Instead of just surviving week to week, wouldn’t it be nice to have an active plan for building your wealth? Is it difficult to not just come out even at the every month, but start to save and invest some money? Read on to find out.
First, a word to the wise. Before you start saving, you need to get those debts paid off. While most people these days are happy to have some outstanding debts, it makes poor financial sense to try and save at the same time.
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This is because the interest that you will be charged for the money you owe will far outweigh the interest you can earn on money that you save or invest. Remember most credit cards are at around 15-20% after the promotional periods. While you will only get a max 5% interest on your savings and 9% on long-term investments on the stock market.
If you save before your debt free, it’s really like robbing Peter to pay Paul. So you are better off paying your debts first as an easier way to build your wealth, than saving or investing.
Next, you can start to build your wealth without actually earning any more money or doing any more hours at work. The way to do this to look at your current spending and see where you can make cuts.
Some families choose their grocery bill as something that can be altered to create more capital for investing. Swapping to store versions instead of brand name products can save you up to a third on your grocery budget.
It’s also possible to save money by planning out your meals and buying ingredients only according to the plan. This stops you wasting money on food that isn’t used or isn’t needed. Also, some families choose to shop at a cheaper store and use coupons. Remember if you are a family of 4 spending $400 a month on food, then even a ⅓ saving will be $133. Over a year that will add up to $1600 which can be saved or invested.
Many people are intimidated by investing their money. All the talk of high risk and losses can put them off. But it is a low maintenance way of increasing your wealth. Of course, it’s essential that you only ever invest money that you can afford to lose. This is because the stock market goes up and down, so your original investment can be worth more or less that is was at the beginning. Read more about how this works at The Fortunate Investor.
Making a killing on the stock market is not a quick fix. In fact, it is a more long-term goal. This is because you have to be able to keep your investment in over enough time to get a decent return. You also have to choose whether to take it out during a time of profit or leave it in for the duration. Over time a stock market investment, which is easy to set up, can yield a 9% return on your initial payment.
Remember too that investing works on a percentage rate. That means that the profits available to you are significantly increased by the size of the original invest that you put in.
*This post was contributed. Family friendly contributed posts are welcome.