While it would certainly be nice to receive an inheritance of some kind or have a high paying job, it’s really the little things that will determine how wealthy most of us end up being. Our money habits usually make all the difference and often determine the difference between living a prosperous life and living a life full of constant financial stress.
Here are 4 ways to start building wealth no matter what stage a person is at in life.
1. Reverse thinking
When the majority of people get paid, they typically spend a little money first, pay their bills, and then save what is leftover. This thinking is backwards because we should really be putting our financial goals first. For example, we should be saving first, paying bills second, and spending what we have left.
When we put our saving goals at the forefront of our finances, we will have more control over our spending and our ability to save. Spending first typically makes it harder to save later.
2. Knowing our financial goals
Planning to save is a great start, but it’s important to know what our financial goals are. We need to be more like performance athletes and imagine ourselves in the place we want to be financially. Study after study has proved how thinking and goal setting has an impact on the outcome.
To really get a good start on saving for the future, most experts recommend that we have a five-year plan that includes specific money goals that should focus on things like having 6 months of emergency funds put aside or saving for a deposit on a home. Having a specific goal to work towards makes it easier for us to save.
3. Create and customize spending rules
Many people love spending money on designer items and the latest gadgets, but we know that designer items can get pretty pricey. When we drop $1000.00 on one of the latest smartphones, but don’t have a cent to our name should an emergency arise, then we’ve got to start making our own spending rules.
For example, a rule that doesn’t allow a person to spend more $300.00 on a purchase unless it’s an absolute essential. This is just an example, but creating these types of spending rules will help us get our spending under control and will start helping us build up our savings account.
4. Live like we’re secretly rich
Many of us associate sprawling mansions and expensive cars with wealth, and this association often gets people into trouble with spending and saving. When they start building wealth, they start spending it before it even has a chance to grow. We have seen and heard the stories of people who win the lottery or inherit a large sum of money and how fast the majority of them ends up losing it all due to excessive spending habits.
Now this is not to say that we should just tuck all of our money away and live off canned tuna every day. Enjoy life and live well, but living too big could really set us back. It’s important to find that happy balance between saving and spending, no matter how much money we’ve got.
If you’re interested in getting started on creating wealth for you and your family’s future, visit http://www.ethica.net.au/about/why-choose-us/ to speak with one of Ethica’s financial planners located on the Sunshine Coast.