Being financially secure alleviates one of life’s biggest stresses and allows you to enjoy life on your terms, not just living to earning an income. Apart from a fortunate few, wealth is something that needs to be built over a long period of time. Just because it takes time however, doesn’t mean it has to be hard. In fact, building your wealth slowly is the easiest way to do it. Here are five ways to build your wealth and get rich slowly.
Set long term lifestyle goals then short term milestones which will enable you to accomplish your long term goals. If you want to live permanently on a cruise ship or own a beach house work out how much you will need (including inflation) then break this down into yearly and monthly targets.
Save first spend later
If you have a goal and know how much you need to save to realise it, then save that amount of money as soon as you are paid. Set up a separate account which you can’t access by card and transfer your savings into it automatically.
Budgeting isn’t about surviving on instant noodles and showering once every three days, but allocating your available income to maximise the benefit you receive from it. Once you are allocating enough money to savings to achieve your long term goals, ‘allocate’ the rest to spending. By tracking this spending for a month or so you will get an idea of how you are using money. Work out where you can decrease spending on things that give you little benefit and increase the amount you spend on things that bring you real happiness.
The easiest way to build your wealth is to utilise compounding. Regardless of what you invest into make sure you are reinvesting the income you earn from your investment. Ideally choose something that does this automatically, like a bank account with interest paid directly into the same account or shares that allow you to automatically reinvest dividends.
Have a holistic financial strategy
Saving, reducing spending and investing is a great start, but you also need to consider your entire financial situation. Depending on your circumstance it might be beneficial to invest through superannuation, establish a family trust or invest in assets that have a high growth component than income. Consider which strategy will be the most efficient way to build your wealth and achieve your goals.
Building wealth is a long term activity, the sooner you start the greater it will become, so don’t put it off until you feel like you have ‘excess’ money to save. These five tips are a great way to start building your wealth for an independent and secure future.