7 Steps To Get Rich and Stay Rich, According to Money Expert Vivian Tu
This prompt is not a text that requires paraphrasing.
ALL you have to do is STRIIP. STRIIP is an acronym and an easy-to-follow step-by-step guide on how to be really smart with your money.
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You can begin this week.
Save
Setting up your emergency savings fund is Tu's first priority.
"What I always recommend is the first step is to save three to six months' worth of your living expenses in a high-yield savings account," she said.
If you don't have a emergency fund in place, a string of unfortunate events can quickly pile up and leave you in a tight financial spot. For example, if your roof collapses, your car breaks down, or you suffer a sudden injury, you'll want to ensure you have the funds to cover these unexpected expenses, or they could end up making your financial situation even more dire.
You also stressed the significance of keeping this money in a high-yield savings account rather than a traditional savings account.
“The main reason we use a high-yield savings account is to make sure we can earn the highest interest rate possible on our savings.”
Remember, paying off debt takes time and discipline, but with a solid plan and determination, you can achieve financial freedom and live a more debt-free life.
The "T" in Tu's STRIIP method stands for "total debt."
We have to look at debt as a complete picture," she said. "My top suggestion is to prioritize your debt by interest rate, starting with the highest rate and working your way down.
Keep making the minimum payments on all of your debts, and with any extra money you have available, apply it to the debt with the highest interest rate.
When you tackle your debt in this way, not only are you paying off your debt as quickly as possible, you are also paying the least amount of interest.
Plan For Retirement
The "R" in STRIIP stands for "retirement."
“Trust me. I highly suggest using tax-advantaged accounts, such as a 401(k) through work or a Roth IRA, even if you open one personally. These options are also a great way to reduce your taxes now and invest in your financial future.”
Invest
accounts.
People make a big mistake by putting their money in those investment accounts or just leaving it in cash," Tu said. "That money won't increase in value. You actually need to invest it.
She recommends investing in index funds that track the S&P 500 or the total US stock market, or mutual funds such as a target date retirement fund.
People often get confused, but it's actually simple: calculate the year you turn 60, then find the target date retirement fund that best matches that year. "Once you invest in that fund, it will adjust over time as you age to fit your needs at a specific age.
Another option to consider is choosing a brokerage that offers a robo-advisory service.
“What you'll do is take a short online quiz to tell us about your financial goals, when you want to retire, how much you earn, and where you live, and then we'll create a customized investment plan for you that's tailored to your needs," Tu said. "It's very straightforward, and it allows you to be a hands-off investor."
Prioritize Increasing Your Income
The second "I" in STRIIP stands for "income."
I'm sure you've heard the stereotype that millennials can't afford homes because we're obsessed with avocado toast," Tu said. "Saving money is essential, but making an extra $5,000 per year by asking for a raise is a lot simpler than cutting $5,000 out of our discretionary spending each year.
When you earn more money, you can spend it on personal expenses without feeling guilty about it.
I want to make sure you're still enjoying your life while being financially responsible, so it's crucial to prioritize your income," he said. "Request a 10% to 15% raise every single year. Am I saying you're going to get it? Not always, but it's really important to keep asking, because if you don't ask, you don't get.
“By doing this, you're ensuring your manager understands what you're looking for in terms of job rewards and has insight into your professional aspirations.”
Plan
The last step of Tu's STRIIP strategy is to create a comprehensive financial plan tailored to your unique goals.
You can't ride off into the sunset into a happy ending without having a plan, and it doesn't need to be the same as what someone else wants. For some people, a happy ending could be moving to an Airstream by 30, while for others, it means retiring at 60 and being able to support their kids financially, owning a vacation home, and always being able to take care of their dog, Fido.
Whatever your personal goal is, take a step back and calculate how much that will cost each year and determine how much money you would need to have saved and invested so you can reach that goal through interest or capital gains.
Bonus: Collaborate with Others Who Can Assist You in Reaching Your Goals
Tu's last step is to seek collaboration, not rivalry.
Don't view someone else's success as a personal failure," Tu said. "When I was in my early 20s, I had the mindset that if someone else achieved success, it meant I never would. I felt that there weren't enough opportunities to go around, and if one person got promoted, I was behind for good. ... I think that sentiment around money comes from not feeling good enough.
You believe that everyone has the potential to be wealthy and remain wealthy — but you need to surround yourself with the right people.
You deserve a wealthy life, and it's going to be a lot simpler if everyone around you is supporting each other instead of tearing each other down," she said. "Yes, I know this might sound a bit too nice, but in the long run, you're not trying to move quickly, you're trying to make progress, and it's always easy to make progress in your life with friends by your side.
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Rich people sometimes cleverly accumulate wealth, but most people fail when it comes to maintaining their finances. Fortunately, Vivian Tu shares her Seven-rules approach to making millions and staying rich.
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