Many people grow up having conflicting values around money and wealth and misunderstanding how they work together. Often a person may say they want to be wealthy, but what they really want is financial freedom. It is of crucial importance to manage your money effectively, master it, and instruct it to do what you want it to do for you. You’ll start seeing how your money can work for you when your future needs become more important than your current wants.
Money is what makes the world go round. Just like you have a job, your money has a job too, and it should work just as hard for you, as you have worked to earn it. Whether you’re a stay at home parent taking care of your home and family or a professional working crazy hours, having money in the bank is essential.
All is possible through either investing or saving part of your hard earned cash every month. There is a clear difference between investing and saving. Saving is storing your money, while investing is growing your money. One of the significant differences between the wealthy and not so wealthy is that wealthy individuals earn interest while everyone else pays interest.
“The way that the prosperous continue to build their wealth isn’t really a secret; they spend less than they earn, save the difference, and let the potential of compound interest make their riches grow. Financial wellbeing is a long-term commitment, but with the right guidance, discipline and savvy decision-making, you may achieve your goal sooner than you think. It is never too late to start investing in your financial well-being.” states Craig Hutchison, CEO Engel & Völkers Southern Africa.
Here are some pointers on getting your money to start working for you:
Get Out of Debt
Your money doesn’t really belong to you until you’ve paid off your debt. This includes all debt, even if it is good debt. Your extra cash is better spent towards growing your net worth before anything else.
It may seem like a problem that is too big to tackle. The trick is to start by just clearing up your smaller debts and then work towards tackling the larger debt with the extra money that you have available.
Take a moment and just do a quick calculation on the interest you pay monthly just on interest – imagine having those additional funds each month. As you pay off more debt, and then apply that money to the next debt, you begin to build momentum and you will be surprised how quickly you be debt-free.
Have a budget
Your budget is the best tool you have to give you control over your finances, this will allow you to make financial decisions at the beginning of the each month by telling your money where to go instead of later wondering where it went. Always pay yourself first – make sure putting a little away for the future is your number one objective.
Once you have mastered budgeting, you will be able to reach your financial goals more quickly and avoid debt. Now that you have a flowing stream of savings coming your way, you are ready to put it to work. The next step would be to choose a vehicle for growth that suits your lifestyle and your long- and short-term goals. Consulting a financial planner can help you find the right fit.
Grow your wealth
You don’t have to be extremely wealthy to take advantage of investing over time, you might not be able to stop working and just live off your dividends any time soon, but the rewards will pay off in the future. It is important to remember to diversify your portfolio; you should never want to have all of your money invested in a single spot, venture or business.
“Be careful who you trust with your money, make sure you invest your money with a reliable and established company with a solid history and reputation, do your research and do not be afraid to ask questions” Craig advised.