We all have our personal and financial goals that we hope to achieve this year but are often unsure of the steps to take to improve our chances of success.
What are the basic steps to follow when it comes to building your wealth in 2017?
1. Start small
You are less likely to see a difference if you set out large, dramatic goals. Start by planing one single financial change at a time. For instance, it could be setting small monthly savings targets that are easy to achieve, rather than an overwhelming lump sum of cash.
2. Open a Savings Account
Having a separate savings account is a great way to protect those hard earned dollars. Take advantage of technology to set up an automatic payment and never miss a month of savings.
3. Have a Generous Emergency Fund in place
There are plenty of financial surprises life can throw your way. These unexpected events can be stressful and costly if you aren’t financially prepared. Avoid the stress by dedicating a certain percent of your savings to an emergency fund. This should be separate to a savings account and for emergency purposes only. “Out of site, out of mind” is the best way to grow your emergency fund.
4. Set Specific Goals for Your Savings
The goal to increase our rate of savings is a given every year, but it helps to set a specific purpose for your money that you are planning to save. Once you have the processes in place to enable your savings you should set clear goals for that money.
Whether it’s for a holiday, paying off the bond on your home or your retirement fund, it helps to know specifically where the money you are saving is going for you to measure your progress and stay motivated. Without clarity, it’s easy to dip in and spend your savings unnecessarily.
5. Set a Monthly Budget
Stay motivated and on track with a set, realistic monthly budget in place. Sticking to a budget will help with the discipline of building your savings. Knowing what you are able to spend per month on top of your savings will help curb unhealthy financial decisions, and make saving that much easier.
6. Stay Away from Debt
After paying off any debt, focus on avoiding any future debt by all means. If you stick to your monthly budget and savings goals this should be a lot simpler to avoid. Being free from debt will make it easier to focus on your savings and investing, and also means you’ll have full control over your income.
7. Reward Yourself
Rewarding yourself once you’ve reached a savings milestone is the best way to keep you motivated towards your bigger goals. It’s much better to have a controlled and short-lived splurge along the way than to promote long-term unhealthy spending habits.
8. Find a Financial Planner
Once you have an emergency fund in place and a good amount savings, investing is the next logical step up the wealth ladder. Investing doesn’t need to be a scary process, a good financial planner will be able to guide you, go through your options, and explain the risks involved with each investment.
If you’re ready to take your next financial step, contact Lou on 0414 168 327 for a personal guide through your savings and investment paths.