We are often so busy living our day to day lives, entrenched in the cycle of working, earning, paying bills, saving, spending that we neglect to find opportunities to make more money over and above our salaries. Most of us are fairly diligent about paying our debts and keeping our spending within our monthly budgets, but generally, the idea of actively building wealth tends to allude us as the task seems far too daunting to even try.
Building wealth is about setting your financial goals and actively chasing them by yourself and for yourself. It’s a strategy to use in order to gain valuable resources to improve your quality of life. Simply put, its making extra money so that you can settle your debts quicker, save more and have money for your retirement and to ultimately be able to spend more in the long run.
Its therefore becomes important to remember the simple fact that wealth is not only built by keeping a tight budget and cutting back on expenses, but by actually going out there and finding ways to make your money grow. It’s about planning how to bring money in and not just how to stop money from going out.
There are many different ways to do this, but first you need a plan – a financial road map. You need to have a good understanding of your current position: Ask yourself these questions; what money is coming in and what money is going out and where is it going? Wealth Platform is an amazing tool you can use to get your basic accounting started and provide insight into your current financial situation.
Next, you need to start listing the ways you can save more and earn more:
- Live below your means – spend less than you earn. This is done by downsizing and cutting out what is not necessary. If you wasting food or not using the majority of materials or resources you keep buying, then you can certainly reduce the amount you buy or perhaps even do without them.
- Prioritise your debts – whether these are debts you have accumulated over the years or debt you about to go into, make it a priority to sort out payment for these debts, before you plan to spend your money on anything else . Having a bad debt history is more detrimental to your future than you may think.
- Go easy on your credit card – for the same reason as the above, use your credit card for emergencies only and pay it back as soon as possible. Alternatively, rather build an emergency fund so you do not ever risk going into overdraft. People are still being lured into the idea that what they spend on their credit card is theirs to spend. It’s not. Unless you are always in the green, all you are doing is spending the bank’s money and accumulating more debt through the interest on money that you will owe.
- Save now for tomorrow – This cannot be emphasised enough. It may seem completely unnatural to think about your old age in your youth, but unfortunately it’s imperative that you do. Start saving for your retirement immediately if you haven’t yet done so. The more years you spend saving for your retirement, the less worries you will have when you are too old to do anything about this.
- Use your skills – Apart from your day job, you no doubt have many additional skills that you can put to good use. Creating multiple income streams will allow you to pay off debt quicker and accelerate your savings account. Not only does it give you a bit of security should you lose your salaried job, but you might also discover more lucrative opportunities and your true passion.
- Invest, invest, invest – Let a financial adviser and your money work for you. The simplest way to appreciate your money is to invest it, be patient and let it grow. So many people who don’t have a lot of money to spare, shy away from investing because of how long it takes to grow. However, as with investing in your retirement, it’s a long term goal and something you will be thankful you did in years to come.
‘Personal finances’, ‘investments’, ‘budgeting’, ‘wealth management’ are not words to be intimidated by, but words that should motivate you to take action.
While you may feel you cannot know everything about the money you earn, it is important to understand the basics. Then find yourself a reputable company, like Advisa, that you can trust to guide you in the right direction towards building your financial wealth.