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Money Matters

Top Ways To Save Money, Erase Debt And Build Wealth

Are you looking to bring more money into your life? Trying to build up your wealth? Struggling with debt? Perhaps you’ve tried various ways to become rich, even possibly trying millionaire mind-hacks secretly used by the rich and famous?

While the road to wealth comes easily for some, it often seems like a world away for many others. But if you approach your finances in a planned, methodical way then you could already be on your own personal road to wealth.

Top ways to get on the road to wealth

According to wealth manager Bradley Werner it is important to realise that there is no fast road to wealth creation.

“The most important ingredient to building wealth is time,” Werner tells THE FRANK GAZETTE. “The longer you work, the longer you save, the longer you invest etc then you will gradually notice your wealth growing appreciably.”

Werner says the second thing to understand, which is closely linked to the concept of time, is the concept of compounding.

“If my money is growing at say five percent per annum, then that is five percent growth on last year’s growth too and so on,” said Werner. “This is incredibly powerful and many people fail to understand this. I advise my clients to put some money away every month by setting up a direct debit, or a standing order as it is known in some countries.”

Thirdly, Werner says that it is prudent to diversify your savings/investments.

“By spreading your risks you can go a long way to eliminating shocks from your portfolio of savings and investments,” said Werner. “Finally, I will also add, do not be afraid to seek advice! You need to have a financial plan and you need to be committed to that plan for a long time. Often, wealth can be created by investing in tax-efficient savings. So, you’re not just relying on pure growth, you’re also looking to benefit from future savings from tax that you don’t have to pay.”

According to Adam Fayed, Director at International-AMG, you should focus on your income, expenditure and investment returns and not just one.

“You can never out-earn bad spending habits,” Fayed tells THE FRANK GAZETTE.

Fayed also suggests that you should read a lot, because the more you read, the more you earn.

“Finally, associate yourself with more positive people who are hopefully better than you, rather than toxic people,” said Fayed.

Top ways to save money

Werner says that a top way to save money is to set up a regular contribution to either a cash savings plan or a stocks & shares investment.

“The discipline of knowing something is being put away every month brings its own level of satisfaction and comfort,” said Werner.

Secondly, Werner says that you should take advantage of available tax efficient investments.

“Not having to pay a future tax is a saving in its own right!” said Werner.

And thirdly, take the time every three to six months to review your monthly expenditure.

“You’ll be surprised how much discretionary spend you make i.e. expenditure on non-necessities,” said Werner. “If you could set yourself a target to reduce your credit card bill by five percent, see how much that translates into savings for you.”

Fayed maintains that the beginning of the month is important in terms of your investments.

“Invest at the start of the month, and not the end, as it forces spending restraint,” said Fayed.

Fayed’s second recommendation to save money is to use cash more than cards, as it makes you think more about spending, while his third tip is having a 24-hour rule before spending online, to reduce impulse purchases.

Getting out of debt

According to Werner we need to be clear what we mean by getting out of debt.

“If you live in a country with low interest rates, then borrowing to buy a house or using part of your mortgage to fund your business may be a wise decision,” said Werner. “But you must only borrow as long as you can afford the repayments and it will not impact your stand of living. Once you compromise your standard of living, then you have borrowed too much and this becomes bad debt.

“To reduce your debt can be very challenging and usually requires some tough decisions. Reducing monthly spend usually doesn’t solve the problem entirely. It helps, don’t get me wrong, but usually you are required to take a more drastic approach. Maybe you need to look at re-mortgaging and consolidating your debt at a lower rate interest rate if possible. Try increasing your monthly repayment, you’ll be surprised how much quicker you pay off your mortgage!”

Personal finance expert Jackie Beck has created a Pay Off Debt app to help you get rid of debt. The app has been featured in numerous publications including Oprah’s Magazine, O.

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Beck and her current husband managed to get completely out of debt and paid off over $147,000 by using a debt snowball. This is where you focus on paying off one debt at a time as quickly as possible while still making minimum payments on the rest.

“But there’s more to it than that,” Beck tells THE FRANK GAZETTE, “because along the way we needed to learn to budget, plan for emergencies, create savings for emergencies and irregular expenses, track our spending, figure out our goals, invest, increase our income, reduce expenses, etc.

“It’s all interconnected, but every step in the right direction helps. For me the catalyst for it all was tracking my spending as I was doing it vs. at the end of the month. That made it easy to check with myself on how I felt about it, make changes, and use my money for what mattered.”

Wealth inspiration and motivation

Werner is always inspired by entrepreneurs who take risks in order to achieve their dreams and goals.

“When you read about their success, you understand there is a lot of calculated risk and it’s not all luck!” said Werner. “It helps though. Entrepreneurs such as Richard Branson and Steve Jobs are two individuals who come to mind immediately. I’m fascinated by their achievements given the obstacles they needed to deal with.”

Fayed draws inspiration from those who come from nothing and make a success of themselves.

“I’m inspired by anybody who came from nothing or little, and anybody with longevity,” said Fayed. “Buffett has been doing it for 75 years. He started investing at about 14 years old or so. That is incredible. It isn’t easy to carry on that long.”

Fayed’s favourite book when it comes to personal finance, savings and wealth is The Millionaire Next Door by Thomas J. Stanley and William D. Danko.

“Most people assume I can only help already wealthy or high-income people,” said Fayed. “The book shows that average people can get wealthy!”

Beck’s favourite personal finance book is Your Money or Your Life by Vicki Robin and Joe Dominguez.

“I read the book while on vacation years ago, and started putting one of the suggestions into practice before I even got home: tracking my spending,” said Beck. “The book changed my perspective on money, and helped put me on the path of debt freedom and financial independence.”

Financial advice for your younger self

If you could travel back in time to high school and give your younger self any financial advice, what would it be?

“Firstly, I’d start saving into a pension earlier,” said Werner. “Because you cannot access the funds until much closer to retirement, I wouldn’t be able to use it to buy a first car or something. Instead, the funds would have a nice long investment period to grow and grow!

“Secondly, I would take out a critical illness plan, with a term as far out as possible. At such a young age the premium would be dead cheap and I’d have peace of mind that if I suffered a critical illness I would be paid out a lump sum. Nobody told me about that until I was 35!”

Beck would give herself two pieces of financial advice.

The first one would be that building credit isn’t the most important thing to do with your finances.

“Being financially stable is, which includes budgeting, saving for emergencies, saving for specific purchases, and investing,” said Beck.

The second piece of advice would be to start investing at least 20 percent of her income for retirement right away, and then to never use that money for anything except retirement.

If Fayed could go back in time he would take the advice of well-meaning adults with a pinch of salt.

“Pick your mentors well,” said Fayed. “Spend more time with high-quality people and less time with toxic people. Time is the most valuable resource. Use it well. Read early. Invest early. It all compounds - compounded knowledge, returns etc.”

Fayed believes you should focus on gains just as much as the losses.

“Most people are so cautious about taking any risks, that they never try to succeed,” said Fayed. “Take calculated risks. Don’t be naive but remember most people are good. Better than the media and many people suggest anyway! Being trusting has many long-term benefits.”

It’s clear that you can take steps to start building wealth, saving money and reducing your debt no matter your age and stage in life. So, act now!

“Wealth creation and savings is not a complicated science,” said Werner. “It’s fairly straight forward. It requires discipline and commitment to your financial plan.”

© 2019 Bevan Frank and The Frank Gazette. All Rights Reserved.

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