10 Rules For Building Wealth

Many consumers worry that they will never have enough money to retire comfortably or build a substantial amount of wealth. The fact is however that building wealth is really just a matter of getting into specific habits and keeping those habits going over 30 or 40 years.

If the average consumer were to simply save on a regular basis, spend relatively frugally and put as much money into retirement accounts as often (and as early) as possible, most would have a sizable amount of retirement savings by the time their “golden years” arrived.

To that end we’ve put together a list of the Top 10 Rules for Building Wealth, all of which are basically habits that, if you seriously want to become wealthy, you need to start. Enjoy.

Rule 1: Have an Emergency Savings account that holds enough money to cover at least six months’ worth of bills. If you’re self-employed or work on commission this is vital to save you from financial disaster should you suddenly be out of work. The more you can put aside the better.

Rule 2: Take your cost of living and Multiply it by 25. This is the number that you’ll need to live comfortably in retirement. If you spend $40,000 a year, in order to live comfortably when you’re not working you’ll need to have at least $1 million saved.

Rule 3: Save at least 10% of what you make. Compound interest is your best friend, and the earlier you start saving the better. Putting at least 10% of your income aside, with the help of compound interest, can earn an incredible amount of money for you with practically no effort.

Rule 4: If your company has a 401(k) Matching program, take full advantage of it. If you’re not, you’re leaving money on the table.

Rule 5: if you have children, open a college savings account for them as early as possible. They might be in diapers now but, before you know it, they’ll be needing tuition money.

Rule 6: Maximize your contributions to an individual retirement account or IRA. Roth IRAs are excellent as well.

Rule 7: Don’t spend more than 30% of what you make on your home. Here’s a fact; the average new home buyer has absolutely no idea how much maintenance costs go into owning a home, as well as insurance costs, property taxes and so forth. Keeping this in mind, purchase a home that’s comfortable but no more than what you actually need.

Rule 8: If you can erase at least 1% from your homes mortgage rate, refinance.

Rule 9: Use the “120 minus your age Rule” for stocks in your portfolio. Keep the rest in bonds.

Rule 10: If you don’t understand an investment, don’t use it. Frankly, there are enough “tried and true” methods of building wealth that you shouldn’t have to risk your money on something you don’t understand or that sounds too good to be true.

If you can make a habit out of these 10 Rules, and follow them during your entire adult life, by the time you retire you should have a sizable amount of money set aside to support yourself and live comfortably.

Why Your Career Should Be Considered Part of Your Portfolio

David Blanchett, the head of retirement research for Morningstar Investment Management, recently published a paper entitled “No Portfolio Is an Island”. In it he looked at counting your career as one of the most dynamic factors for asset growth, a strategy that’s been validated by other financial advisors.

“You should think of your wealth holistically,” Blanchett says. “If you think of yourself as an entity with these risk exposures, how do you use your portfolio to make [your] overall wealth as efficient as it can be?”

The fact is, everyone expects that their hard work will one day pay off, but most people also realize that they need to continually add new skills to their resume in order to be able to survive the changes that usually occur in the real world. Today staying employed his more than just earning a living and saving for retirement, it’s also his vehicle to stave off financial crises that might damage your retirement or force you to drain your retirement accounts in order to cover other emergencies or expenses.

Blanchett says that “Your ability to pivot into a new job will affect your retirement,” adding that “If you are going to make a change, have more of your portfolio in cash” to pay for classes, certifications and a potential gap in income while you switch to a new position. On the other hand, he also advises that it the position that you are right now is stable and safe, reasonably speaking, you may want to take a bit more of a risk with your portfolio.

Paul Winkler, a financial advisor from Goodlettsville, Tennessee, says that “The future value of your career declines as you age because you have fewer years to work,” and he adds that “If you have a choice between taking $50,000 and investing in yourself and your future earnings through a master’s degree, or put the money into the market, consider the relative risks. Are you getting into a different industry, and so opening up more opportunities and thus minimizing risk?”

Winkler believes, for example, that getting a Masters degree in philosophy or a Master of business administration are both risky but that, if a person were to get a Masters degree in computer science, the risk is minimal. He says that “Your confidence in your career and your willingness to change is a huge,” and goes on to say that “But it doesn’t matter what the risks are you are moving on them.”

Carrie Birgbauer, New York money coach, believes that changing careers only works when the move is synchronized with a person’s other financial goals. She says that “There’s a lot of magical thinking about career changing,” and adds that a person should will “Consider yourself an asset in your own portfolio: How will you source help and minimize costs to gain a sustainable investment?”

One thing that Blanchett advises is that people think of how their everyday decisions about their career will affect their portfolio in the medium-term. He believes that this insight will help people to make decisions about their career, helping them to manage their risk accordingly.

