Some of the luckiest people in the world are those who were taught as children or learned early in life how to save money and make it grow into wealth. This is not the case for many of us. Often we come onto the wealth making scene at later stages of life realising the growing need to plan for our retirement years.
Working to obtain wealth is one thing but knowing how to manage it productively is another. Someday, we will all want to retire and live in comfort. We may even want to leave a financial legacy to our loved ones.
This will not happen magically or without effort on our part. It certainly wont happen by living short-sighted. We must think to the future. If you are already in your midlife it is still not too late to create lasting financial security for yourself and your loved ones. I’ve heard it said many times by jaded individuals, “It’s all going to turnout how it’s supposed to.” That is a fatalist’s view. We can take our future into our own hands and plan for the life we want to live and someday leave to our family.
Let’s talk about five simple tips for growing your wealth that you can get started with right now.
1) Create a budget
It seems the majority of people I talk to about finances fly by the seat of their pants. They don’t have a budget yet they wonder why they never have money when they need it. Bills will arrive and they seem surprised by the timing or the amount. It’s similar to taking a road trip without a GPS, you will soon get lost. Tip number one is to create a budget that includes all your expenses (yes, even your Starbucks Run).
Don’t forget to allow for savings so that you can start investing to grow your wealth.
2) Live on less than you make.
That’s right; you don’t have to spend everything you earn. Over spending is your worst enemy for growing wealth. You absolutely need a budget! The budget you create can have a little fun money allocated but it’s vital that at least 10% of your income be saved as an emergency fund. This 10% nest egg is money that you could put into a safe investment for the future. For example a high interest bearing account. Zero risk with guaranteed growth into the future.
Delayed gratification isn’t a very popular concept in these days of instant gratification. However, it is one of the most important of the tips for growing your wealth. When you are ready to retire and enjoy time free from work you will be glad that you had a disciplined plan for a successful retirement.
3) Live Honestly – watch your credit
One of the five tips for growing wealth is to keep interest fees and credit to a minimum. The best way to live life is honestly. If you can’t afford to pay for that new dress or suit now, don’t charge it; or if you do use a now fee credit card and pay it off at the end of the month.
If you truly want to grow wealth it’s important to avoid paying unnecessary interest. Sometimes interest must be paid such as when buying a car or home however paying monthly interest because we’re living beyond our means is backsliding financially.
4) Pay off your car and home faster
This is just simple math. By making more than the minimum mortgage or car repayments you can save thousands of dollars in interest on these items. Would you rather pay interest or earn it? By paying off these large purchases sooner you reduce the interest you would pay and can start putting those savings into your own account and earn interest!
5) Start your own business
The tax benefits of owning your own business can save you money every year. Even when you are only working the business part time you can claim part of your utilities, computer and phone expenses. Many people do not understand how much money they can save by keeping track of their business expenses. Some of these deductions may depend on what kind of business it is that you are operating.
Another plus about having your own business is that you can use some of your extra cash flow to build up your investments. Yes, the benefits of being an entrepreneur are huge.
These five tips for growing your wealth will set an excellent tone for your retirement years. If you need help getting started it’s a good idea to consult with your accountant.
PLEASE NOTE THESE ARE TIPS NOT FINANCIAL ADVICE.