Save a percentage of your salary every month
A simple way to keep your savings on track is to save a given percentage of your salary each month, rather than a specific amount. This way, the amount you save will grow larger as your salary increases. Even if you are currently saving for retirement in the form of an annuity, there are still various other reasons why you should be saving. It could be used as an emergency fund for unforeseen expenses, to pay for a trip or to send your children to university. No matter how you end up using your savings, it means you don’t have to go into debt to do so.
TOP TIP: Set up a savings debit order to go off from your account along with your other large expenses. This way you won’t forget to ‘pay yourself’.
Harness the power of compound interest
Wealth is created over the span of many years. Even if you only start investing in your thirties, you still have plenty of time to earn and invest. Compound interest occurs when the interest on your investments start to earn interest. It takes willpower not to withdraw from an investment account, but in the long run it is the best way to get your money to work for you.
Spend less than you earn
If you’re only ever just making the end of the month, it’s unlikely that you will be able to build wealth. Rather buy a smaller house or drive a more modest car, so you are able to save your extra income. It’s easy to fall in the trap of using your entire income. It takes discipline to stick to a budget, but when you do it becomes possible to manage your finances more effectively.
Keep an eye on the blog for Part II, in which we will discuss conservative investments and how you should approach debt repayments. In the meantime, feel free to reach out to a knowledgeable member of the Libertine Consultants team if you would like more information on our debt services and credit services.