Finding Side Work – I’m A Freelance SEO Consultant (and You Can Be, Too)

tell-others-what-you-doI’ve talked a bit on here about freelance side work. It’s taken me a little bit of time to get my sh*t together, but I’ve finally got going on a few projects. Here’s the path I followed to get my freelancing up and running.

Learn something (if you don’t already know enough!)

I covered this pretty extensively in the past. Rather than summarize all the resources again in this post, I’ll just point you to “How to Become an SEO Freelancer in 48 Hours.” I still refer back to this all the time, and it’s definitely the best post I’ve found for both getting familiar with SEO and implementing all the steps to get projects going.

If you don’t want to do SEO, there are a ton of options out there. Some of the easiest simply involve writing or other things you’re already able to do without having to learn more. Writing is a great place to start. I really like this post on 15 Ways to Get Paid to Write. What’s really great about this post is that Sarah goes from easy projects that you could essentially start on today all the way up to high-paying projects that you can make a career out of.

You can also check out Ashley’s free “The Definitive, Step-By-Step Guide to Getting Off Your Butt, Finding Some Focus, And Jump-Starting Your Biz” to get going, too.

Also see my post on money making skills you can learn online to get you started and give you some ideas of the information that’s out there for free to get going on what you want to learn.

Before you say you don’t know enough…

Keep in mind, you don’t have to be a professional to get paid to do something. You just need to know enough to be able to help someone else that’s willing to pay you to do something for them. Even if you don’t know enough right now, you can spend mere minutes a day learning how to do something you didn’t know much about before. I’ve learned a TON about SEO just by reading different guides, books, and blog posts.

If you don’t have any projects to work on from the get-go, start by working on your own projects. You’ll learn a lot just by writing on your blog every day or by optimizing your own sites for SEO. Once you know enough but might still be looking for projects to work on, consider offering free work for others.

Create a list of services

Although I’ve been offering SEO services (and writing services, too), I haven’t done anything to publicize them. Now, you can see a basic description of what I offer on my services page. This is simply to give potential clients an idea of what I can do for them and a ballpark of what my services cost. I’ve tried to focus on how you can help them achieve something. For example, with SEO, most clients want their website to rank higher in Google and drive more traffic to their site. This is something I’ve highlighted on my sales page.

There are lots of different ways to advertise your services as well as many different opinions on what the best practices are. I just finished reading The Wealthy Freelancer (highly recommended), which gives a lot of advice of how to quote your prices and charge the right amount for your work. I also found Chris Guillebeau’s recent “Instant Consultant” post intriguing, which led me to add the “buy now” button to my services page, too. Will it work? I’m not sure, but it’s an interesting experiment.

I know I’ve got some work to do on improving this page, but I feel better already just getting it up there and starting to tell people about what I do.

Tell people about what you do!

Lately, I’ve primarily been working on SEO analysis for a friend that I met in a context unrelated to SEO. I’ve been happy with how this worked out simply because I didn’t have to do any work or promotion to make it happen. I simply mentioned that I was good with SEO (and lead a discussion on it at one of our Meetups), and now the members of my group know who to turn to if they ever need help.

I’ve mentioned to many friends and family that I’m a paid freelance writer and that I do SEO, too. For those of you that didn’t already know that, now you do!

Thanks again to Sean and Location Rebel for a lot of the inspiration and ideas for this post.

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photo by: Steve Rhodes

Location Rebel Review: The Definitive Guide to Location Independence

Location RebelSince I started reading Sean’s blog and watching him travel to awesome places like Bali and Thailand, I always knew that I wanted to follow in his footsteps. But I wasn’t always sure how to do it. Then, Sean released Location Rebel, and I signed up to join his pilot group immediately. I’ve been working on the program for a month now, and I couldn’t be more pleased. Here’s my Location Rebel review, and why I think it’s among the best courses out there.

What You’ll Learn

Sean is big on becoming a “relative expert” and learning several new skill sets as rapidly as possible. On top of being a success story himself, Sean profiles 7 other Location Rebels that all make a living in different ways using different skills. These are new faces that you haven’t seen before, and it’s refreshing to see their successes, often without a boatload of expensive and lengthy formal education. These people all do things that you can learn quickly and start earning right away.

What Makes This Course Different

Not only does Location Rebel tell you what the entrepreneurs in this course do, but there are a ton of resources to get going on learning how to do what they do. Sure, you can try to locate these resources online for free. But Location Rebel has the resources that others recommend and have used to make thousands in their respective fields.

The Location Rebel Forums have been extremely helpful in finding the answers to my questions and identifying with others that have the same goals that I do. Sean’s been great in providing answers and supporting everyone along the way, too. This isn’t a course that Sean’s just created and then moved on from. He’s committed to improving LR and making sure it’s the best possible resource.

