In our blog Mastering Your Finances, we introduced the idea that there are only four things you can do with your money.
You can:
- Earn it – income that you get from work, rent, investments etc.
- Spend it – money to live and for having fun!
- Owe it – owing money is not always a bad thing otherwise how, unless you are incredibly lucky, would you afford to buy a house?
- Save it – putting money aside for the future or that rainy day.
Simple, right?
Well perhaps not, even if you’re a young professional, making some good money, thinking about tying the knot, starting a family, and maybe even buying a house, this can all seem rather a lot.
Where do you start?
Let’s take a closer look at No. 1 – Earn it.
Understanding the Importance of Earning
Think about earning as less about what’s in your pay packet and more about adopting a proactive mindset for long-term wealth accumulation and security.
It’s opening your eyes to additional opportunities to generate income through other means.
This accumulation of earnings is the foundation upon which your financial independence and prosperity is built.
Diversifying Income Streams
Relying on your salary alone, is like putting all your eggs in one basket. It could leave you financially vulnerable if you were made redundant, for example.
Exploring additional avenues of income, such as freelance work (if practical), rental properties, or investments, can provide a buffer against financial setbacks. But importantly extra revenue streams will accelerate the accumulation of your wealth and give you the ability to make better choices when you come to Spend it, Owe it and Save it.
Alternative income streams is one of the fundamental strategies for enhancing earning potential.
Invest in Yourself
Increasing your earning capacity requires investment in yourself.
Commit to being a continuous learner. Acquire new skills either formally through courses or informally by being an avid reader. These new skills and knowledge will allow you to climb the career ladder more rapidly and open doors to higher-paying opportunities.
Investing in yourself pays off, literally.
Budget Smart
Money in, money out – it’s as simple as that. Create a budget that covers the essentials, something for the savings pot, and leaves room for having some fun.
Stick to your budget like it’s your favourite playlist on repeat.
Budgeting isn’t about being boring; it’s about being smart with your cash.
Make Your Money Work For You
That money you’ve allocated to savings, how are you going to make it grow?
The obvious thoughts might be stocks and shares, bonds or commodities to build a diversified investment portfolio that creates capital growth and/or dividends.
It’s essential to conduct thorough research and seek professional advice. You should understand and assess your risk tolerance before embarking on any investment venture.
Stocks and shares are not the only way to make your money work for you, becoming a landlord may be more appealing.
There are many other ways to generate additional income.
How can you use the skills you already have?
What are you most interested in?
It’s far easier to learn about something that excites you. Knowledge is power.
Become the Boss
It’s not for everyone but, if you’re feeling adventurous, why not dip your toes into entrepreneurship? Start a business and be your own boss.
However, be aware that it’s a rollercoaster with ups and downs, but the potential rewards and the satisfaction of doing your own thing can make it all worthwhile.
Start ‘Earning it’
Making money isn’t just about getting rich; it’s about being savvy and setting yourself up for the future.
What actions will you take having read this blog?
How will you invest in yourself?
Commit to drafting a simple budget, today.
And if you want to chat your thoughts and ideas with me, Chris Webb, then please get in touch on 01372 275098 or email chris@corfewealth.co.uk.
I’m here to help you take control of your finances, so that you have the ability to bounce back from any setbacks and create a road map that sets you and your family up for a lifetime of financial success.