8 Simple Tips for Successful Wealth Creation
The concept of wealth creation can be daunting, especially for those who currently have nothing in their bank accounts or have accumulated debt over the years. There’s good news, though! Creating wealth isn’t as difficult as it may seem.
Sure, it takes some strategising and dedication, but if you follow these tips for successful wealth creation, you can maximise your earnings and achieve your goals for a financially-stable future.
Earn Money & Focus on Saving
This tip may seem like a no-brainer, but it’s still worth mentioning; the first step to creating wealth is to earn money and do whatever you can to save it. You obviously can’t save what you don’t have, so before anything else, lock down a job that allows you to increase the current balance of your bank account.
Once you start earning regular paychecks, you can start saving. Even if you save a small percentage every month, it can grow to a substantial sum over the years, especially if you take advantage of company-operated retirement and investment programs.
Make a Plan & Set Attainable Goals
Establishing a financial plan with attainable, achievable goals is a great way to begin your wealth creation journey. If you have no idea how to do this, you can hire a financial advisor to help (more on that later).
By setting goals, you’ll have a clearer vision of what you want to achieve financially, whether it’s in the short-term or long-term. Once goals have been set, you can then create a plan that allows you to achieve those goals.
Remember, everyone’s financial goals are different. Yours may be to save for retirement, or perhaps you want to focus on paying off your debts. Whatever your goals may be, try to be specific and focus on realistic, attainable tasks that can actually be accomplished if you stick to your plan.
Start Budgeting
The only way to truly save is to establish a budget (and stick to it). By managing your cashflow, you’ll increase your chances of achieving your financial goals and saving for the future.
The first step in creating a budgeting plan is to track your spending. This allows you to see where your money goes each month, giving you a chance to cut back on unnecessary expenses and avoid overspending.
It’s best to track your spending for at least a month and keep track of ALL your spending, even your morning coffee runs. There are plenty of apps to help with this task, but you can also track your spending the old-fashioned way with pen and paper.
From there, you can break down your spending to find unnecessary expenses that can be avoided. For example, instead of spending $7 on Starbucks every day, which amounts to $2,555 per year, make your coffee at home!
Form an Emergency Fund
Dealing with an emergency is one of the biggest obstacles to wealth creation. Emergency spending, like paying for a car repair or replacing a dishwasher, is something that everyone should be prepared for.
The best way to prepare for an emergency is to set money aside that’s specifically meant for emergency scenarios. That way, you don’t have to pull money from your savings or use a credit card when you encounter an unfortunate event.
The best way to build an emergency fund is to set an automatic deposit from your paycheck into a separate account. You can do this every month or every week, but the goal is to accrue enough money to cover unforeseen expenses.
Automate Your Money-Saving
When it comes to saving money, there are plenty of ways to automate your saving and budgeting efforts so that you don’t have to lift a finger. By automating your finances, you might not even notice that you’re saving money!
The best way to do this is to set up automatic transfers from your checking account to a high-yield savings account. You can also divert a small percentage of each paycheck to a savings or retirement account.
The general rule of thumb is to divert 20% of each paycheck towards a savings account, and this can include emergency funding and retirement. If you’re not able to spare 20% of each paycheck, no worries! Even 5 or 10% of each paycheck can add up over time.
Make Smart Investments
Investing isn’t something that you can do at the beginning of your wealth creation journey, but eventually, you’ll have saved enough to invest some of your hard-earned money.
The key is to create a well-rounded investment portfolio that includes a diversified range of stocks, bonds, and mutual funds. Never put all of your money into one investment; focus on different types of investments to lower the risks associated with a downturned market.
Focus on Paying Off High-Interest Debts First
These days, most people have some form of debt. Whether that’s good debt (like a mortgage) or bad debt (like a maxed-out credit card), it’s best to focus on high-interest debt before anything else.
If you’re struggling to pay off your debts due to high interest rates, there are a few options to alleviate the process. You can apply for a balance transfer, which allows you to move your debt from a high-interest card to a credit card with lower interest rates.
Another option is to apply for a debt consolidation loan, but this should only be considered if the loan offers lower interest rates than the debts you intend to consolidate.
Talk to a Financial Advisor
Teaming up with a financial planner or advisor is a great way to get some insight into different options for wealth creation. Financial planning experts are trained to help clients manage money more effectively to achieve specific financial goals.
Whether you need a financial expert for budgeting, debt consolidation, or retirement saving, Sterling Grange can help. Get in touch today
