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13 Basic Rules To Grow Your Wealth Effectively

13 Basic Rules To Grow Your Wealth Effectively

Perhaps you started this year vowing to grow personally, expand professionally, or simply grow up.  Do you also want to grow your wealth?

While no two financial pictures are exactly the same, healthy portfolios do have similarities. Follow these 13 rules to grow your wealth effectively.

Think of money as a tool.

That’s all those papers and coins are — a tool to get you what you want. They aren’t the only way, but it is a universally accepted exchange. Thinking of money as a tool empowers you to avoid many of the negative, intense emotions that can be associated with it, and to make rational, calm spending and saving decisions free of emotion. Money is a tool. That’s it.

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Accept that it takes time to expand your tool kit.

It takes time to grow wealth. Period. “Time” in this case means years, sometimes decades. This can be a frustrating concept for young folks who are rarin’ to earn that cash, accustomed to getting what they want with the click of a button and bombarded by stories of internet sensations who made it big overnight and photographs of 20-somethings with luxury cars and diamonds in their ears.

Define “wealth”…

Do you desire a fat bank account, for uses to be determined in the future? The ability to fund an expensive hobby, like horses or photography? The chance to take years off work and afford time to raise your young children? Your definition of “wealth” may, or may not, be a McMansion and six sports cars. Whatever your definition is, congratulations! You’ve established a goal that is yours. Your definition of “wealth” is the one that matters.

… then define “wealth” again.

Accept that you will end up spending vast amounts of money on unplanned expenses. Your car will break down. You will have kids before you’re financially ready. You or a loved one will incur a hefty medical bill. This is called life. Money, that tool we keep in our pockets, will help us meet life challenges. So take a deep breath, relax, and accept the fact that your financial goals will change time and time again. Staying calm during times of unexpected spending will help you keep your eye on the long-term prize; freaking out or giving up on your savings plan in the face of adversity will not.

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Acknowledge that cash is king.

If you can’t pay cash for it, you can’t afford it. Treat your credit cards like cash; this means sticking to a lifestyle that suits your income level so you don’t rack off more than you can afford, and paying them off regularly. Do your best to avoid assuming car loans — if you can’t pay the sticker price, search for a used car or take advantage of public transportation for as long as possible. If you have a take a home loan, keep it modest, and wait to look at homes until you can afford to put at least 20% down.

Save.

This is frequently repeated advice, and for good reason — the secret to growing wealth is to accumulate it. Read up on the latest from accountants and peruse personal stories online, check books out of the library, or hire a consultant through your bank to help with financial planning; however you do it, you must develop a savings plan. Once you have at least six months of living expenses for you and your family readily available, you can start to grow your wealth through different types of funds, according to the level of risk you want to assume.

Diversify your tool kit.

Talk to a certified professional about the benefits and drawbacks of savings accounts, stocks, certificates of deposit, IRAs, mutual funds, and any other number of savings and investment options. The key word here is “diversify.” You want to build a broad foundation, so that if something unfortunate happens to any one area of interest, your financial ship simply bobs along in a different direction, it doesn’t sink (and neither do you). Remember that purchasing land or a rental property, or upgrading a home you currently own are also ways to invest.

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Shop around until you find a no-fee, cash back credit card.

Avoid complicated rewards point structures, or even airfare cards unless you are a frequent traveler; it can be difficult to gauge whether you will actually use these rewards and the value back on each dollar that you spend can be minimal. Annual fees add up and mean you often end up paying for your plane ticket or hotel room yourself with the fee. Once you find a card you like, stick with it for maximum benefit to your credit score.

Shop around, period.

It is tempting to purchase what we want, when we see it. Online shopping, however, means that nearly every product can be compared to a competitor, whether in your community or across the globe. Take the time to compare prices before you buy, especially on big ticket items. Once you have a good feel for the market, don’t be shy about negotiating for a lower price from a local merchant if you find an item cheaper elsewhere.

Expand your mind.

Get creative in seeking out ways to increase income — there are a lot of ways to earn money out there. Make a list of your skills, whether learned in a professional setting or elsewhere, then hop online to do some research, and talk to everyone you meet about how to possibly leverage those skills. Your local chamber of commerce, or meet up groups advertised online, can be good places to start. It’s a freelancing nation, and you may be surprised at what and how much you can pick up on the side of conventional employment.

