consider a duplex, triplex, or quadplex. Live in one unit while renting out the others for significant savings. You can essentially live in your home for free while someone else pays your mortgage. When you are ready to move into your “forever” home, you can always rent out the unit you were living in.

Now you have two homes and one of them is an income producing asset.

8. Retirement Accounts

If you are in a career field where the employer will match your contributions up to a certain number, then make sure you max that out. If an employer will match up to 5%, then make sure you are contributing at least 5% into your retirement account. It’s free money!

Consider the tax implications when choosing between investment options like Roth IRA vs. traditional IRA, 401(k) vs. 403b, etc.; also consider the tax implications of withdrawing from these accounts early or later in life! 

Choosing between investment options is challenging. One thing to consider, though, when you do choose investments, make sure you understand the tax implications of your choice. Keep in mind that you’ll have taxes at the end of each year based on any gains or losses. It’s a good idea to talk to a tax professional who can help you make sense of them.

Many people misunderstand IRAs. They’re not just for the elderly but a great way to save money and invest wisely.

Traditional IRA

Traditional IRAs are a great way to save for retirement. You get an upfront tax break and build your savings over time. You will pay taxes on this account when you withdraw your money in retirement. Understand that in your later stages in life, you will likely be in a higher tax bracket then you currently in now.

Roth IRA

Roth IRAs are great because they let you save for retirement now and enjoy tax-free withdrawals in the future. You pay your taxes up front when you make your contributions.

The traditional retirement system may not be the way you want to go

In Conclusion

Financial freedom is possible for everyone, not just the rich and privileged. Anyone can take control of their money.

Stop living paycheck to paycheck and start feeling secure in your financial future. It’s time to TAKE ACTION! Leave us your thoughts in the comments. What would you add to this list or want further information on?

Mike Cavaggioni
Mike Cavaggioni

Mike Cavaggioni is an Active Duty Officer in the U.S. Navy, REALTOR-ASSOCIATE®, Real Estate Investor, and Finance Coach located in Honolulu, HI. He is the founder of Average Joe Finances and host of the Average Joe Finances Podcast. Mike is building a community for people to come together to learn and build their wealth.

One thought on “8 Ways to Increase Your Income and Save Money

Tell us what you think...