No matter how much wealth you grow, if you don’t put it into good use then it is like filling a bottle with a hole, it will never be full, no matter how much you fill. Have you ever thought “Why rich stay rich and poor stay poor?” Well, the answer is money management. Money is an essential part of all our lives. But earning money will not make you rich.
We earn to live and live to earn.
Below are some simple yet effective strategies to help you grow your wealth.
Re-analyse Your Finances (And Refinance Debt)
A financial emergency is an ideal opportunity to return to the planning phase and reconsider your present financial situation. Is your emergency saving too little? Is there more risk in your portfolio than you’re OK with? Do you have more debt than you should?
Scrutinize your accounts to find ways in which you can save money—either immediately or over the long run. For instance, now is an ideal opportunity to:
- Renegotiate your mortgage to a lower rate: Interest rates have fallen tremendously. In case you’re hoping to cut your mortgage payment, call your bank and check whether you are fit for renegotiating. Simply make certain to factor in shutting costs, which could eat into your reserve funds.
Review regularly the performance and utility of the various steps you have taken to grow your wealth. Make changes/ adjustments as required.
Monitor Your Spending And Maintain A Monthly Budget
Truly, it sounds easy and basic – and it is. Yet it’s so crucial to attain financial independence.
Your income is a basic segment to your monetary life. If you are unable to raise your income over time, it would be difficult to increase your wealth.
Start by monitoring what you earn and spend. Is your financial situation always tight at the end of the month? Or are you able to at least save a little and not worry for your basic day to day expenses?
If at the end of the month you are broke, then you need to plan to spend your money more wisely. If not then you can think of saving more than the previous month. Ideally you should have a habit of saving a percentage of your earnings first and then utilize the balance for your needs.
You can save by not spending impulsively. Perhaps, stop dining out every weekend, and try to shop when there is a sale or discounted. Limiting your spending on these little expenses every month can help you save and grow your wealth in long run.
Maintaining a budget can be helpful to make sure you are spending on what you actually require. A budget can be as simple as two columns – one listing your income and the other listing monthly expenses such as debt repayment obligation. It can also help with prioritizing your needs and skip avoid spending on items that are not needed or something which you don’t truly care about.
Investing Your Income
Financial success is a choice. It results from the many small decisions you make each and every day.
Investing and earning returns from the investment assets is definitely necessary to grow your wealth. Try investing your savings in various investment vehicles, so that you can spread you risk without compromising your returns. Be extremely cautious about where you are investing. Your plan can consist of paper assets, owning and running a business, real estate or any combination of them.
If you want to live a decent life with basic comforts after you retire, you can invest 15 to 18 percent of your income to your retirement account and that will do.
But if you want to achieve financial independence and not worry about the pay checks, you should try investing a minimum 35 percent of your income or even start your own business to achieve your retirement goals earlier.
Earning More Money
You can try reducing what you’re spending or increase your savings. But, if you don’t earn enough, you will not be able to implement any of the plans mentioned in the previous sections. Find alternatives to earn passive income. Find ways to earn a second source of income. However, all these should not come at the cost of your personal or family life. After all, building wealth without having a quality life is meaningless at the end of the day.
Many people don’t this about this as they feel the numbers on their pay check are fairly out of their control. As a matter of fact, this is false. You can play a vital part in deciding the amount you want to earn every year.
The right tactic for making more money looks different for everyone, depending on your goals, needs, challenges, and opportunities. You can increase your income through various ways including changing jobs, getting a raise, building your own business etc.
Build More Assets
The next thing you should do is consider using your savings to invest in assets. Money kept in savings is not advisable because savings get spent but invested money multiplies. You can start by looking into investments such as real estate and gold.
You can purchase land. Land is an asset which is becoming scarcer. Consider cities like London, New York City, Los Angeles, Paris, Tokyo, Mumbai etc. A piece of land in these cities are the rarest of rare items. One good idea of land investment, is to keep buying land ‘just on outskirts’ of important cities.
For some, Rental Properties is the best income generating asset. Why? Because it is one asset which generates the best passive income. The rental yield from a real estate property also increases with the rate of inflation, thus helping you stay ahead of inflation.
Say NO to Debt
Each time you take a loan, you are really looting your future self. Debt robs you of your present and future pay. Debts can often confine you from developing. And, anything that prevents you from growing ought to be avoided. Debts are common because of the ways people manage their money. Stop spending unnecessarily, and this will help you spend within your income.
But remember that money can’t always buy happiness. Your friends, family, and career are all just as real as cold hard cash, they are necessary elements to living a full life. Even though your goal is to grow your wealth, but it should not be the only goal. In the pursuit of wealth, make sure you’re not overlooking or risking other aspects of your life.