Money isn’t just something that can help you buy necessities and luxuries. This tool can help you reach your goals. It can offer stability and comfort for your family, make planning a lot easier for the future and enable you to save toward important life milestones.
If you want to achieve these things, though, you’ll need to go beyond earning money from a job or a business. You need to take measures to make your hard-earned money work for you.
Here are a few ways to slowly build your personal wealth:
- Invest Your Money Wisely
The term “investment” is a broad topic. There is a lot you need to learn and do before you can sit down and call a particular investment a wise decision.
Bonds, stocks, equities, mutual funds, life insurance with investment programs, exchange-traded funds and unit trusts are just some financial instruments that can help your hard-earned dollars grow. You, however, have to learn how they work first.
You can accomplish this by staying up to date with the state of the economy in your country. Read up on what’s changing and what you should expect in the near future.
Here’s another important note: do not invest your money in a financial instrument you do not fully understand. If someone recommends you to invest your dollars in a new crypto coin or an investment opportunity promising you the life you’ve always wanted, stop and think. Do your research before taking the plunge.
- Automate Your Savings
Your savings, along with how you structure them, are a great way to make your dollars work for you now. If you’re thinking of buying a car or purchasing a house in the future, you don’t want the hassle of scrounging around for money. You also don’t want to get into debt by unnecessarily getting a loan.
The solution, therefore, is to automate your savings. This will help you save thousands of bucks down the road.
Why automate anyway? Can’t you just save whenever you want (or feel like it)? Money management, for many people, is about as enjoyable as cleaning out a garage or a basement. Never attempt to convince yourself to save money every time you’re paid. Instead, establish an automated system – and you’ll never have to think about saving it.
The great thing about an automated saving system is that your bank account does this job for you. You don’t have to press buttons or add reminders to your calendar once you’ve successfully set up the system.
When dividing your monthly paycheck, create the following buckets:
- Yourself (yes, you pay yourself first)
- Recurring monthly services
- Sub-savings accounts
Then, begin allocating your hard-earned dollars on bills and fixed costs that you can’t use a credit card for. Make sure these withdrawals are automatic and factor in the remainder of your automatic payments from this point.
From here, arrange an automated payments scheme using your credit card for services, such as gym memberships, Spotify and Netflix. Just make sure that you pay off your credit card bill in full each month.
Next, take full advantage of your investments, especially the ones you can max out on, such as your 401(k) and Roth IRA.
Now, think about the things you want in the future and what you’re going to spend every month. Establishing automatic payments into sub-savings accounts is like giving your future self a nice gift.
Keep a close eye on your system over the next several months and fine-tune it according to how you live. When you have everything automated, you shouldn’t have to worry about saving again until your income rises.
- Live Below Your Means
You need to manage your expenses to make room for savings. Some things you do mindlessly might be eating up a large chunk of your overall budget. Daily trips to Starbucks for your favorite latter can pile up. Staying at a hotel every month to enjoy a “staycation” can ruin your finances.
Live below your means. Instead of hitting the coffee shop every day, invest in a coffee maker – or better yet, just drink water. If you want to do a staycation, stay at a friend’s house or just chill in your living room.
- Create an Emergency Fund
Financial emergencies, such as a job loss, a medical procedure or a car repair, can quickly put you into debt and wipe out any progress you’ve made toward growing your money.
You can make your money work for you by creating an emergency fund. If an emergency does show up, you could use that fund to pay off the expense and regain control of your financial situation.
Be smart with your money. Take note of these financial tips to make money work for you and achieve your goals in life.