If there’s one thing that most of us can agree on, it’s money.
Well, our money, that is. We don’t want to worry about it, and we’d definitely like more of it. For many, though, building their wealth can be an extremely tricky task that just never seems to happen as fast as we want it to.
Here to break down why is CTV’s Chief Financial Commentator Pattie Lovett-Reid, who has some strategies to help us achieve our goal of increasing that number in our bank accounts. Below are eight techniques that affluent individuals usually follow in order to build their wealth – and you can, too.
1. Don’t spend frivolously
Households are ruined financially one dollar at a time. Let’s say you paid $1,000 for a standing room ticket at the NBA Finals. The experience is likely to be amazing, but you could use that $1,000 in better ways. Consider putting it towards an extra mortgage payment or even a couple of car payments. Small amounts spent frivolously add up.
2. Focus on asset accumulation
Payments that never end are a financial sinkhole. Music, movie, gym and yes, even cable television payments will compromise your ability to get ahead. Sadly you pay and pay and own nothing at the end of the day.
3. Borrow to invest, not consume
Bank of Canada Governor Stephen Poloz has repeatedly stressed concerns about the debt levels of Canadians. Look closely at the debt you’re carrying and be honest – could you pay it off if you wanted to? Borrowing to invest is a legitimate investing strategy, but borrowing to simply consume is not.
4. Be realistic
There may be a rude awakening for Canadians who have used the equity built up in their homes as a never-ending piggy bank. However, with a number of five-year fixed term mortgages coming up for renewal next year, some households will face difficulties if rates march higher. Staying rich means not overextending yourself financially and being realistic about the financial landscape. You can’t necessarily time an interest-rate increase but you can develop a contingency plan.
5. Set up an emergency fund
It’s a smart idea to have three to six months of living expenses tucked away for a “what if” scenario. If you can’t save up, make sure you have access to credit that you don’t use unless you are absolutely desperate or an economic recession hits. A little financial flexibility will go a long way.
6. Don’t let cash sit idly
Invest in the markets or through other assets that are income-producing and don’t leave money sitting idly in cash. Don’t forget that after taxes and inflation, you are actually losing money.
7. Be flexible with your financial plan
Having a financial plan, reviewing the plan and tweaking the plan is essential to financial success. Set some time aside to discuss your financial situation. Recognize a plan is not carved in stone. Life has a way of throwing curve balls when you least expect it. However, you cannot make changes to your financial strategy when thrown off course if you don’t have a plan in place.
8. Look for the next big thing
Those who have earned their wealth know it takes hard work, discipline and a little luck along the way. However, you know the saying, “Luck happens when preparation meets opportunity.”
Whether you’re just starting to save for the future, or approaching your retirement years, above all remember that you don’t need to be a millionaire to have a millionaire mentality.