How can you quickly make and save more money?
What if you could do things now to make your financial situation better? Below are 7 things you can do which have an immediate effect. Some will take longer than others, but making the decision to do it now is half the battle! Setting the goal, taking the action and making the changes is what will see you in a much better position later.
Think about it, where do you want to be a one year, two years or even 10 years from now. If where you are right now isn’t where you want to be financially, you need to make some changes. Here are the ones I’ve found helped me the most go from homeless to multiple international award-winning CEO, speaker and author living in my ideal area.
1.) Clear debt
As simple as it sounds, it can be extremely hard, especially if you have multiple debts or they’re debts such as payday loans with high interest. Decide to clear your debt, then create a plan of action and do it. Dave Ramsey wrote The Total Money Makeover and Scott Pape wrote The Barefoot Investor. Both have basic steps to take to help clear debt, starting with creating a mini emergency fund of $1,000 to $2,000 which is for emergencies. Sort out your budget and start throwing everything at debt.
For inspiration and tips check out how this couple cleared $90,000 worth of debt in 12 months (and they were unemployed when they started). Or read how Kiri paid off $3,000 worth of debt in a month. these 6 tips to easily clear debt will help too.
2.) Set up your investments including super
If you haven’t looked at your superannuation in a while (or ever), do it today! Getting your super sorted means you’ll be able to retire easier. Firstly, consolidate all your superannuation accounts into one so you save on fees etc. Check the insurance options and benefits with each, as well as fees before you consolidate. You can compare the top performing super accounts here. Note, Scott recommends HostPlus in his book The Barefoot Investor.
Check your eligibility for the super co-contribution as well. While it might not seem like a lot, you can get up to $500 from the government as a co-contribution. Find out more here. You can ask payroll to set up the contributions automatically for you.
As for investing, my preference is shares. You can start small with roundups or $5 a week/a month/whatever you choose with options such as Raiz. I did a comparison with them vs a high-interest savings account here. What I do is invest a little each week, then when it is $500+ I withdraw and invest in a larger parcel of shares elsewhere myself. Make sure you do research if you’re investing yourself though!
You don’t need large amounts of money to become a millionaire and retire comfy. Check out this post on how you can be a millionaire even as a single mum.
3.) Set up savings
A $1,000 to $2,000 baby emergency fund is your first savings step if you don’t already have one. Get a high-interest savings account which is separate from the rest of your banking so you can’t touch it. Start putting as much as you can into it until you reach the $1,000 or $2,000. Personally, I feel $2,000 is the minimum you should have here in Australia.
Once that is set up, focus on clearing the debt. For me, even when I was paying down debt I tried to save something, even if it was only $10 a week. The reason being, once the debt was clear, I had essentially no savings! Do what works for you though.
I have no debt, so my money is split minimum 10% investing, minimum 20% savings, minimum 10% whatever I want/sanity money and a maximum of 60% for living expenses.
4.) Know your net worth
If you’ve never worked out your net worth, it isn’t too hard. Add up your assets (house value, savings, superannuation amounts, investments etc). Add up your liabilities (personal loans, credit card debt, mortgage and any other debt). Deduct your liability amount from your asset amount and that is your net worth. Meaning, if you had to sell off everything today, this is how much cash you’d have.
5.) Have sanity money
Some call this a ‘smile’ account, the first time I heard about it, it was called sanity money, as in money to keep you sane. This money is yours to do whatever you want with. If you’re partnered you each need to get an amount for this purpose. Spend it on whatever you want and don’t feel guilty about it.
Whether you decide on $10 or $100, it’s up to you and your personal circumstances, but you need it. Having this amount from each pay helps reduce the chances of a blowout later or a spending binge because you feel deprived.
6.) Create a spending plan or budget
Tell your money where to go! Knowing how much money is coming in, what your expenses are and how you are saving/paying off debt/planning for your future is crucial. Don’t make it complicated either. Know what needs to go where then set it all up.
Check out this post on how to create and stick to a budget to help you.
7.) Automate it!
All my bills are set up to be direct debited. Investing is done automatically with Raiz, as is my savings. You can have your payroll do super contributions or divide your pay into a separate savings account as well.
Automate your finances and you’ll have less stress, your money will go to work for you and you’ll have the headspace free to do other things. For more on automating your finances check out The Automatic Millionaire. David Bach is a fantastic author and a lovely guy.