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Get your hands dirty.

Nothing is ever “too small” or “beneath you” in the money-growing game. Do not shirk from the hard jobs, the dirty jobs, or those that pay only a little in the beginning — pick them up, see where they go, and remember to save, save, save.

Find a good accountant.

Once you have money, you don’t want to give it away, do you? That’s exactly what you do come tax time — give your hard-earned cash back to the government. Tax codes are complicated, to say the least, so make sure you are giving exactly what you owe and not a penny more by enlisting the help of a seasoned professional. Though Certified Public Accountants are more expensive than do-it-yourself options, what they save you this year and in the years to come truly make this investment worth it.

Treat money management like a job.

Set aside time each week to review your financial accounts. If you’re starting out, this time may be as simple as going over your credit card statement to confirm that every charge is legitimate; if your financial picture is intricate and complicated, this could mean a weekly meeting with your financial planner or bank. Take time to study articles online, read a book from the library, or attend a local class that will teach you more about what all of those financial terms mean and how they apply to you.

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Want to make progress today?  Find out The #1 Thing Stopping You From Becoming Rich Right Now 

Featured photo credit: Alan Cleaver via Flickr

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Last Updated on July 20, 2021

Financial Freedom is Not a Fantasy: 9 Secrets to Get You There

Financial Freedom is Not a Fantasy: 9 Secrets to Get You There

Have you ever considered your life now, and how it would be if you had more time to spend with your family and less worries about money?

Nowadays, financial stress is one of the most troublesome weights in life. If you’ve ever encountered financial stress, you know the difficulty of not having enough income to pay your obligations or bills.

Many people say that money is not the ultimate goal of life. While that’s true, money certainly plays a very significant role. The meaning of financial freedom changes with the different phases of our life, but ultimately, it is something that many people strive for.

In this article, we’ll explain how to capture that financial freedom you’ve been looking for. Read on to learn the secrets to financial freedom.

Break Free of Your Finances

Financial freedom is about having a constant flow of cash from your assets to cover all your regular needs.

When you are not worried about your income, or living paycheck to paycheck, you gain a great sense of freedom. It’s the freedom to be obtain and do what you truly need to make your way through everyday life.

Gaining financial freedom, though, is a process of growth, making small improvements and gaining emotional strength.

Though it seems hard to believe, it is really very simple to get financial freedom.

To do so, you simply need to make sure that your assets exceed your liabilities. In other words, you’ll need to find the sweet-spot where your residuals meet or surpass your expenses. This is something that you can achieve with the proper plan.

While not every person will accomplish financial freedom, the potential for anyone to do so is certainly there. Anyone can achieve this success, regardless of their income level.

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Outlined below are 9 secrets that will help you in your goals of achieving financial freedom.

1. Stop Unnecessary Spending

We often spend money inwardly, instead of objectively.

For example, you may spend when you’re anxious, depressed, restless, exhausted, from fear of missing out, or to please others. This is a very unhealthy way to handle your finances.

To stop this habitual spending, log down all your spending over the course of a month.

Just as some people keep a food diary, keep an expense diary. Remember not to just write down how much and what you spent the money on, also include the circumstances of why you spent the money. Was it an impulse buy at the checkout line or was it something you planned to purchase?

This increased self-awareness could enable you to avoid triggering situations in the future when you are considering an impulse buy.

2. Plan a Monthly Budget

This is a great opportunity to get serious.

Take a seat with your spouse or partner and make a monthly budget based on your income, not your expenses. You are never again going to spend more cash then you have on hand.

Overspending is the thing that led you to more financial obligations. Make sure you decide every month what is coming in and what will be going out and stick to that budget… no matter what.

3. Cut-up Credit Cards

Perhaps you are the type of person who always pays your credit card balance in full before the end of your billing cycle, and enjoys the reward points you gain. If this is the case, then you’re already way ahead of the game.

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If not, you may want to consider ridding your life of the burden that credit cards bring.

