If you want to stop working eventually, you will want to take steps to increase your long-term wealth. Building long-term wealth is all about making your money work for you and being intentional about how you go about that.
#1: Build an Emergency Fund
First, you are going to want to start by building up an emergency fund. An emergency fund is about having money that you can pull on for all the unexpected expenses that come up during a year. For example, you can use your emergency fund to pay to replace your broken water heater or pay to fix up that damaged part on your vehicle.
On a bigger scale, if you build up your emergency fund enough, you can use it to get through a job loss or reduction in work hours. It is a good idea to have an emergency fund that can support you for three to six months. The more cash you have stashed, the less you have to rely on credit cards and high-interest personal loans to deal with expenses you didn't plan for.
#2: Contribute to a Retirement Plan
Second, you need to contribute to a retirement plan. You will want to put money into a traditional IRA or Roth IRA, depending on your tax situation. It is important to set aside a portion of your income from your retirement plan. The more you save, the more your money can grow, and the better off you will be during your retirement years. The sooner you put in money, the more time it will have to grow.
#3: Invest Outside of Your Retirement Account
Third, it is essential to invest outside of your retirement account as well. Investing in the stock market, bonds, and other methods outside of your retirement account allows you to pull and use that money when you want, without having to pay restrictions that you would should you withdraw money from your retirement account.
#4: Carry Life Insurance
Fourth, it is smart to carry life insurance. This will help provide for your family should you die. Depending on the type of life insurance you purchase, you can also borrow against your life insurance or cash out while you are still alive.
If you want to build your wealth, you will want to work with a financial planner who can help you figure out how to contribute to your emergency fund, investment fund, and retirement account to build your wealth. They can help you set up a plan that will allow your wealth to grow over time, setting you up for financial success. Reach out to a company like Libertas Wealth Management to get started.
