We’ve all been taught that saving money is a good policy. We save for a rainy day and for our futures. We say no to shop-bought coffee, search for discount codes before we make a purchase and generally try to be as thrifty as humanly possible.
But really, how effective a financial strategy is this?
Saving a little each month may help you build a nest egg in case of a financial emergency. It will certainly allow you to make a bigger, more expensive purchase. Who knows, it might even allow you to make other, more financially beneficial decisions. However, in itself, saving is not going to turn you into a millionaire. These six strategies, however, will all bring you much closer to becoming comfortably rich and financially independent.
1. Raise your standards, but...
Tony Robbins once said that if we want to change our life we have to raise our standards. This may have some people confused - after all, how are we supposed the raise the level of our lives if we don't spend more money?
In fact, to raise your standards, you should definitely spend money, though you should spend it the way it counts - on improving yourself. Don't save money just to save - instead, invest in yourself. Don't be afraid to pursue additional knowledge and pay for courses that will let you gain new skills and certifications. Learn something that will either help you do your current job better, making you indispensable at work, or something that will allow you to find other, better paid jobs.
Some learning opportunities might be costly, but some are free. However, even if you have to spend some money, you are making the best possible investment. A new position within a company or a completely new job might allow you to earn more money in a year than you could possibly save in 10 years.
In fact, to raise your standards, you should definitely spend money, though you should spend it the way it counts - on improving yourself. Don't save money just to save - instead, invest in yourself. Don't be afraid to pursue additional knowledge and pay for courses that will let you gain new skills and certifications. Learn something that will either help you do your current job better, making you indispensable at work, or something that will allow you to find other, better paid jobs.
Some learning opportunities might be costly, but some are free. However, even if you have to spend some money, you are making the best possible investment. A new position within a company or a completely new job might allow you to earn more money in a year than you could possibly save in 10 years.
2. ...Don't raise your spendings.
Most of us tend to live within our means. However, if we get a raise at work, chances are our lifestyle will expand to use up that extra cash. Our vacations, our clothing, our home may all become a little more lavish. This is absolutely natural for most people. However, if you are trying to become financially independent, you must avoid recklessly increasing your spendings.
Instead of using up the extra money you’re making, put it away somewhere where you won't be able to waste it easily. To do so, you might create a banking account – not so much for saving as for simply storing your money out of easy reach. Keep outgoings the same and put additional earnings straight into that untouchable banking account. Just make sure to read our next point before choosing your account.
Instead of using up the extra money you’re making, put it away somewhere where you won't be able to waste it easily. To do so, you might create a banking account – not so much for saving as for simply storing your money out of easy reach. Keep outgoings the same and put additional earnings straight into that untouchable banking account. Just make sure to read our next point before choosing your account.
3. Look for the Accounts that Actually Earn Money
Saving money in your regular account is all well and fine. But most current accounts don’t help you to grow your money.
Banks offer a variety of savings products and you should find one with a good rate of interest if you want to make the most of your earnings.
Accounts with limited access (so you wouldn’t be able to dip into your funds in an emergency) or accounts where you put in a fixed amount each month often offer the best interest rates.
And once your savings account is opened, don’t fall into the trap of paying in your money and forgetting about it. Banks change their interest rates all the time. So you need to keep up-to-date with the best savings accounts around and move your money accordingly.
Above all though, don't let your account lose money. You've started it to store the excess of money you make now so make sure that the account itself isn't eating your money up. And once you have stored enough cash, you are ready for next steps.
Banks offer a variety of savings products and you should find one with a good rate of interest if you want to make the most of your earnings.
Accounts with limited access (so you wouldn’t be able to dip into your funds in an emergency) or accounts where you put in a fixed amount each month often offer the best interest rates.
And once your savings account is opened, don’t fall into the trap of paying in your money and forgetting about it. Banks change their interest rates all the time. So you need to keep up-to-date with the best savings accounts around and move your money accordingly.
