If 2020 has taught us anything, it’s to have a back-up plan for when the unexpected occurs. Many people have one source of income from their full-time job. But what happens if something beyond anyone’s control (i.e., a global pandemic with no end in sight) occurs and you lose your job? There goes your source of income, but your monthly expenses and bills will continue to be due.
Having additional streams of income set up will give you a safety net and financial security.
To help simplify things and give you peace of mind when it comes to financial health, try using the “Three Buckets Principle” of money. Here’s a general breakdown of these buckets:
Bucket One: Emergency Funds – Financial advisors recommend having a minimum of three to six months of all living expenses saved in case of emergency. This will help you get by for a bit if you lose your job unexpectedly without going into debt. These savings should be liquid funds, meaning you can access them without penalties or risk.
Bucket Two: The Goal Bucket – Think of this as your short to mid-term financial goal bucket. Money used for a down payment on a house, college savings or even a special vacation or home renovation project would fall into this category. Consider money in this bucket as “disposable income” – the leftover money after you’ve attended to your monthly bills and buckets one and three.
Bucket Three: Retirement Bucket – It’s never too early to start saving for retirement, so you should set this bucket up as soon as you begin working. You should aim to save 15-20% of your gross income for retirement. If your employer offers a 401(k) plan, you should contribute some money there (or a Roth or traditional IRA) to maximize your investment.
As soon as you enter the workforce, you should aim to start filling buckets one and three right away. Once you have them filling nicely, you can start filling bucket two. It’s more important than ever to have a hefty emergency fund during unpredictable and trying times such as now. By following the Three Buckets Principle, you will learn how to make ends meet even during unsettling times and maybe even how to successfully save for your future.
But How Can I Make More Money NOW?!
If you have some disposable income and you’re looking to put that extra money to work for you, so it makes you even more money, consider real estate investing.
If you have the means to do so, buy a property and then rent that property for an additional source of income. It goes something like this. You buy and property and your mortgage is $1,000 per month. You rent that property to a tenant and they pay you $1,300 per month. Viola, you just started making an extra $300 per month in additional revenue.
We know, real estate investing isn’t that easy, right? Probably not. So make sure to speak with your financial advisor about the risks and rewards to ensure you make an educated decision. If you decide to go that route, you might want to also talk to a property management company who can help you with all the details of owning an additional property, upkeep, collecting rent and more.
Need help improving your credit before real estate investing can be a serious option for you? We can help!
But, what happens if you don’t have disposable income that you can put to work for you, so it makes you more money? What if you are barely getting by and need to make more money just to survive these difficult times?
It might make sense for you to consider a side hustle. Pursue a passion, or dream that you’ve always had, and see how if it can turn into a revenue stream (no matter how big or small). Or, look for part-time work on the weekends, or maybe try Uber, or LIFT in the evenings. There are an endless amount of options when it comes to side hustles and part time work, so don’t rule those out as a possibility to help you get through challenging times.
Improve Credit – Your Trusted Credit Repair Consultants
The credit experts at Improve Credit are not your typical credit repair consultants. Not only do we get the job done right for you the first time with proven strategies, but we also educate you along the way to ensure your future financial success. We are here to help offer you new beginnings and education to foster financial freedom in the new year.
If you find yourself in hard times right now and in need of some financial freedom, Improve Credit is here to help. We offer a variety of services, such as credit counseling services and personal credit repair, that will help you learn how to better budget your money and improve your credit.
Led by Wanda Strickfaden, a leader in the field of credit repair in the North Carolina region, the Improve Credit consulting firm has surpassed the 25-million-dollar mark for total savings earned by their customers. Allow Wanda and her team of credit experts to help educate and guide you into financial freedom.
Please contact us at (704) 877-8739 and schedule a free consultation today. We look forward to hearing from you soon!