As most people know, there are essentially two ways to build wealth, you either save more or earn more. Over the recent years, online payments have completely transformed the way we manage money. Almost any transaction can be arranged online now, from online grocery orders to online money transfers. As online transactions are ‘invisible’, it is very easy to lose track of your incomes and expenditures. So, one of the first essential steps in managing your money is finding a good way to track your finances.
Some people find it easier to keep it on pen and paper, others resort to spreadsheets or Google Docs but there are thousands of budgeting apps out there that can track your finances automatically. Check if your banks offer apps to track your finances. These apps (such as Mint) can be linked directly to your credit or debit cards, so they can automatically track payments. There are also features that categorize your spending and allow you to set goals for spending and automatic savings transfers.
Here are some simple but clever tips on how to build your wealth by saving more or earning more:
Saving More
1. Save on groceries
You can find hundreds of tips online about how to save up on groceries such as, buying in bulk, farmers’ markets, meal prep, buying canned or frozen items, etc. Another understated tip is to do your grocery shopping when you’re full. I can tell you from experience that you can slash your bill significantly without all the temptations and cravings! Also, items like herbs are quite expensive so you could invest in some herb pots at home.
2. Set up an emergency savings and retirement fund
Set up an emergency savings fund in the case of unexpected costs such as unemployment. Ideally, you should have enough savings to get you through around three months of unemployment. You should research the job market in your field and how fast people can find new jobs, so you can save accordingly.
For the retirement fund, aim to set aside at least 10% of your income annually. Set up a savings account and don’t touch that money!
3. Minimalist Approach
You should change your mindset when purchasing new things. Consider how necessary it is and perform a small cost-benefit analysis to see if the purchase is worth it. Think about how often you will use it and if it is good value for money. Also, start using cash for new purchases so you can visualize your expenditure.
4. Invest in a used car
Unlike property, cars tend to depreciate quickly in value. So, a better option might be to buy a used car to lease cars instead of purchasing new ones.
Do this whenever possible for electrical home appliances as well. If you can find used ones in good condition on sites like Gumtree or eBay, don’t buy new ones!
Earning More
I would say the most important tip on how to manage money is that it is more worthwhile to find out new sources of income rather than trying to save more. After all, there is a limit to how much you can save without cutting basic amenities.
1. Find a side hustle
Aside from your main job, look for new opportunities for earning money. There are plenty of online sites that advertise freelancing gigs. Also, invest some time and money learning new skills that are in high demand such as programming. You can take short, affordable online courses from reputable people on sites like Coursera, LinkedIn, and edX.
Find your passion or hobby and learn how you can market that. I recently read a story about how an amateur baker earned more money from her baking Instagram page than from her corporate salary! My takeaway is that it is better to find new ways to earn money than trying to increase your savings. There’s only so much you can save.