How To Accelerate Your Wealth In 3 Easy Steps
Many of us are looking to accelerate the growth of our net worth but often find ourselves caught up in a web of complex strategies and confusing financial products.
Getting ahead financially can be deceptively simple though, and it often starts with understanding (and applying) a small but powerful concept.
That is, to spend less than you earn and invest the rest.
Like many things in life, this is a simple strategy, but it's not necessarily easy.
While many of us dream of getting ahead, it’s the first part of this concept where we often slip up. We find ourselves living paycheque to paycheque or maxing our credit cards out to maintain our lifestyle.
Continuing down this path often means that when it comes to investing, there’s simply nothing left in the bucket and as a result, we end up stuck in a financial rut.
If we are looking to get ahead though, the first thing we need to consider is that we may need to do things a little differently. After all, if we continue to do what we’ve always done, we’ll continue to get what we’ve always got!
1. Control your spending
There are only two ways to spend less than you earn and that’s to reign in your spending! Again, simple but not necessarily easy.
You need to get a handle on your budget and what you're spending, and that means tracking everything that you do - at least for a little while.
Question how efficient your spending really is. Are you getting a lot of satisfaction from the items you spend your money on, or are they just something that you do out of habit and then they’re gone?
Track where your dollars go, re-think how you spend those dollars, and you will be well on your way to improving your net worth.
2. Increase your income
If the rule is to spend less than you earn, and your spending is well under control, then you need to increase your income.
If you’re in a corporate job this may be easier said than done, but it’s certainly not impossible, and with a little creativity you might be surprised what you can do.
Can you ask for a pay rise? Can you go for that next promotion?
If you're not happy in your current job, is now the time to start talking to some recruiters about some more inspiring (and better paid) positions?
What about doing alternative things, like hosting an Airbnb? Or have a garage sale for the things that are sitting around in your house that don't do anything?
Can you get a bit of a side hustle on and create that business that you've always wanted to generate a little bit of extra income?
3. Invest the rest
This is where the rubber hits the road.
It’s one thing to spend less than you earn and have some left over, but you need to make sure that you’re putting those funds to work for you.
Think of this money as your employee – every day it wakes up and goes to work, bringing in an income or growing in value so that when it gets big enough, it may even be able to support you.
Whether this is through a share portfolio, or (my favourite) a property investment, you need to make sure it’s getting the most bang for your buck. Stuffing it in a mattress or a regular savings account won’t cut it – it has to be performing, and ideally, it has to be leveraged.
You also need to make sure it’s not doing anything so risky that it’s making you uncomfortable. You want to be able to sleep at night.
So if you're looking to get ahead, remember that building wealth is not complicated, but it's not always easy. You may need to get creative when it comes to spending less than you earn, but if you can control your spending, increase your income and invest the difference, you never know where you’ll end up.