When you look at how much money you make in a year, it seems like you’ve got everything together. Your career is on an upward trajectory and you keep pulling in a bigger salary every year. But your bank account is a whole other story.
It’s a common experience: you make a lot of money but you can’t seem to save it. Life can get expensive for plenty of reasons and it’s easy to lose track of your spending. Weddings, vacations, a busy social life – it can all add up to a costly lifestyle, and that maybe what’s draining your paycheck before you have a chance to stash it away and build up some savings.
Those who never learned how to save growing up but have the means to do it now are especially prone to spending too much and not building up their investments and savings for their future. Remember that it’s great you’re earning money now, but the economy can change. What do you want your life to look like in 10, 20, and 50 years?
These personal finance tips can help you turn around your financial prospects. If you’re already earning money, half the battle is already over.
1. Plan for the Future
One of the reasons you’re not saving is probably because you’re not planning for the future. It’s an easy trap to fall in; virtually every company out there wants you to think about today, and tomorrow never. Financing deals on things like furniture and cars are the biggest culprits. They often offer 0% loans for the first 6 months (or any given time period) – followed by high interest that you can still be paying. Think about whether or not you can afford to pay something off before interest kicks in, including your credit cards. It’s always better to pay the full balance whenever you can.
2. Break Down Your Spending
One of the hardest parts of saving is giving up life’s luxuries (big and small), but the good news is, in your situation, you don’t have to cut back to austerity. Here’s how you should break down your budget:
Fixed Expenses: About 50-60% of your income should be going toward fixed expenses like rent/mortgage, gas, bills, and generally predictable, necessary expenses.
Savings and Investments: 15-25% of your money each month should be going toward savings and investments, assuming you are debt-free. Send some to a savings account for short-term goals like a vacation, while 10 to 15% should go straight into investments.
Discretionary Spending: This is the fun stuff, and can account for up to 20-45% of your spending, depending on your retirement and saving goals. You don’t have to give up everything, but putting a hard cap on this budget will help you prioritize.
3. Invest for Growth & Wealth Preservation
Now that you actually have money to invest, where do you put it? It depends on your goals. At first, growth is going to be more important, but as you continue to save, your goals will evolve, and wealth preservation will become more important.
Protection: Hard assets like gold are some of the best ways to protect your wealth from uncertainty. Now is a great time to start investing in gold coins and bars, because the global economy is starting to show signs of weakness again. Investors around the world flock to gold coins and gold bars when they lose confidence in the stock market. Gold dealers like SilverGoldBull offer gold around the world at competitive prices online. It’s easy to compare, click, and get your investments.
Shares have higher growth potential, but gold has lower risks – including no third-party risks when you buy gold coins in physical form.
Growth: Shares and bonds tend to be the most popular investments when you’re looking for your money to earn interest or dividends. Shares will grow your earnings more quickly, but there’s more risk, whereas bonds provide a guaranteed interest rate. The difficulty with bonds is that inflation may outpace them.
Start saving money and investing it in assets that will help you grow and preserve your wealth.