Did you know that carefully managing your finances and making your money work for you maximises your earning potential? Well, it’s true! All is possible through either investing or saving part of your hard earned cash every month.
Remember that there is a clear difference between Investing and Saving. Though two might seem or sound the same saving and investing are not the same things. Simply put saving is storing your money, while investing is growing your money.
One of the biggest difference between the rich and not so rich, is that well-off people earn interest while everyone else pays interest. It is therefore important to realise that money is a tool that can help you achieve your goals and in order for you to reach true financial independence you need to have your money begin to work for you and not you work for it.
Below are a few guidelines of how you can start process:
The most important way to change the way you handle your money is to budget. When you are budgeting you are making your money do what you want it to. By assigning each dollar to a category you are controlling where your money goes and what it does. This will help you begin to reach your financial goals.
2. Get Out of Debt
Do you know how much money you are paying in interest each month? How much of your monthly budget is being eaten up by student loans, car payments and credit card bills? If you could take all of that money and put it into retirement, you will be amazed at how quickly you can save for your retirement and other things that you want. Debt often becomes a burden and limits the choices that you can make. One of the best things you can do with your money is to get out of debt and stay out of debt.
3. Save Your Money
Once you have freed up all that extra money from paying off your debt you need to begin saving aggressively. There will be a point when the money you have will earn more than you do in a month. This takes quite a bit of money and in order for this to happen you need to put a large amount away each month. Once you have a six month emergency fund saved, you will need to begin investing your money. This is how you can grow your wealth most effectively. Additionally saving money can help you be prepared to handle the ups and downs that will happen throughout your life.
4. Invest your money
One of the biggest difference between the rich and not so rich, is that the wealthy people earn interest while everyone else pays interest. It is therefore important to realise that money is a tool that can help you achieve your goals. In order for you to reach true financial independence you need to have your money work for you and not you work for your money. Investing is the best way to grow your wealth.