Not everyone can be filthy rich but making the most of what you have will help you reduce your money worries and achieve your financial goals.
When it comes to money, most of us would like more of it. We don’t necessarily want to be filthy rich, with a 7-bedroom home and a fleet of supercars in the drive, we just want to be able to live our lives without having to worry about where the next penny is coming from.
There are plenty of resources out there containing simple and practical financial tips, such as this guide from Wonga, but relatively few are aimed specifically at growing your wealth and making your money work for you. So, what simple changes can you make to grow your wealth? Here’s our guide.
- Pay yourself first
Before you start thinking about how to grow your money, you need to make sure you have enough in your coffers to provide protection against unnecessary expenses and periods of unemployment. Without a safety buffer in place, you’ll have to eat into your savings and investments when things do go wrong, and your wealth growing efforts will be back to square one.
The secret is to treat savings like any other essential expense, such as rental or mortgage payments. Set up a direct debit that moves a proportion of your pay packet, ideally around 10-15%, straight into your savings account as soon as your paid. Stick to this strategy and your savings will quickly and continuously grow.
- Pay off and steer clear of debt
Debt is the devil when you’re trying to grow your money. Having to pay interest on debts is the single biggest barrier to wealth for most people. While a mortgage is an example of a debt that, in time, may help to improve your wealth, very few other debts are quite so beneficial. Credit card debts, overdrafts and loans are the worst offenders, so pay them off as soon as you can, focusing on the highest interest debts first. Once your debts are repaid, leave credit facilities well alone.
- Spread your investments across different asset classes
Investors who have money primarily invested in stocks and shares will have seen just how risky putting all your eggs in one basket can be, with the ongoing coronavirus decimating the stock markets. To reduce your risk, you should spread your investments across different asset classes such as shares, property, gold, cash, bonds and other assets.
- Little and often
When saving and investing, you can make the most of your income by being regular. Even if you only have a small amount of money left over each month, setting up a standing order to whip that money out of your account before you even know it’s there is the way to go. When investing in stocks and shares, this approach will also allow you to mitigate the ups and downs of the stock market, as you’ll be buying in at different levels every month. That will help to smooth out stock market volatility and lead to decent returns.
Have you successfully grown your wealth? What strategies worked for you? Please share your tips in the comments below.