Tips on How to Build Your Wealth
No matter where you are at in your life, it is always a good time to start putting money away, investing and building your wealth. This does not mean that you can never buy something fun again, it just means that you should be mindful with your money.
Here are my top tips for building your wealth:
Pay off your credit card
First thing’s first, pay off your credit card and try your best to live on savings. While it may mean that you need to live a bit more of a frugal lifestyle for a few weeks/months, it’s best to get on top of this so you don’t end up wasting too much money paying interest.
Credit cards are vastly used in Australia to make not only purchasing easy, but also racking up debt easy. Credit cards come with interest, you are losing the money that you could have been saving. Finder has reported that there are approximately 13, 668, 490 credit cards in circulation and the average balance is $2, 868 at any given time.
I suggest keeping track of your expenses and getting rid of anything that you don’t really need for now. For example, you don’t need three streaming services, choose one. Try to eat out a bit less and cook at home more. See where most of your money goes and make a plan to reduce it, especially while you are paying off your credit card.
Budget
Now it is time to budget as you need a plan in place to save money and build your wealth.
* Open an additional saving account where you can transfer the “savings” portion of your wage each week. Having it in another account helps due to the “out of sight, out of mind” mentality
* Have a realistic savings goal in mind. For example, is it possible for you to save $5K a quarter or more? Well do it. Try to save as much as you can
* Don't forget about unforeseen expenses like a car service. It doesn’t hurt to put extra money aside for items like that
Building wealth
At any point it is a good idea to see a financial advisor who can help you get a strategy together. There is more than one way to build your wealth so, just find a strategy that suits you.
Here are some things to consider:
* Check in on the things you already have: Is your bank charging you too many fees? Is your health/car/business insurance excessively high?* Is your interest account still bringing in the interest initially promised?Look for savings accounts that offer your interest
* If you don’t need access to all of your money right now, consider putting some of it into a long term account as the interest is often higher
* Look at property and blue chip shares which are generally the safer ones to invest in. You can also invest in high risk shares but consult a professional first
* Consider investing in property. Your first home may come with a good first home buyer government scheme, if you are looking to invest, new house and land packages often come with tax benefits
* Make sure you have money going into superannuation
Gerry Incollingo, Managing Director of LCI Partners
