With the cost of living continuing to bite, keeping control of finances is a number one priority for many.
While saving money remains an important part of financial health, building wealth is also a great way to prepare for the future. It may seem like something only a few can manage – but with the right financial strategies, and the right amount of planning, you too could also create a growing nest egg in the coming years.
Here are 10 practical tips to not only help you get started, but also grow and nurture your hard-earned cash going forwards.
- Create a comprehensive financial plan
Start at the beginning by assessing your current financial situation, and set clear but achievable goals for both the short and long term.
Take into account your income, expenses, current savings, any debt you have, and balance them against your savings targets. Set budgets, save before you spend, and regularly review and adjust your goals and plan as you go along to help you keep on track should your circumstances change.
- Diversify your income streams
Building wealth on a single modest salary can seem not only like an impossible task, but a risky one too. But building wealth when you have more than one income stream coming in is all the more achievable.
Today, more people than ever are working as multi-income individuals (Miis) – that’s someone who has more than one source of income. Miis leverage two or more revenue streams to boost their earning potential and achieve financial stability.
In some cases it’s a useful way to provide a safety net should one source of income fail, or a way to add a buffer against rising bills. In other cases, having more than one source of income can pave the way for eventual financial freedom.
- Automate your savings
When your income arrives for the month, remember to pay yourself as well as your bills.
Many banking apps let you automatically transfer a chosen amount of money from your current account into your savings account by setting up a recurring payment to yourself. Whether it’s £20 or £200 a month, having a little money automatically put away each month will accumulate a surprising amount after a few years without you even having to think about it.
Look out for savings accounts that pay out higher interest, but also be aware of which ones will let you withdraw at any time (‘instant access’ accounts) and which ones require you to have your money in the account for a set amount of time.
- Automate utility bill payments
Getting better control over your finances can also mean streamlining them. Consider setting up an automatic Direct Debit for all your home services with the UW app. Utility Warehouse (also known as UW) offer energy, broadband, mobile and insurance, and their app lets you manage all of their services in one place.
Setting up automatic payments with UW makes budgeting even simpler as there’s only one bill to pay each month for multiple services, you save more money the more services you bundle with them, and you’ll never forget to pay on time – avoiding falling into debt.
- Invest in your financial education
They say it takes money to make money. But even if it’s time and not money you’re investing, knowledge is power. Taking the time to learn about managing personal finances, making investment strategies, and tracking market trends can all go a long way in taking steps to building wealth. The more you understand, the better equipped you’ll be to make informed decisions about how you make your money work for you.
- Maximise retirement contributions
Take full advantage of retirement savings available to you, for example, workplace pensions. If your employer offers a match, contribute at least enough to capture the full match.
An employer-matched pension is when an employer agrees to add more to your pension if you agree to pay more into it – it’s essentially free money. If you’re eligible, consider increasing your contribution rate gradually to boost your long-term savings.
- Build and maintain an emergency fund
Being a Mii and having more than one income stream is one way of building financial stability – but it’s also crucial to have an emergency savings fund to keep yourself afloat should the unexpected happen.
Aim to save 3–6 months’ worth of living expenses in an easily accessible account to give you peace of mind and protect you against debt should you ever find yourself without a steady income for some time.
- Invest in a diversified portfolio
As well as putting away money in a savings account, you may also want to allocate an amount to investing – for example, in a stocks and shares ISA.
While there’s always an element of risk when investing, you can minimise it by spreading your investment in a well-diversified portfolio. Investing in a broad mix of stocks, bonds, real estate and other investment vehicles rather than buying a few individual stocks gives you a little extra protection should the value of one go down.
When choosing where to allocate your assets, consider your risk tolerance and investment first – higher-yielding investments generally carry more risk, while low and slower-yielding investments tend to come with less risk. Regularly reviewing and rebalancing your portfolio to adjust to market conditions can also help you improve long-term returns.
Aside from stocks and shares, if you’re a homeowner you can also consider how home equity can also help you build wealth.
- Leverage technology for financial management
From checking your credit score and investments to budgeting and tracking expenses, there are many great apps to help you manage your finances from wherever you are.
Many apps also help you automate savings and goals – for example, rounding up your spending to the nearest pound and automatically putting the difference into a separate savings pot.
- Consider alternative investments
According to the Utility Warehouse Miis report, some multi-income individuals are also diversifying their income streams with network marketing opportunities.
Not all network marketing opportunities are genuine and – as with anything – you should do your due diligence in researching the company and how the model works before diving in. But depending on the company, your goals, and the time you put into it, some provide the chance to make a decent additional income.
By implementing as many of these wealth-building tips as possible, you can start working towards achieving financial success as soon as today.
Remember, there’s no such thing as a ‘get rich quick’ scheme, and building wealth takes patience and discipline. But by staying committed to your financial goals and continuously learning about finances, you’ll be well on your way to a more secure financial future.