 

What If You Don’t Want To Be “Location Independent?”

I’m definitely into traveling, moving, and working wherever I please. But maybe that’s not for you. Luckily, the amazing help that Location Rebel can offer doesn’t end right there.

Do you simply want to work from home? The guide in Location Rebel will show you how to start earning money right away through quickly picking up new skills to become a “relative expert” while leveraging the skills you already possess, too.

Do you want to stay at your job? Location Rebel will will help you craft a remote work agreement. Through the Location Rebel Entrepreneur Blueprints, you’ll learn how others have successfully negotiated for remote work with their employers.

Why You Should Try Location Rebel

Sean is committed to the success of the Location Rebel members. He genuinely wants everyone in Location Rebel to succeed, so much so that he’s guaranteed the success of this program. Sean had me hooked before I even saw his guarantee – Sean has guaranteed that you’ll make at least $1,000 in the first three months of Location Rebel. That’s many times the price of the course, back to you in just 3 months. I’ve already starting working as an SEO freelancer, and I’m already seeing things start to ramp up in Month 2 of LR. I feel so confident in this course that I announced I would leave my job less than a year from now. The course focuses a lot on making money through learning and using legit skills and leveraging those skills to your advantage quickly.

I’ve invested over $1,000 in online courses over the past year. A lot of these courses have been great, but I haven’t identified 100% with any one of them, nor have I been able to apply everything that’s in them right away, either. Location Rebel changed all that. I’m applying what I learned right now, and I’m already beginning to reap the benefits. I’m convinced that I will make back my investment many times over.

Whether you’re interested in Location Rebel right now or not, check out the free Location Rebel Arsenal and case studies and see how others have achieved a location independent lifestyle. If you do take the dive, I promise you won’t be disappointed. I hope to see you on the inside 🙂

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Yes, this post contains affiliate links. But hey – I’m in the course (and even featured as a testimonial!).

To Recent and Unemployed Grads: Go After Free Work

free-workThis post may sound like crazy advice, especially coming from someone promoting making and saving some. But, since hearing about it a few weeks ago, I’ve been really intrigued by the idea of free work . This is something that I think would be great for someone who wants to improve their marketable skills, build a portfolio, make valuable connections, and find their way towards doing something that you love. I also think this is extremely valuable to 1) someone just out of college and/or 2) someone that can’t find a a job.

I was turned on to this idea by Charlie Hoehn, who released an ebook called “Recession Proof Graduate” (shown below). Charlie figured out how to get “free work” with some big names, which led him to gigs with Ramit Sethi, Tim Ferriss, and others. And he’ll be the first to tell you that he’s loved it, too. Here’s the full text for his ebook along with a YouTube video from his TEDx talk. Both are really inspirational with fresh ideas for graduates out there.

Charlie brings up a lot of great points about free work vs. internships. Here’s my favorite points:

1) Free work is much less formal than internships. This can work to your advantage to offer an employer/mentor a low risk, high reward tradeoff on your proposal. Essentially they have nothing to lose.

2) You can work remotely. This is great because you can work with anyone in the world from anywhere in the world.  No need to be strapped down to a desk.

3) You don’t have you be an expert. You just have to be good at something. Charlie admits that he’s not an expert in the areas that he’s worked, but that’s okay. He just needs to know more than most.

4) You can work with awesome people on awesome stuff. With internships, you may be competing against a ton of people for one position. But, with free work, you’re not vying for one spot. The proposal is what you make it, and who you contact is completely up to you.

5) Eventually, you can make money doing what you love. It won’t come right away (see definition of “free”) and it might not be a lot at first. But, is there really anything worth going after that’s more rewarding that getting paid to do what you love?

I can’t think of any video that’s resonated with me more this year than the TEDx talk by Charlie. He hit the points dead on about taking a job that sucks and planning to make a change to something better but never actually getting around to it (see 4:45 in the video). Before we know it, we’re in our mid-thirties with a wife, kids, and no opportunity to take chances and take on free work.

As for me, I have a few things in the works for how I’m going to implement this. As I see it, there’s almost no downside. I have free time around my 9-to-5 job, and I’d definitely like to take on some interesting work that will also help me develop skills. Just about any of these skills you can learn online could be something you could find free work for and eventually earn money doing.

For new graduates out there that haven’t found a job you love (or haven’t found a job at all), this type of thing could shape your entire life. Forget about going after the big paycheck. Forget about sacrificing the next 40 years to get to retirement. In just a few months of doing free work, you could be well on your way to being happy doing what you’re truly interested in in a matter of just a few months. It may not be easy, and it’s much less enticing than a $40k paycheck, but pursuing free work building up to something amazing (and potentially extremely profitable) for the long-term.

What do you think about “free work”? Have you have done something similar?

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photo by: billaday

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