Little “Top Tips” to Help Build Wealth and Secure Your Future.
Nobody likes uncertainty. With uncertainty comes anxiety and that sense of things being a little too out of one’s control. Finance management can be one of the most stressful things to manage because of the unpredictability of costs and the costs of living.
There are some sure-fire ways to give yourself the best chance to create long-term wealth for yourself that is independent of job title, the latest fad (like crypto) or hoping your tick-tock or NFT career takes off.
Like many things, you can complicate the process, which makes creating any worthwhile result very challenging, or simplify it. This gives clarity and makes the objective easy to quantify.
Forming habits are the key here. Creating habitual responses to money and how you spend it or save it can be the difference between creating wealth for yourself or living hand-to-mouth for your entire life.
Building wealth over one’s lifetime ultimately starts with two things.
Increase the difference between what you spend and what you earn.
Save that difference and let it compound over time.
This first point can be done in two ways. You can opt for a higher-paying job, so your net income is higher. This is likely to come with added responsibility, longer hours, and more stress. As a second option you can mercilessly cut your expenses.
As we have shifted somewhat to a working life that is ‘lifestyle’ oriented, the idea of long hours, less time with the family and additional stress is not everyone’s cup of tea. The notion of cutting expenses can actually be quite cathartic if you objectively take to your spending habits objectively, you’ll find that perhaps you don’t need 5 different streaming services. Whilst this is a crude example, it adds up. Cut those five down to three and you’re saving about $3-400 per annum.
Remember little streams make big rivers when they converge.
This second option warrants a budget and spending some time noting and tracking what you spend over a week, a month, a quarter... so you can truly understand where your money is going. It is then quite easy to begin to eliminate what you really don’t need to spend on.
You’ll be surprised with a little bit diligence at creating good spending habits, that difference between what you earn and what you have left over will increase.
Saving the difference, and investing it, can be done in a multitude of ways. It can be invested in stocks, diverted into one’s superannuation fund, or spread across a portfolio managed by a financial planner. You can even take the cash and bury it or hide it under the mattress if you so desire (though these last two won’t return any interest) but the point is that by reigning in unnecessary spending and putting the money you save to work for you, you can create a sizeable nest-egg when you consider such things from a 25-year vantage point.
The key is to think about the 25-year plan. The $10 here and $5 there that you shave off your budget does not seem like much, but it adds up. And when it is put in a high performance fund that money will compound and return.
Before you begin such a strategy, consider getting the house in order by doing the following.
Pay off all your debt that doesn’t serve you. There is good debt and bad debt. Good debt is attached to something that appreciates, like a house. Bad debt cost you money, like a credit card.
Invest money wisely. Nobody has a crystal ball but throwing one’s lifesavings into Bitcoin in the present state is not a wise move. Seeking out a trusted professional is critical here.
Do a budget that you revisit regularly. Long-term views of a budget are what is needed here because you can spot trends easier. Reviewing your expense budget quarterly is a start.
Create a side-hustle. That hobby you have that you could potentially monetise for a bit of extra pocket money? It might be the time to start!
Establish a “liquidity” fund. Rather than putting any expenses that blindside you on a credit card, having a source of cash to deal with such expenses means you don’t lose more than you should to interest payments.
