Here are 5 Money Habits you need to adopt right now to take back control and start building wealth.
1. Spend Less Than You Earn
The basics of building wealth are pretty simple. Earn Money, Spend Less than you Earn, Save & Invest. This sounds simple, but many people fail to put it into practice. Spending Less than You Earn is one of the most important financial habits you can adopt. If you don’t you will never get ahead and you will continue to live paycheck to paycheck, worrying about money. The reason so many fail here is that they never take the time to analyse their financial habits by tracking where they spend their money. We are constantly bombarded by marketing messages persuading us to spend money on things we don't want or need. And with the advent of Buy Now Pay Later, we are even being encouraged to spend money we don't have.
2. Track Your Spending
It is amazing how easy it is to blow your money each month without realising where it is all going. Spending is easier than ever with a simple swipe of our contactless cards. It is even more important now, with the cost of living increasing. That’s why you need to take the time to track where and how you are spending your money. To keep more of what you make, you need to know where it is going. I personally recommend online tools such as Mint or an Expense App called iExpensit which allows you to track spending easily. Once you know where your money is going, you will be able to review your spending and cut back on unnecessary impulse purchases.
3. Set Up and Automate Your Emergency Savings
Before you start to invest, I recommend everyone have at least 3-6 months of living expenses saved in a separate emergency bank account, preferably one with a higher rate of interest that can be accessed at any time. Make sure you set up an automatic debit from your main bank account so that you fund your emergency account each month. Having cash set aside will give you peace of mind knowing that you have a buffer to meet unexpected expenses.
4. Pay-Off Debts
If you have expensive credit card debts outstanding, then you need to focus on eliminating them. Once you know where your money goes each month, you can then cut back on unnecessary purchases, such as the daily latte, redirecting any savings to paying off debt. Reducing your debts will also lower your monthly repayments and increase your monthly cash flow. In our Money Mastery Program, we teach you tactics and strategies to help you pay off debt sooner.
5. Save & Invest for the Long-Term
You know you need to save and invest. Consistent investing is essential if you want to benefit from compounding and build lasting wealth. This can either be through your Retirement Account, Personally, or both! The simplest way to make investing a habit is to set up an automatic debit from your main bank account each month, which can be done in minutes. In our Learn to Trade Program, we teach you to invest and select an appropriate mix of long-term investments such as an S&P 500 Index Fund, Real Estate, Bonds, and Commodities.
If you are currently investing in the Stockmarket, I highly encourage you to read our post on the 5 Common Trading & Investing mistakes.
