A common misconception about becoming financially prosperous is that you need to work harder than everyone else, build a vast corporate empire or have a natural gift for trading. The truth is that you need to make your money work hard for you, not necessarily yourself.
This speaks to simple math. If you were to invest a modest portion of your income (whatever that might be) into assets that generated a decent return (5-10%), then over the length of your working life, this can easily compound into a serious amount of money.
Making your money work harder for you requires more than simply leaving it in your current account or spending it on liabilities like a new car or clothes. It needs to compound - to create more money by itself, by being invested in an asset class that reliably creates greater and greater returns.
It doesn’t require any special edge to make your money go further, but it does necessitate an understanding of finance and the practicing of sound monetary habits.
Here is some advice that should set you on your way:
Cut down on your monthly costs
The first step to making your money work harder for you is to reallocate your monthly spending. There is no necessary avoiding payments like rent, food, taxes, and utility bills, but you can reduce them.
Living below your means sounds like a prison sentence, but it doesn’t have to be extreme. Simply being able to have some money left over to invest in assets is enough.
Once vital payment is insurance, which can quickly mount up if you haven’t negotiated a fair deal with your provider, if you are unsure how to do this, contact an insurance broker who can help you find the best deal.
Acquire a range of assets
Another great way to ensure your money is working harder for you is to invest it in a range of safe assets which can generate meaningful returns.
Storing your spare money in a conventional bank account sounds sensible, but the reality is that inflation eats away at it year on year. It is like a melting ice cube, dripping away at an increasingly alarming rate.
Instead, you need to ‘beat’ inflation by investing it in an asset class - such as property, stocks, bonds, or any other manner of asset class. You should do your due diligence before actioning this, but by being clever with your money, you can generate far more than you might imagine.
Pay off debt and start practicing better financial habits
Making your money work harder for you is about more than clever investments and being shrewd with your monthly spending. You must eliminate any prior financial issues and prevent yourself from falling into bad habits.
These include falling into debt, overspending on luxuries like cars, nights out, clothes, and other similar liabilities, and entering into investments or trades you know nothing about.
Steering clear of debt, overexposure, tax issues, and credit problems will put you far further ahead on your financial journey.