Building wealth is like climbing a mountain. If I drove you to an extremely large mountain to climb it, the size of the mountain would probably intimidate you. But when you realize that the goal of climbing it is really composed of about 100 little goals, you realize the climb isn’t so bad. Climb a little bit each day. Make sure you are constantly taking steps forward.
It’s the same with building wealth. Take advantage of little opportunities to grow the wealth you are building. The opportunities will all feel little. But they’ll add up to getting you to a place that you didn’t think was possible.
Because of Covid-19 and it’s effects on our world, the US government has felt it was necessary to send out stimulus checks to Americans. The attempt is to help people catch up and to bring a boost to the economy.
Before reading this article, please understand that this is simply words of general advice. If you are in financial dire, you need to talk to a financial advisor personally to work through your financial situation.
These are all solid words of advice to help you figure out how to handle your stimulus money.
Six ways to build wealth with your stimulus:
- Pay off all of your debt.
There are a ton of financial gurus. I’ve read many of them. Robert Kiyosaki. Dave Ramsey. Ramit Sethi. And this topic causes much division with many of them. Pretty much it’s Dave Ramsey against the world. Most would agree that you should pay off certain debt like student loans and credit card debt.
I’m on the side of Dave Ramsey with this though. Debt brings chains. And more so, no debt, makes money. It reminds me a lot of the famous quote by Warren Buffet, “Only when the tide goes out do you discover who’s been swimming naked.” When you pay cash for everything, there is nothing that can be taken from you. But when you leverage yourself and borrow, you put yourself at the will of others.
With your stimulus, pay off your debts. Knock them out! you won’t regret being debt free. It makes life much less stressful.
2. Build a solid emergency fund
It sits there and it’s always been there. We swim and have tons of fun and never notice it. And for years as a kid, I didn’t think much about what the orange tube was there for. But when I saw it used, I realized how important it was.
When you’re swimming and feel safe and comfortable you don’t think about how much you appreciate the lifesaver. But when you begin to drown, you really appreciate when someone can toss you a lifesaver.
You’re emergency fund is the lifesaver. When I think of an emergency fund it’s an account that has 3-6 months of expenses in it. The idea is it’ll get my family and I by for 3-6 months if something ever happens. You shouldn’t tap into it much at all. Not pulling out to get money for a restaurant or wants. But only pulling out of it when you have no other options and it’s a heavy need.
If you don’t know where to start, put $1,000 in a savings account. You won’t ever regret having an emergency fund. But the day you begin to drown, you’ll regret not having it.
3. Buy an Affordable Home
Let me be clear before we dive into this, home ownership is a great path to wealth building and many times a great opportunity if it is affordable and fits for your financial plans. But there are also many times it’s not the right move to make. Renting, as I’ve talked about before, has a place and can be apart of your wealth building strategy. Depending on where you live, renting many times can make much more sense. It can save you some money. But homeownership is a great part of wealth building too.
A couple things you want to consider. First of all, make sure that the deal works. Always try to buy low and sell high. When you become emotionally involved with a home, sometimes you can’t rationally make a decision on the purchase because it’s the perfect home. But if the mortgage is going to kill you, don’t do it. Get a good deal that makes sense for your finances.
Many people will be getting stimulus payments and added with their tax returns, it could be enough for the down payment of a home. It’s worth considering your options because it might just be a good decision to use your stimulus money to purchase and step into ownership.
4. Begin looking for investment options
Robinhood. Webull. Fundrise. Real estate. The Stock Market.
What do you do?????
I’ve never met a person who didn’t like the idea of investing. But every person I talk to about it doesn’t want to go through with it for whatever reasons.
What I’d highly recommend you to do is to take some time to explore some options and figure out what option makes the most sense for you. Can you handle the ups and downs of the stock market(although it’s always trending up!)? Do you love the idea of real estate? Take some time to think through how you’d like to invest some money. Consider your risk tolerance(meaning how much you are ok with the possibility of losing money).
I love real estate and the stock market so I diversify. I put some money into growth stock mutual funds(a group of companies, it’s a safe investment). And I also do a little with real estate. That’s what I’m comfortable in. I know those arenas. I don’t mess with gold. I don’t collect art or wine. I’m not into the crypto currencies or Forex. I don’t know those things much at all. I have some comfort with the stock market but I don’t mess with single stocks much. I try to play it safe and stick to what I’m comfortable with.
Take time to figure out how to invest some of your money and to grow it.
5. Pour it into a retirement account
You will either get older or you’ll die. How are you preparing for that?
I separated this from investment options just because you may want to invest separately from the money you are putting away for retirement. Make some money you’ll benefit from sooner and some money you’ll benefit from later.
Albert Einstein said, “Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t, pays it.”
It is foolish to not want to put money into a retirement account. The way compound interest works will multiply your money in huge sums.
This video will help you understand compound interest:
My favorite way to get compound interest working for me is by contacting a good financial advisor and having them setup a good growth stock mutual fund for me.
My advice to you is to setup a retirement account with a good financial advisor so you can have compound interest working for you.
6. Give to Others!
What?!? Build wealth by giving money away?
Yes. It sounds crazy but this has been one of the most important things I’ve seen in wealthy people is their enjoyment of giving money away. They are blessed because they choose to be a blessing to others. This isn’t in correlation with the belief that if you live how God wants you to that he’ll make you rich and healthy.
More so, this is about stewardship. God makes you a steward over what you’re given. As a steward, when you give back to him consistently, it shows that you are a good steward. He’ll take care of your needs.
Ways to give are through your local church, through nonprofits that you support, through ministries that have impacted your life and there are also numerous websites that can help you identify opportunities to give.
When you get your stimulus check, consider giving some away to be a blessing to others.
I hope you’ve enjoyed these 6 Ways to Build Wealth with Your Stimulus Money. Please check out our other post, 5 Ways to Waste Your Stimulus Money.