Money makeover, day three – 10 ways to save and build wealth
by Peter Switzer
What follows are the 10 habits of successful wealth builders. There are more, but I think these are a nice start. If you’re not ticking off at least eight of these, then you are probably reducing your chances of maximising your richness in the future.
1. Like a business with a business plan, create a wealth plan
Just like making a blueprint for a new business or a new house, work out what your money goals are, see if your current ‘plan’ will make it happen and if it’s not looking promising, then get cracking to create one. You can do it yourself but if you can’t, don’t be afraid to talk to expert advisers.
2. Save every month
Set yourself a savings target that covers both your big spending plans, such as overseas holidays; crucial expenses, such as car rego; and your investments for wealth building purposes.
3. Stay out of dumb debt
Some financial educators warn against debt completely, but that’s too restrictive. Smart debt could be for an investment property that gives good tax deductions and that jumps big time in terms of capital gain.
You could borrow for shares, just like property, which rise in value and also provide tax deductions, so the real cost is reduced courtesy of the tax office.
Others borrow for positively geared properties where your rent is more than your borrowing costs.
Debts for frivolous consumer items are dumber debts, especially if it stops you borrowing for smart debt projects.
4. Shop around before buying
This is all about planning as well. Remember, every dollar saved can be earmarked for investments that give you income rather than taking income away from you.
5. Buy pre-loved goods
In the age of internet auctions, we might be becoming aware that new products are not always best value. Many car experts buy one-year old cars or demonstrator models at enormous discounts and suffer very little discomfort.
6. Take care of your stuff
Think of the car you never wash, the plant you don’t water, the suit you don’t get dry-cleaned — these are all cases of mismanaging your assets and, inevitably, your money.
7. Get into shares
This is not compulsory but, typically, the wealthy collect good shares like good property. They invariably hold them and reap good long-term rewards, despite the ups and downs of the stock market.
8. Become a smart property player
There are many great property plays from investment properties to buying oldies, living in them and doing them up for capital gain with no tax.
9. Look and learn
Look for expert help or great money education sources and, especially, become a tax expert, because we pay a lot of tax and it can be legally reduced.
Make sure your accountant, lawyer and property advisers are the best and listen to them. Ask questions and get smarter. You are never too old or too young to learn.
10. Face the brutal facts and get real about yourself
This will ensure you live by habits that will make you richer.
Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.
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Published on: Tuesday, December 22, 2009blog comments powered by Disqus