With the Reserve Bank pushing interest rates up to fight inflation and Australia facing a possible “per capita” recession, it’s not enough to just get by anymore. Now is the time to try and build your wealth and a financial buffer, using every trick possible!
Wealth building is a lifelong process. It means developing new habits and new ways of thinking. Changing your habits is scary, so it’s a good idea to take it step by step.
Forming new habits
Let’s take a quick look at how new habits are formed:
- Find a cue – the first step to creating a new habit is a cue. This cue triggers an automatic reaction in the brain that causes you to react and behave in a certain way.
- Develop a routine – the second step is routine, which is the behaviour and the action you take.
- Enjoy your reward – the last step is the reward. Habits come with immediate or delayed rewards. Those with immediate rewards are easier to develop than those with delayed rewards. Practices for wealth building are harder to commit to and maintain. However, they are well worth it in the long run.
Make new habits stick by doing the same thing over and over again. Eventually, you won’t even have to think about it – you’ll just naturally react in the new way you trained yourself. Making meaningful, lasting changes in your life is a breeze when you take small steps.
Now that you know how to form new and healthier habits, here are seven tips for building wealth.
1. Goals
To build wealth, you must know how to get there. You can make this happen by setting yourself short-term and long-term financial goals. It’s important to have SMART financial goals:
- Specific
- Measurable
- Achievable
- Realistic
- Timebound
Reaching goals usually means you have to give up certain stuff and work your butt off! Like a bodybuilder going through crazy tough workouts and pain to get what they want.
But, if you keep your goals in mind, it becomes easier to handle the sacrifice of skipping that extra burger or drink. Just imagine yourself rocking those goals every single day! You’ve got this!
2. Pay yourself first
If you are serious about building wealth, regardless of your current financial situation, you’ll find a way to save money for the future.
But sometimes, it’s tempting to skimp on or dip into your savings to treat yourself. A trick to help you avoid this is to treat your savings like a bill that must be paid.
Try to arrange an automatic payment into a separate savings account every month. You have the option of a regular savings account or a term deposit account, for instance, where the interest is generally higher. With a term deposit account, your money is only made available to you after the relevant notice period has passed – many term deposits have a 31-day notice period. This means that it’s easier to control those moments of weakness. You’ve got 31 days to think about whether to spend that money.
Making the decision to save, and sticking to it, is more important than how much cash you put aside.
3. Spend less than what you earn
The path to wealth means living within your means, in other words, not spending more than you earn. Easier said than done!
The good things in life don’t come easy, and you must decide to wait for something you want today to build a better future for tomorrow.
Always work out how much money is available to you each month. Try “backward budgeting.” This means taking your net salary, after tax and superannuation deductions, etc., then subtracting your expenses.
If your result is a negative number, then you are spending more than you earn and need to:
- Make more money
- Cut down on costs
- Or both of the above
Don’t get caught by “lifestyle inflation.” This is when people start living like famous movie stars as soon as their pay increases. Limit what you spend, and invest the extra cash.
4. Invest wisely, as soon as possible
While saving is a savvy practice, it doesn’t offer the best returns. Instead of just keeping your money safe, make it work for you!
A good tip is to start investing early. This lets you cash in on compounding gains and exponential growth. Don’t let fear of failure stop you from investing! Instead, research so you can invest wisely.
- Get advice from the right people – family members and friends who are not active investors may not be the best financial advisors. Instead, ask a professional.
- Understand how the investment works – investing blindly is extremely risky. Ensure you understand how the money you invest generates a return.
- Diversify your investments – investing in different assets is a good risk management strategy. It’s never wise to “put all your eggs in one basket.”
- Develop healthy skepticism – if it sounds too good to be true, it probably is! Keep away from “get rich quick” and gambling schemes.
5. Read and learn
Successful people read to learn more. They read self-help books and things like biographies of other successful people.
The world is changing daily, and if you want to stay ahead of the game, you must keep up with the times. Read, take online courses, and attend seminars and webinars. This will help keep you on your toes!
The more you learn, the more chances you have to develop good money habits and grow wealth to secure your future. Knowledge helps keep your brain active, and you can train your brain to think in ways that will make money. You’ll be stacking loot like a pro in no time!
Try to set aside 30 minutes per day, or at least an hour or two each week, for reading books about self-help or finances.
6. Build the right relationships
It’s always good to surround yourself with the kind of person you want to be. This means hanging out with winners!
People tend to pick up the habits of the people they mix with. Choosing someone you look up to to mentor you is an important step toward success. This person can show you the ropes. They will also encourage you to be the best that you can be.
7. Discipline and consistency
To make money, you must be disciplined and consistent. Stick to your investment plan, and don’t rush decisions. It also means holding off on some instant gratification for bigger rewards later.
Stay focused, and don’t let emotions control you! Build a diversified portfolio and think long-term. That’s the key to success!
Then again, life does throw its curve balls from time to time. If you find yourself short on cash, Credit24 could help with a short-term cash loan. Visit Credit24 to get a loan fast and find out more.
Disclaimer:
IPF Digital Australia Pty Ltd, trading as Credit24, ABN 59 130 894 405. Australian Credit Licence 422839. The information in this article is of general nature and does not take into consideration your objectives, financial situation or needs. Lending criteria, fees and charges apply. For more information about our products, eligibility criteria and terms and conditions, please visit www.credit24.com.au.
Image: Supplied.
This is a sponsored article produced in partnership with Bazoom.