Many cards have strategies set up so that if you make a certain number of late payments, they will raise your interest rate much higher. This can really add up in the long run and you won’t be doing your financial situation any favors. If you’re prone to late payments or have a large balance due on your cards, cut them up!

Without proper self control on credit card spending and payments, you are basically throwing your money away. To ensure that you have better control over your spending, use only cash or debit for all future purchases (and don’t forget to pay at least your minimum payment on your cut-up cards each month!).

4. Increase Savings

There is no doubt that for a comfortable retirement you must accumulate satisfactory savings throughout your working life.

It’s good practice to save up to 15% of your income.

Start with your workplace 401(k), if you have one. If not, a Roth IRA (if you are eligible) or a traditional IRA (if you are not eligible for the Roth) are the next logical steps.

Increase in longevity means you might be able to look forward to 25 to 30 years in retirement, or possibly even significantly more. Investing now in good retirement plans will ensure that you have a guaranteed a stable monthly income when the time comes to stop working. [1]

5. Invest Wisely

Consider investing in funds.

Specifically, you will gain higher returns if you invest in different types of mutual funds such as Debt funds, Equity funds and Hybrid funds with a proper balance, although it absolutely relies on your personal preferences and sense of risk taking.

To get the most of these benefits, make sure you are investing in a variety of assets. Another resource of investing in mutual funds is SIP (Systematic Investment Plan) where you invest some money every month in funds. SIP works by averaging the per unit price of the stock.

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Mutual fund investors are aware of the benefits of an SIP (Systematic Investment Plan). For one, it is the most secure way to invest in equity mutual plans so that wealth is created over a long period of time. This plan also helps you to gain a better sense of financial discipline, which will come in handy in all your financial endeavors.

6. Invest in Gold

There isn’t really a better way to invest in gold than to have the physical gold itself in your possession.

You can purchase gold coins and bars from mints as well as from coin dealers and other private sellers.

Another way to invest in gold is through ETFs (Exchange Traded Funds).

These are is similar to mutual funds but they are exclusively investments of gold. ETFs are great because they offer more liquidity; the ETF owns the actual physical gold, stores it, and retains the value of the shares. These shares can then be bought and sold in the stock market, and one big benefit is that the transaction costs of gold ETFs are much lower than the that of physical gold.

With its consistently-increasing demand, investment in gold can be very wise long-term investment to make.

7. Stash Emergency Funds

Whether it’s a cash gift or a work bonus, always try to save any extra money that comes your way rather than making unneeded purchases.

If you get paid every other week, you’ll get an “extra” paycheck (three rather than the usual two) twice a year. Either save those paychecks towards your emergency funds or utilize the money to pay down other obligations, such as loans, credit cards or other debts.

Make it hard to get your cash.

Put your savings in an alternate bank, maybe an online bank that forces you to delay for several business days before transferred money hits your regular bank account.

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8. Find Fabulous Mentors

Find a mentor, such as a friend or family member, who has exceptional control over their finances and pay attention to everything they do.

If you do not have any friends or family that are enjoying financial freedom, then find a mentor online! There are numerous blogs and guru websites featuring the advice of many people who have reached financial freedom, and they exist primarily to let you in on how to achieve it for yourself.

There are also plentiful forums available that share tips and tricks on how to best achieve financial freedom. Read as much as you can and start changing your habits for the better.

9. Be Extra Patient

Patience is the key of financial success.

Being patient can be quite tough, especially when you’re struggling with your finances, but having faith is worth it. You’ll continuously be on the right track if you are taking the proper steps above.

So don’t be discouraged, even if you are only saving a few dollars a month; it all adds up. Within just a few years you’ll look back proudly at your accomplishments and be glad that you had the patience to get there.

Financial Freedom for All

Anyone can achieve financial freedom, regardless of their financial circumstance.

Use the tips provided above to get yourself on the track to financial freedom and toss your monetary concerns out the window. If you wish to achieve a life with financial freedom for yourself and your family then you must adopt a disciplined approach towards your finances.

Following the simple secrets above is a great start to making your money work for you, so you can work less and live more!

Featured photo credit: rawpixel via unsplash.com

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Reference

[1] Hartford Gold Group: IRA Retirement Accounts

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