1. Develop A Secondary Income Stream
The days of living off of one singular income stream are long gone. Purchasing a quality home, car, and paying educational expenses for kids takes multiple incomes. No more working for one company and retiring after 40 years with a gold watch. Companies are always looking to hire younger and cheaper labor in almost every field. That is why it is important for you to remain nimble. Never hitch your financial future to one corporate wagon. The average person will experience between 7 to 15 job changes in his/her lifetime. Unless you are a neurosurgeon with a median income of $575,000 per year; you need to develop a secondary income stream.
Make 2021 the year that you start to develop a secondary income. Your secondary income stream does not need to provide the same amount of income as your primary job. Every little bit helps! If you can find a way to make an additional $32.88 per day, that would generate you an additional $1,000 per month. That’s an extra $12,000 per year that you can use to save for retirement or eliminate high interest credit card debt. Imagine what it would be like to have an extra $1,000 added to your income every month.
There are easy ways to generate $1,000 a month. You can be a freelancer. You can write blog posts, design logos, or help solve simple tech issues and easily make over $30 a day on sites like Fiverr.com. You can deliver for Doordash or Uber Eats one day a week. There are numbers of creative ways to earn an extra $1,000 a month which will help you on the road to financial freedom.
2. Max Out Your Retirement Plan
The time is now to get serious about funding your retirement plan. If you keep putting it off, then you will never be able to retire and will die working. That is a horrible thought. Social security does not provide enough standalone income to allow for full retirement. You have to do your part! Get serious about saving for retirement now. (The more money you are willing to sacrifice and invest today, the closer you are moving to retirement).
If your company offers a solid retirement plan, then you need to enroll. A 401(k) or 403(b) are great options when your company matches contributions. If your company does not offer a plan, then you can create your own by starting a Traditional IRA or a Roth IRA at Fidelity, Etrade, TD Ameritrade, or any reputable brokerage firm. You can contribute as much as $5,500 a year to an IRA plan.
3. Fully Fund An Emergency Savings Account
Let’s face it 2020 was an extremely challenging year. Millions of people experienced job losses, evictions, food shortages, and financial peril. Government assistance alone was not enough to economically survive the Coronavirus crisis. This past year showed the importance of having an emergency savings account. Now is the time to setup an emergency savings account. Set a goal of developing six months of income aside in an emergency savings account.
If your net income is $3,200 a month after taxes, then you need to save $19,200. I know that he dollar amount may sound daunting but that long term goals have to be challenging. Your long-term goal is to save six months of net income in a money market or savings account that is FDIC insured. Investing all of your savings in stocks and mutual funds forces you to sell your investments at inopportune times. Six months of savings provides you with financial security for the future in the event of job loss, medical emergency, or another global pandemic.
