Compulsively checking your bank account balance and feeling broke is a vicious circle, although more common than you think. People often associate how much money they have with how much money they have in the bank. While that is of course a large part of it, here are a few reasons that you probably have more money than you realize, it is just hidden away creatively.
You Own a Home
If you own a home, even if it is not paid off, it can be considered an asset that contributes to your overall net worth. Equity refers to the money that your home earns while you are paying down the mortgage, the difference between what it is worth and what you owe. Although tapping into this resource is not as instantaneous as swiping your debit card this still qualifies as money you can get your hands on if you ever need or want to.
A home equity line of credit is a type of loan where you borrow money from the value of your home. These funds can be used for things like home renovations, to pay down higher-interest debt, or even assist with sending a child to college.
If you want to see the top choices and compare rates and lenders do your research before deciding. You can review a guide that compares rates on home equity lines of credit from major lenders. Even if you never tap into this money, it still belongs to you and contributes towards the fact that you have it in your portfolio.
Your Credit Score is Healthy
A healthy credit score is a sign of overall financial literacy. People who nurture their credit score and know that it really holds the key to so much when it comes to money are typically in better standing than those who ignore it.
When you plan your household budget you need to make paying down debt a priority and doing so will improve your credit health. While having a favourable score does not put money into your pocket, it does make a difference in how much you spend in certain areas, which will impact how much money you have.
For example, those with lower scores or little to no history are not desirable candidates for things like rental agreements and car leases. You may end up paying more money in interest or your monthly rates simply because the lender cannot establish if they can trust you or not. This fact alone means that you have more money than you think you do if you are not wasting it on higher premiums because of poor credit.
You Invest in Retirement
Making contributions towards any type of retirement account absolutely counts as money that you have. While you are not going to be able to get a hold of this money until a certain period or not without penalties for early withdrawal, it all belongs to you. By maxing out your contributions you will also earn the top amount for interest and that is just free money.
If you work somewhere where your employer will match your contributions to their sponsored programs you should do what you can to hit that mark because again, it is money given to you essentially free of charge.