Congratulations — you’ve reached a net worth of a quarter-million dollars. What do you do now?
As you build your wealth, your needs and challenges change. You — and your money tactics — need to change with them.
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Here are six money moves to get even richer after you hit that net worth milestone of $250,000.
In the early stages of saving and investing, the mission centers around forming good habits. These include budgeting, saving as much as possible, avoiding unsecured debt and getting comfortable with investing.
You’ve passed that stage. Now you need to get more strategic.
Start by setting a target. What’s the finish line? What net worth would let you quit your day job?
If you don’t know how to come up with that number, multiply your annual spending by 25 as a simple rule of thumb. But at this stage, you’re likely ready for professional help.
“When you reach $250,000 net worth, you need to meet with a financial planner,” said Melanie Musson, a finance expert with Clearsurance.com. “You’ve set a solid foundation, now it’s time to develop a goal for your future — and a path to reach that goal.”
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As investors make progress, they should keep aiming to invest more, not let their foot off the gas.
Charles Nemes, CEO of Nemes Rush Family Wealth Management, noted that reaching a milestone doesn’t mean you should lose sight of the fundamentals. “Saving first and spending second is by far the most successful way to achieve financial independence for you and your family,” he said. “Money that sits in a checking or savings account finds a way of getting spent. Move the funds to be invested and sequestered as soon as possible!”
The higher your savings rate, the faster you build wealth and reach financial independence.
Maybe you’ve gotten away with a $1,000 emergency fund up to this point. But part of a sound independence plan involves keeping enough cash so that you don’t have to raid investments early, when unexpected expenses rear their ugly heads.
Most households measure emergency funds in terms of the number of months of living expenses they can cover. Households with stable, secure incomes and steady living expenses can get away with two or three months’ worth of expenses. Those with unstable income or expenses should budget more, such as six to 12 months’ worth of expenses.
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