So you’ve made it through the holidays and to February. Your budget has been blown out of whack and the Christmas debt sends shivers down your spine. You’re starting to stress about how long it will take to pay off your credit card(s), or how you’ll pay them off to begin with.
We’ve all been there. The Christmas festivities get the better of us and we’re stuck paying off debts for months if not years following the holiday period. However, even if you’ve racked up a mountain of debt as far as the eye can see, there’s always a way to turn your cash flow around and to increase your wealth.
Here are the 8 top tips you can follow to increase your wealth in 2018.
Track Your Spending
The Australian Securities & Investments Commission has created a TrackMySPEND app to help you track where your money is being spent. This will allow you to see the bigger picture of how you spend and where you may be able to save money. If you’re someone who likes to spend even tiny amounts on multiple luxury items, this app may be the wake-up call you need to get your finances in order.
Make A Financial Plan
Creating a financial plan to guide you through the year ahead will encourage better financial stability and improve your budgeting. If you’re struggling with keeping your budget in check, it may be worth speaking to a local financial advisor.
Even the most minimalistic financial plan will help reduce your unnecessary spending. Set a weekly budget and stick to it. Any excess money at the end of the week should go straight into savings, not spent on luxury items you don’t need.
Reduce Your Tax with A Novated Lease
If you’re in the market for a vehicle, there are a few ways you can finance it.
The first is by speaking to family and friends about borrowing enough to purchase a car. While this is one of the cheapest options, if unexpected issues arise, it may create a rocky relationship and serious issues between family or friends.
The second is by taking a loan out from a bank or financial institution. While they do provide quick access to money, there are usually many unexpected fees and costs associated with it.
The third option is to take out a novated lease to purchase a vehicle. A novated lease is a 3-way agreement between your employer, you and a car dealership. The best part of a novated lease is that the costs involved are deducted from your pre-tax salary, which means you can save a substantial amount of tax.
Using a novated lease calculator, will help you work out how much you can save in tax by taking out a novated lease.
Reduce Your Debt
This one is a no-brainer. One of the best ways to increase your wealth in 2018 is to reduce your debt as much as possible. Money that you owe is money that could better be spent increasing your net worth.
If you’re unable to lower your debt any further, consider finding a lower rate loan and consolidating your finances. The biggest cost involved with debt is the interest you must pay, so finding the lowest rate is crucial.
When paying off your or consolidating your debt, keep in mind any penalties that may be involved with paying off a loan early. These penalties are commonly found in most home loans and car finance loans.
Save or Invest
Many people ask the exact same question:
“I’m looking to increase my wealth, should I save my money or invest it?”
The answer depends completely on your own situation.
Investing is a terrific way to increase your net worth and create the potential for future growth. However, it does require a moderate to high investment to see substantial results. Saving money can be done by anyone, at any time, in any industry. Even the smallest of savings added to regularly can build into something big.
Saving money should almost always come before investing. Even when investing, you should keep a healthy amount in your savings account should problems arise and you need quick access to money. A thorough understanding of your situation and saving capabilities should guide your choice between saving or investing.
It’s Not What You Earn – It’s What You Do with It
A common saying is “I don’t make enough money to save or invest” which in most cases, is false. If you’re using this as an excuse, then you’ve already set yourself up to fail. Even the smallest of savings can add up to something big. Saving only $20 a week will result in over $1,000 saved by the end of the year. You can use this money to invest and continue to increase your wealth for years to come.
Change Your Spending Habits
The way you spend your money will determine how well you can build your wealth. Ditch the small unnecessary daily purchases, such as purchasing a barista made coffee every day. A $5 cappuccino five times a week for a year adds up to well over $1,000. You could be spending this money better, increasing your wealth in return for one small sacrifice.
Consider every purchase before making them. Do you really need a new ‘ground-breaking’ mop you’ve seen on TV when you already have a perfectly fine mop? The answer is no. Change the way you view money and cut back on unnecessary spending now.
It’s All About YOU
If you’re aiming to increase your wealth in 2018, It all starts and ends with you. Wealth isn’t going to just fall into your lap. You need to constantly put the effort in to better you and your position. Changing your habits, the way you spend money and making realistic goals you can reach is a must.
Follow these tips and you’re sure to continually increase your wealth in years to come.
Please note that advice provided in this article is general in nature only.