Strategies to accumulate greater wealth than your contemporaries over time
Money matters will always remain a hot topic of discussion. Everyone is perpetually interested in earning and managing wealth. This will never change!
It’s deeply ingrained in our DNA! The desire to amass and provide.
Historically, our ancestors were known as “hunter gatherers”. This term highlights our inherent tendency to accumulate possessions, which offer us a sense of security, prestige and comfort.
We all understand the human yearning for these aspects.
Financial literacy is not commonplace
Despite finance being an evergreen topic and its immense importance to individuals, it is not directly imparted in educational institutions. This results in generations of people who are unprepared and inefficient in handling their financial matters.
The educational system churns out individuals who are literate, yet financially ignorant.
How to surpass the wealth of 99% of your contemporaries
There are numerous processes and techniques suggested by financial advisors.
You can undoubtedly find a plethora of books, articles, and blog posts to last a lifetime of reading.
However, today’s financial advice presents two problems:
- It’s challenging to sift through commission-hungry advisors and associates who attempt to steer you towards decisions that line their pockets.
- The generally good advice is often presented in an overly complicated manner, making it inaccessible to the layman or those who stick to traditional cash.
Let me state that I am not a financial advisor, nor have I ever been one. I am a Software Engineer who desired to better his financial situation.
Next, I’ll simplify the insights I gathered from numerous articles, YouTube videos, and books. My aim is to make this information easily digestible for all, just as I wished it would have been during my research.
The quintessential tips to bolster your finances
1. Mind your spending
The first step everyone should take towards financial wellness is to monitor the inflow and outflow of money in their lives.
There’s no need to panic and suddenly stop your morning coffee runs or homebound yourself to curb spending.
Maintain a normal week, and if you fancy that coffee, go for it, relish the croissant you’ve been craving, indulge in a Friday night takeaway.
Don’t go overboard, but don’t deny yourself either!
Observe your weekly spending to grasp an understanding of your average expenditure while fulfilling your desires, whatever they may mean for you.
Once you have a clear picture of your spending, analyze it.
Most banking apps offer the functionality to categorize your expenditures
2. Spend strategically
After identifying your regular expenses, it’s time to address certain behaviors.
Incurring debt or overspending is sometimes beyond your control.
Emergencies, family situations or other unplanned circumstances often lead people to financial strain, and no one should judge them for it.
However, for a majority, debt and poor financial management result from:
- Impatience
- Unhealthy relationship with money
- Impulsive buying
Here are a few instances:
- I don’t need a new phone, but my friend just upgraded and I can’t be seen with an older model.
- I recently enjoyed a city break and don’t have enough budget for another one, but my friends are planning a trip and I don’t want to miss out – Fear of Missing Out.
- I favor the BMW 3 Series and can afford it, but I also like the 4 Series, which is beyond my budget. But life is short, so I’ll go for it.
- I’ve exhausted my clothing budget this month, but I really like this shirt. I deserve a treat, I’ll get it.
As you can see, we often neglect our budgets, especially when we feel low or seek quick and instant gratification to remedy a bad mood.
Strategic spending is one solution to this problem that offers a new perspective. The concept involves making planned expenditures.
3. Prioritize debt repayment
If you’re already in debt, don’t be alarmed, you’re among the majority.
Whether it’s student debt, a mortgage, car payment, a loan or a credit card, debt is universal.
Debt is not an enemy. It’s a crucial factor for growth and development.
It might take you a decade to save enough money to kick-start a new business. But taking a loan can ensure you have a thriving business and repaid your debt within the same period.
4. Organize your accounts
Always seek the best deal on your accounts.
Before opening an account, research the bank, the account types, the charges, the savings Annual Percentage Rate (if debit), and the payback Annual Percentage Rate (if credit).
5. Invest
Once you understand your expenditure, plan strategically to maintain savings and manage your debts efficiently, you’re ready to invest.
But don’t rush into investing and end up in debt or stop saving.
Only invest what you can afford without having to sacrifice or fall into debt.
In conclusion, these steps could significantly enhance your financial journey.
As the title suggests, most people don’t adhere to these guidelines, leading to precarious finances.
This predicament cuts across all backgrounds, all forms of education, and all income groups.
