Many of us like the idea of getting rich. However, sometimes the biggest obstacle getting in the way of this goal is ourselves. It’s so easy to fall into bad habits that eat into our money and prevent us from achieving financial independence.
In this post, we’ll be looking at four things which need to be considered before financial success can be reached. They may seem simple but many of us tend to overlook one or more of them.
1. Ditch the debt
Debt is a killer, and many of us have racked up thousands of pounds of it by our early 20s. Until your get debt under control it will continue to chip away at your wealth, and the longer you have it the more it claims.
Not all debt is created equal. So when reviewing what you owe, always plan to payback the higher interest loans first even if they are not the largest in terms of capital owed.
For example, student loans are for a large amount of money, but the rates you pay are very low. Plus you are not held to any payment deadlines for settling the debt. So with this loan it is better to keep it and pay off slowly.
However with large cash loans or credit card debt, its in your interest to pay these off as quickly as possible. It may be tempting to just pay of the interest each month and not the capital, but this is very damaging in the long run.
2. Reduce Spending
Of course the best thing is to not getting into debt in the first place. This is where creating a budget and reducing your monthly spend is very important. There is a big difference between having enough money to pay for something, and being able to afford something.
The most effective way to reduce spend is to focus on the small things which are a month drain on your budget. For ideas on what you can reduce check out are article 7 Things That Probably losing you Money.
3. Invest your money to get rich
Your money should be working for you. With interest rates at an all-time low, saving is not a good long-term plan for getting rich.
Instead it is better to invest your money to generate a higher return and grow your overall wealth. This also means you are no longer just dependant on your job for increasing your capital.
A common misconception is that you need a lot of money to start investing, however this is not the case. For information on how to start investing with a little amount of money check out our post Simple Ways To Start Investing With Little Money
4. Focus on income
Increasing your income is obviously key if you want to get rich.
It’s also very important that your income doesn’t come from just one source. Because if that source dries up then you are left in a difficult position.
Therefore you should focus on setting up as many income streams as possible, in addition to what you get from a 9-5 job.
This income can come from investments such as property, or dividend payments from Mutual funds or stocks and shares. However, it can also come from additional work/side projects, known as ‘side hustles’.
For help finding the right side hustle for you check out our post, Side Hustle Ideas You Can Start Today.