1. Make your purse – or wallet – thicker.
This does not mean filling it with invoices for all the items you have purchased with your credit card. That is, fill your purse with money. And the best way to do that is to spend less than you earn. This cure stems from the first gold law we saw last week: aim to save 10% of your income.
Minimum Save more than that if you can. Save for the long term, for your mortgage deposit or pension, depending on where you live. If you need to save for short- and medium-term things, such as vacations or cars, they should be separate and separate from the 10% + you save for your long-term needs.
Your 10% may include your pension contributions, ISA, premium bonds or any type of high interest / limited access savings account. With compound interest, your bag will become very thick over the coming months and years, even if interest rates remain low.
2. Control your spending.
If you are going to save at least 10% of your income in the long run, you need to make sure that your current expenses are not more than 90% of your income. This means that wherever you are in the income scale, you will need to apply self-discipline when it comes to treating yourself and your loved ones.
To begin with, keep your credit cards for emergency use only and if you use them, pay them off before you start collecting interest. Similarly, avoid taking out loans unless you can justify the interest you will end up paying for that privilege. A car purchased on one of the popular rental schemes can be justified if it is essential to your work or business. But a loan for a vacation? Staying would be a better choice.
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Learn to distinguish between wants and needs. A roof over your head and food on the table are necessities; a month in the Maldives is a wish. Treat yourself to this when you have saved 10% of your income for a year or two and have the opportunity to fly to paradise without immersing yourself in those savings.
The secret to controlling your spending is to create a budget and then stick to it. If you have Microsoft Excel you can download a template to help you track your expenses over the course of a week or month. You can also find ready-made models online or applications for your phone. Work as much as you spend on mortgages, rent, business trips, etc. And set boundaries for items such as dining out, entertainment, travel, etc. This will help you keep below 90% of your income.
3. Make your money multiply.
You are looking for consistent returns for a lottery win, not long-term. What you need is a steady increase in your capital, your core assets, such as interest from an ISA or savings account, or – more risky – dividends on shares you hold in well-managed companies, including your employer. , if they have an employee stock ownership scheme. If you are not an expert in financial products and investment vehicles, find someone who is. Do not make any commitments until you talk to a professional financial advisor. Explain what your investment goals are and ask them to help you create a plan to achieve them.
4. Save yourself from losing.
The ill nightmare of seeing your wealth dreams turn to dust as Bitcoin falls or the blocks you met in the pub the next night disappear with your life savings. One way to protect yourself from loss is to make an unbreakable rule not to touch that essential wealth that you are saving and investing for a long time. Keep a steel ring around this! If you are tempted to try your luck with Bitcoin or currency trading, use only money that you can afford to lose. That means any money you have left after saving your 10%, paying your bills and filling your stomach.
Money you might otherwise spend overnight outside can be delivered to books online, if you can afford it – see the second recovery above. Never use a credit card or loan for spread betting, gambling or any high risk investment. Before engaging in any high-risk investment or bet, make sure you have thoroughly researched the field and understand what you are getting into. If online poker is your dream, first practice with your friends on match sticks.
Make your home a profitable investment.
Owning your own home (and ideally buying some to leave property) has become an obsession over the last thirty or forty years. Given how property prices have risen during that time, it makes perfect sense to climb property rates as fast as you can, especially when house prices are rising at a much faster rate than income.
However, beware that at some point the bubbles may burst. Yes, people have said it for years and it has not happened yet. But it is becoming increasingly possible for authorities to take steps to let some air out of the property market. Possible measures include revaluation of property tax gangs and punitive taxes on purchase to leave properties and properties left vacant. A large increase in housing construction is unlikely to have much of an impact on house prices per se, but when combined with possible tax changes, we can see that prices reach a plateau and stay there for some time.
With all of this in mind, the best way is to find an affordable home or apartment in an area where you would like to live for the foreseeable future, given things like local amenities, schools and the trip to work. Also think about the benefits of paying off a mortgage and gradually taking over the total ownership (rent and vacant property issues aside) of your home over 25 or 30 years, compared to being a landlord who can increase your rent or evict you. at the announcement of a month and who will still have the roof over your head despite all the 000 you put in his or her pocket.
If you do not have the opportunity to fully purchase in the area where you want to live or work, consider opportunities such as joint ownership and self-construction. See what schemes are available in the area where you want to live.
If you already have your own home, you can use it to generate extra income by getting a flat. If you live in a big city, a good source of housing are contractors – professional people working on a local project for you who need a place to stay for a few months and do not want to use hotels.
Often they will go home for the weekend, so you have the place for yourself. Another option is to get students in exchange. They will usually come in within a week or two. You provide them with a bed, breakfast, a packed lunch and an evening meal and get paid for it. Another option is to use your vacation home while you are on vacation yourself. This works especially well if you live in a big city or a historic city.
Even if you rent, rent an apartment (if your landlord will allow it) or run a home-based business (see below). You can still make your home an extra source of income, even if you do not own it.
Two other things to consider. First, home and content security. Make sure you have adequate coverage for the worst that can happen: fire, flood, theft. Second, if you have a mortgage, look into securing it from unemployment and illness. Get advice and make sure the policies you take are appropriate for the purpose and will pay off if the worst happens.
6. Develop income in the future.
Who would not want to wake up in the morning knowing that no matter what happens, they are guaranteed a steady income for eternity? Well, you can achieve this through your long-term savings, that 10% + you set from month to month, year after year.
When talking to your financial advisor (properly!) About your savings and investment goals, the first two issues you should focus on are a pension for you (and your partner, if you have one) and your family insurance when you I am no longer there, i.e. life insurance. Your financial advisor should also tell you about other investments that may provide additional income for you and your family, such as ISAs, unit trusts, and government bonds.
Your goal is to provide a decent income for a long old age. Remember, people are living longer, but not always healthier. It’s not fun, I know, but think about the worst that can happen to you (a bit of an early death). You or your partner become chronically ill or disabled and need long-term care. How will you finance it? If you sell your home, what will you leave to your children? This is the type of issue you should discuss with a financial advisor. You need a pension, plus other income streams, that will pay for all your needs for maybe thirty or forty years after you quit your job. Develop a plan, implement it, then continue to enjoy life.
7. Increase your ability to win.
There is no such thing as work for life anymore. These days, even professions such as lawyer, accountant and insurance insurer are threatened with automation and dismissal. So it makes sense to develop additional skills that you can use if you find yourself out of work.
If you think you are in danger of being replaced by a robot, you need to look very carefully at the “protection from the future” of your career. Think of jobs that are unlikely to be automated or laid off in the future. They tend to be those that involve face-to-face contacts e.g. supplemental therapy, nail technician hair stylist, personal trainer, life trainer, counselor. Also, jobs where a local presence is essential: electrician, plumber, locksmith, builder.
Of course, many of these jobs are relatively well paid and are in highly competitive sectors. That means you have to find a unique selling point: something you do that no one else does, or no one else does as well as you. Focus on something that you are really interested in – or better yet, passionate about – and that you know you can be great at. Be realistic about the potential revenue, competition, and time and energy needed to make it work. If you do not already have experience in your chosen field, you will need to spend a lot of time, and possibly money, to get the necessary skills and certifications. You will also need to decide how you will operate: sole trader, limited company, franchise? Get tips before you commit to anything.
A popular option for generating extra revenue is selling online. Even if you are in full-time job and satisfied with your income, you can try it in your spare time and get an opinion on what is involved. A regular channel will reveal all sorts of things you can sell: clothes, DVDs, cell phones, unwanted gifts. If you like selling online, you can develop a successful business without compromising your core capital.