There are so many temptations to spend money these days. Even just a casual walk down a high street reveals how many opportunities there are to fritter away cash. From advertisements on bus shelters pushing fast food outlets to stores offering expensive yet unnecessary convenience products, it can be hard to avoid these temptations in a fast-paced consumer economy. However, very few people who become wealthy in a sustainable way spend money with wild abandon. By controlling your personal cash outflow, you can ensure that you have enough left over to save and invest.
Addressing the root causes
Spending lots of money has become normalised in our society to such a degree that it’s hard to even notice when you’re doing it. Perhaps you spend £2.50 on a cup of coffee on your walk to the train station in the morning. Or maybe you look forward to your daily bar of chocolate, picked up from the expensive shop close to your office.
People spend money on products like these for different reasons. Sometimes, that cup of coffee is a real treat – and it’s necessary to get your day off to a good start. Other times, you might only buy that lunchtime bar of chocolate because spending makes you feel good and provides a distraction. In both cases, tackling the root cause of the spending is important. If that cup of coffee is what you need to wake yourself up in the morning, then consider investing in a flask and a cafetiere to make coffee-shop-quality coffee at home for a fraction of the price. If you need a distraction or a treat at lunchtime, then why not go for a walk with a slice of homemade chocolate cake instead?
Once you’ve acknowledged the root causes of your spending habits, the next move is to start saving up the cash that you would otherwise have spent on disposable products. Once you’re in the habit of doing it, it’s likely to become easier and easier to achieve – and before long, you’re likely to have a nice little nest egg building up in your account.
However, due to the way that the economy works, saving cash in a bank account is actually not much better than simply frittering it away. The interest that you’ll gain on savings in a bank account is low at the moment – and it’s often so low that it doesn’t even keep up to speed with the rate of inflation, or how fast prices are rising. As a result, investing it somewhere other than a cash bank account is now pretty much essential.
Grasp investment opportunities
As a result, finding investment pathways with more buoyant returns is needed. You’ll have a number of decisions to take when you first start investing. You’ll need to decide what level of risk you’re comfortable with, for example: if you’re not planning to dip into your saved cash for a number of years, then a higher-risk profile is usually acceptable. You’ll also need to make a decision about your preferred asset class. If you’re not yet comfortable with the idea of investing in ever-fluctuating markets, then avoiding volatile markets – such as cryptocurrencies, which can see value drops of 75% – is a good move. A financial adviser can help here, while introductory books explaining how the investment markets work are also helpful.
One of the major appeals of letting cash mount up in a bank account is that it cuts down on the risk of fraud. After all, aside from the value erosion caused by inflation, there’s very little that can go wrong with an untouched pile of cash in a major, well-recognised national institution. However, it’s possible to combine both a relatively inflation-proof investment strategy with safety – and one of the best forex tips out there is to perform due diligence. Before signing up with an investment provider, for example, it’s a smart move to investigate its background. Is it licensed by an appropriate body such as the Financial Conduct Authority, for example? Does it have a large and satisfied user base?
Spending your money in small amounts every day isn’t a sustainable strategy for growing your wealth. Instead, it’s a wise move to address the root causes of overspending – and then get saving. By optimising your investment strategies, you’ll be able to raise your earnings and make your leftover money work as hard as possible.