The events of 2020 and 2021 reshaped our world in countless ways, resulting in work model shifts and massive layoffs that have led more and more people to question the status quo when it comes to their professional and financial lives. . Last November, a record 4.5 million people left their jobs and the Great Resignation shows no signs of abating in the near term.
Maybe you are ready to switch to entrepreneurship or make some essential cash moves. Whatever your situation, 2022 may be the year when you start setting yourself and reaching new goals. Contractor asked three personal finance experts how you can most effectively put your money to work for you this year. Its first $ 100,000 Founder, Tori Dunlap, DigitalNomadQuest Founder, Sharon Tseung and Chloé Daniels of Clo Bare Money Coach, share what you can do to prepare for financial success today and the days that follow.
Below is its first founder of $ 100,000 and Financial feminist Host Tori Dunlap discusses the fundamentals of personal finance that will get you off to a good start.
Negotiation is an ongoing process, not a one-off event
It is estimated that women lose almost $ 1,000,000 in their lifetime as a result of the wage gap. Add to that the inflation we’ve experienced over the past year, and there’s never been a better time to negotiate your salary. If it’s been more than six months since you last met with HR, schedule a meeting and bring every big and small win you’ve got along with some reliable salary data. Talk to your colleagues about compensation and speak up if you find that you are earning less than your peers. If a monetary increase is not being considered, there are other perks to negotiate such as vacations, health insurance, and 401k matches.
Negotiating is like riding a bike: once you get the hang of it, it gets easier every time.
Get the most out of your tax-efficient retirement accounts
In my episode of The Beginner’s Guide to Investing in Financial feminist podcast, I’m talking about the biggest mistake I see new investors making. Often, thinking that just opening an account is “enough”, they forget that just because the money is in an IRA does not mean that it is invested in the market. A brokerage, IRA, or 401k account is just a container – you still have to decide where you want to spend that money.
The second is not to take full advantage of correspondence with employers and to maximize tax-efficient accounts. Correspondence with the employer is free money, and enjoying it should be a priority. January is a great time to set investment goals to get the most out of these accounts.
Paying off debt is good, but it’s not always a priority
A big frustration for me is seeing advice that specifically warns young people to pay off all their debts before they start investing. While I agree that high interest debt like credit cards and some other loans with an interest rate above 7% should be given priority, you can still invest while paying off low interest debt like loans. students. This is because the market has an average rate of return of 7%, which means your money will work harder for you in the market than as an extra payment to pay off your debt.
To earn fast, open a HYSA for your emergency fund and short-term savings
This is the easiest, most accessible personal finance advice I have. A HYSA is like your brick and mortar bank savings account, except you can earn up to 10 times the interest. HYSAs are great for emergency funds and short-term savings goals, as they typically have no deposit limits and allow you to withdraw funds up to six times per month without penalty. It’s a quick payoff to make sure your money is working for you in 2022.
– Tori Dunlap, founder of Her First $ 100K and host of Financial feminist
Related: Pandemic Puts Personal Finances On High School Agenda
Once you have mastered the art of negotiation, harnessed the power of tax-efficient retirement accounts, defined your debt repayment plan, and opened up this HYSA essential, you may want to explore some other ways to increase your income and invest. .
DigitalNomadQuest founder Sharon Tseung has first-hand experience when it comes to taking these exciting (and sometimes intimidating) next steps. Here, she shares her advice to boost your ancillary activities and your real estate investments.
Start a secondary activity
Having multiple sources of income gives you more security. In case something happens to your daily job, you won’t have to worry so much about drastic changes when you have other ways to make money. This is why the average millionaire has seven sources of income that work for him.
There are many side activities that you can start even if you don’t have a lot of capital to work. This can include freelance work on Upwork, starting a YouTube channel, selling digital products on Etsy, or selling personalized products through Merch by Amazon. Even if they take a while to develop, it’s worth the extra income and stability they give you.
Invest in real estate
Andrew Carnegie said that “90% of millionaires invest in real estate”. And that’s because there are so many benefits to real estate, including cash flow, appreciation, leverage, and tax benefits. If you want to start investing in real estate, read books like those in the BiggerPockets collection, listen to podcasts, and attend meetings to network with other investors and agents. Start practicing researching your target market and analyzing which transactions generate cash flow. When you’re ready, take action to grow and learn from experience!
– Sharon Tseung, founder of DigitalNomadQuest and host of The quest of the digital nomad
Related: 10 Side Activities You Can Start At Home In 2022
Maybe 2022 is the year you plan to move from being a prostitute to being a full-fledged business owner. If so, you might have a lot of questions about what your finances will look like as a new entrepreneur. What about retirement accounts? What will be the impact of the transition on your expenses? Your budget?
Chloe Daniels of Clo Bare Money Coach herself took the plunge after starting her budget journey in 2018. Here, she shares her tips for managing finances in the context of new professional terrain.
Create your independent retirement account
Solopreneurs and small business owners have several options when it comes to saving for retirement. Make this year the year you open your Solo 401k, SEP IRA, or Simple IRA for your business. These accounts allow you to contribute more money to your retirement than a regular IRA. With a Solo 401k, you can contribute as both an employer and an employee, which means you can contribute up to $ 58,000 in 2021 and $ 61,000 in 2022. SEP IRAs also allow you to contribute up to ‘at $ 58,000 in 2021 or $ 61,000 in 2022, while SINGLE IRAs allow you to contribute up to $ 13,500 in 2021 or $ 14,000 in 2022. These limits are much higher than the standard contribution of $ 6,000 to the IRA and can result in serious tax savings in the year you contribute.
Prepare a list of all the different expenses you have throughout the year
As our businesses grow, it’s easy to forget about all the different tools and subscriptions we pay for. Are we really using all the things we’ve signed up for over the years? Use the start of a new year to review your spending. Mark on a calendar when they come out and decide if those expenses offer you equal value to what you pay for them. Many of us end up with duplicate services that we don’t even realize we’re still paying for. Doing this once a year is a great way to make sure we never pay for something we don’t need or use.
Set up a spending plan
Something I hear from entrepreneurs is that they can’t budget because they never know what their income will be. But a budget is a plan for your expenses, not a plan for what you do. Our expenses won’t change much from month to month, unless we are facing some major life changes. To get started with budgeting, first determine what your minimum “need-to-do” number is. List all the expenses you will have to pay each month, even if you don’t earn a single dollar. This is your baseline for your budget. Then whatever you do on top of that – assign it a job like saving, investing, or paying off debt. The key to a successful budget is making sure you tell your money where to go, instead of wondering where it went.
– Chloé Daniels from Clo Bare Money Coach
Related: Here’s Why It’s Beneficial To Track Every Small Business Expense