We all have our periodic struggles with finance — from how to save money to how to set up a budget that really works. In this article, the team at Empire Tax uncovers three money secrets of successful people that are habit and lifestyle focused, rather than opportunity or education based. There are many paths to financial stability, and starting off with these helpful habits will be major first steps.
Pay Yourself First
Whenever you receive a check or any kind of income, take 10% of that money and automate it to be deducted from your income for savings and investments. This method of saving money allows you a cushion to have a reserve to invest in opportunities to increase your earning potential. These investments can range from advertising to educational courses. 10% repeated bi-weekly over the course of a year can add up pretty quickly. Even if you’re only able to put away 5%, this will still make a significant difference.
Work From Home
Consider opening a home-based business for tax advantages. This may sound far-fetched, but with careful planning and strategic moves, this can become a reality with enough time invested.
Let’s talk about a widely-known reality: housing costs are the most significant annual expense for anyone. If you’ve got a dedicated room for an office or even part of a room, you’ll be able to deduct some of your housing costs by square footage. While most people may not be sure exactly how to start this process, you can begin with a passion project that you can dedicate a portion of your time to until you’re ready to take the full-time leap. Some can even deduct a portion of new electronics purchases, their wifi bill, phone bill, etc. These deductions can add up to thousands in savings over time.
Live Below Your Means
It is important to identify assets and liabilities as well as needs and wants. When you don’t pay yourself, save proactively towards your future goals, and live paycheck to paycheck, this could be an indication that you are living above your means. One obvious but difficult solution to this is to spend less than you earn, and invest the difference. Our consumption-focused society has made it challenging to feel like we don’t always need MORE. One small example of this is buying a used piece of cardio equipment for $300 through a website like Craigslist as an alternative to the $800/year gym membership you never use. Opportunities to save exist all around us. Also, identifying assets and liabilities has much to do with living within or even below your means. This means not creating unnecessary bills for yourself and knowing which investments are profitable vs. which investments drain your bank account monthly.
Contact the Empire Tax Team with questions about opening a home-based business. Share this with friends and family to spread the money saving love.