Building Wealth with Extra Cash

Tax season is over for most.  Maybe you’re looking forward to a refund check, or have already received one – what will you do with that cash? Are you ready to think about investing that money so it can grow for you?*  

Investing for wealth growth is a different mindset than putting money into savings. Both are important.  Having emergency savings for sudden or unplanned expenses, and planned savings for anticipated purchases, are both smart financial strategies. However, investing is a method of building wealth over the long term so that some of the money you have worked for actually works for you.  

There are many ways you can invest. Some common examples are financial instruments such as stocks, bonds, and mutual funds. You can also invest in real estate by purchasing a home or rental properties.  Some individuals invest in tangible goods, like art, coins, or antiques. Starting and growing your own business, or helping to finance someone else’s business are also considerations.  

How can I have enough money to invest? The key to building wealth is to earn enough to cover expenses and savings goals, with enough left over to invest. The good news is that you don’t need a lot of money to start an investment plan. Many financial institutions allow you to open a small account and start investing by buying one stock share at a time, or in small dollar increments. 

Regardless of the investment, there are several questions to ask yourself before investing your money.     

1. How much risk am I comfortable with? Risk is the possibility that the value of the investment can decrease, or increase less than expected. Investments carry different levels of risk, and someone who is uncomfortable with risk should pay careful attention to their choices.  Unlike a bank savings account which is insured against loss, investments can decline in value.  

2. How much time and research are you willing to put into your investment strategy?  Rental real estate and collectibles can require a significant amount of time and skill. A beginning investor might want to consider an index mutual fund, a collection of stocks chosen based on widely used stock indices. Mutual fund managers take care of the investment selections, and the fees are fairly low.  

3. How much do you want to be personally connected to your investments?  A family home, art, or collectibles can bring enjoyment and fulfillment which cannot be measured in dollars. Owning rental property often means managing repairs and negotiating contracts. These are both very hands-on, as opposed to stock investments that can be managed by a financial professional.

Investing can be rewarding and challenging. It is important to research choices thoroughly and be comfortable with risks. Despite the risks, building wealth opens up opportunities for your future and the future of your family. It can expand your ability to start a business, feel financially secure, travel, give to charity, pay for education, and provide for the next generation.

Learn more about UME’s financial wellness programs at

*This article is for general information and not intended to be investment advice.  For guidance about creating a personalized investment plan, please consult a licensed investment advisor. 

Dealing with Debt

If you have been keeping up with my blog articles, I wrote two blogs about inflation. That is because I am concerned – between the economic stimulus money, the advanced child tax credit, and increased prices, people are over-spending. Additionally, there are individuals that count on their tax refund check and may not be getting it, so I want to provide you with 3 tips for dealing with debt. 

Step 1: Know what debt you have

A good starting point is gathering information on the debts that you have. This may come from loan agreements in your files or statements you received in the mail. Another source of gathering this information is your credit report, which can be obtained from The Your Money Your Goals toolkit contains a Debt Log tool to make it easy to assemble the information in one place or you could gather all the information on a piece of paper. Information needed includes the name of the debt, payment due, total amount left to pay, and interest rate. 

Step 2: Develop a plan

You have all the information, now what is your plan? There are two strategies to tackle debt, the snowball method or the highest interest method. There are pros and cons to both. The debt snowball focuses on getting rid of the smallest debt. Once it is paid off, you can apply the money going towards that debt to the next lowest debt. The other strategy is to focus your efforts on paying the debt that will cost you the most money (the highest interest). You can determine what will work best for you and your situation. What’s more important to me is that you have a plan and develop a SMART goal. Here is a good tool to develop SMART goals.

My Extension colleagues from Utah State University developed a program that can assist in developing an approach to tackle paying off your debt. It is called You can enter information about your debts and explore scenarios to customize your strategy.

Step 3: Assess along the way

It would be nice if life was perfect, but it is not. You may run into bumps along the way such as an unexpected car repair, broken appliance, perhaps you had to change jobs – don’t worry, life happens. As you try to figure it out, return to the basics. Are my purchases addressing my wants or needs? You know the answer to that question. Small decisions add up quickly, such as eating out less and choosing lower cost options. As your situation stabilizes, go back to step 2 and revise your plan. 

Now I could add a step 4, but will use this one as my closing. Believe in yourself. No one knows you better than you do. Sometimes it can be difficult to see the light at the end of the tunnel. Remember, you can do it! Stick to your plan and you will get there.

Cash or Charge? Credit For Young Adults and Teens

Credit is the ability to borrow money to purchase goods and services.  A credit card gives you access to credit, and when a credit card is used to make purchases, the amount spent becomes borrowed debt that must be repaid. 

A credit card can be an easy way to pay for things you want or need, especially if you don’t have enough money with you at the time.  However, credit cards can also create the temptation to buy things you might regret spending money on later. Saving money first before buying an item reduces the risk of overspending, can cost much less, and could even earn you a little money, but also means a delay in making the purchases you want.

Usually, when the full balance of a credit card is paid off when the bill arrives, there is no additional cost.  However, when the amount borrowed is paid incrementally, interest will be added to the amount due, and interest can be costly.  

Here are some things to think about before getting your first credit card, or adding another. 

Some advantages:

  • A credit card, used wisely, can be a good way to establish credit
  • Credit is useful if you need to make an emergency purchase
  • Credit allows you to buy expensive items without having to pay for it all at once
  • A credit card allows you to avoid carrying cash with you
  • Some credit cards offer bonuses, such as cash back or discounts on travel

Some Disadvantages:

  • You might overspend
  • People tend to buy on impulse, without shopping around or check prices as carefully
  • You will pay more for what you buy when interest is considered
  • Owing money can be stressful
  • Making minimum payments required by credit card companies can mean taking years to pay off the items you are buying

Some things to ask yourself before using credit to borrow money:

  • Do I really need this now, or can I wait and save for it?
  • How much will this cost me in interest? Is it worth it?
  • How long will it take me to re-pay?  Will I need to buy more before I pay it off?
  • Can I afford the monthly payment?

Credit, and having a credit card, are privileges that are kept by demonstrating the willingness and ability to pay off any debt incurred. It is important to think through the use of credit and credit cards, and make smart decisions before obligating yourself to pay back large sums of money.