Above all though, don't let your account lose money. You've started it to store the excess of money you make now so make sure that the account itself isn't eating your money up. And once you have stored enough cash, you are ready for next steps.
4. Invest in Property
If you have a good deposit and can afford a mortgage, consider branching out into the housing market. The National Association of Realtors says that in 2019 house prices are rising more slowly than in the past. But they nevertheless continue to rise.
This means that money invested in a property will grow. As long as you’re prepared to invest for a considerable stretch of time - you stand to sell your property for more than you bought it.
And if you decide to use your property as a rental, there could be even greater gains going into the future. Check rental property calculator to get a sense of the figures involved, and if everything seems alright – invest your money in a rental property. You'll have to wait quite some time for the property to finally start bringing money, but it's a sure way to earn. After all people will always need a place to live, sleep, and eat. And you can provide this place.
This means that money invested in a property will grow. As long as you’re prepared to invest for a considerable stretch of time - you stand to sell your property for more than you bought it.
And if you decide to use your property as a rental, there could be even greater gains going into the future. Check rental property calculator to get a sense of the figures involved, and if everything seems alright – invest your money in a rental property. You'll have to wait quite some time for the property to finally start bringing money, but it's a sure way to earn. After all people will always need a place to live, sleep, and eat. And you can provide this place.
5. Invest in a Retirement Account
There are lots of tax advantages associated with saving for retirement. You might be limited as to how much you can contribute to your retirement account each year and won’t necessarily be able to touch the money until you reach retirement age, but it’s still definitely an investment option worth looking at.
A 401(k) pension plan comes with the option of “employer match” meaning simply that your employer will match your contributions. Alternatively, Traditional and Roth IRAs offer different tax options meaning you can pick the one that best fits you.
Do a little retirement research to find out how best to enter your non-working life feeling financially secure.
A 401(k) pension plan comes with the option of “employer match” meaning simply that your employer will match your contributions. Alternatively, Traditional and Roth IRAs offer different tax options meaning you can pick the one that best fits you.
Do a little retirement research to find out how best to enter your non-working life feeling financially secure.
6. Invest in Stocks and Shares
Many people feel that investing in the stock market is too risky. Or that they don’t have the necessary knowledge.
But nowadays, with apps, robo-advisors and a whole load of e-learning options, it’s never been easier to start investing in stocks and shares, even without a financial advisor.
For risk-averse investors, the advice is to diversify – make sure you have shares in a few companies, industries and even countries. This means a fall in one should be balanced out by a rise in another. However, don't overstretch yourself. Instead of happily investing in every single fad that might seem decent, invest in a few things, and be sure to watch those investments.
Also, be prepared to keep your investments for at least five years. That way any downturns are usually rectified, you avoid making significant losses and stand to make significant gains.
Many people feel that investing in the stock market is too risky. Or that they don’t have the necessary knowledge.
But nowadays, with apps, robo-advisors and a whole load of e-learning options, it’s never been easier to start investing in stocks and shares, even without a financial advisor.
For risk-averse investors, the advice is to diversify – make sure you have shares in a few companies, industries and even countries. This means a fall in one should be balanced out by a rise in another. However, don't overstretch yourself. Instead of happily investing in every single fad that might seem decent, invest in a few things, and be sure to watch those investments.
Also, be prepared to keep your investments for at least five years. That way any downturns are usually rectified, you avoid making significant losses and stand to make significant gains.
Saving alone will never make you rich. You need to be savvy about your savings and invest your money in places where it's almost guaranteed to grow. Without taking too many risks, you can edge closer to your ultimate goal of wealth and security.
About the author:
Sienna Walker is an avid blogger with great passion for lifelong learning and constant self-improvement. She is also a huge fan of creating smart, passive income, and earning more on the side. When not writing, she might usually be found online, participating in online courses, or watching motivational videos. Feel free to visit her Twitter @SiennaWalkerS and say “hello” to her.
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