Do you also believe that it takes money to make money? Well, that might not be correct in the real sense considering that you can make money with your skills and ability. You don’t necessarily need cash to make a few bucks. But with your few bucks at hand, you can save and invest in things that will increase your income and, in the long run, your net worth. So, the right answer should have been “it takes money to make more money”.
If the theory is this simple, everyone should have a swift movement from grass to grace. But why is this not happening? This tells you that there must be a missing link that differentiates the results people get with their finances. The missing link is how to make, keep and invest money the right way to give financial freedom. Almost everyone can make money. Where they struggle is the step of saving money.
It’s usually said that accumulating your first hundred thousand is the hardest. Once you can achieve it, saving becomes easier for you, and you can increase your portfolio easily. We created today’s blog to show you the things you should focus on to increase your portfolio.
Check your mindset
What is your perception of saving? Do you see it as an opportunity to jet your way to financial freedom or punishment that deprives you of enjoying your money? Do you think you can save it or do you doubt yourself? Your mindset is important to your saving goal. Most of the time, it’s the reason Mr A finds it easier to save than Mr B even though they earn the same income. If you want to save 100k dollars, you should watch your mind and fix it to see the opportunity you want to create. Making your reason clear will also help you a lot. When you have the right mindset, it’ll be very easy for you to do the other steps that will get you to your saving goal.
Pay yourself first
If you are a fan of “rich dad, poor dad”, this statement won’t be any strange to you. However, knowing isn’t enough. It’s when you put them to action that you will get the desired result. When you receive your salary or income, it’s just a matter of days before your expenses chop it off your hand. The best saving habit you should have is to remove the percentage for savings from that money before anything else. And now, we are in a more advanced world where you can automate everything. So, you have nothing to worry about. Just pay yourself first.
Avoid debt like the plague.
If there is any big enemy towards your saving progress, it’s your debt. This is not hard to understand; imagine you save 20,000 dollars, and you have 10,000-dollar debt. Your real savings in this scenario is just 10,000 dollars. That’s what debt does to you. It is a big hole in your savings box. If you have debts to clear before starting to save, you should have a plan for paying them up the same way you plan to save. And if you are debt free right now, then avoid it as much as you can. Your savings journey will be much faster.
Track your expenses
Normally, we should tell you to reduce how much you spend. But there is no way you can reduce it without first tracking your expenses. By tracking, you will be able to figure out the unnecessary things that are taking away your money, cut down on them and direct the money to your savings. You want to get to your saving goal as fast as possible. So, you need to find as many streams you can direct to it as possible.
Increase your income
Now that you have heard that you need to track and reduce your expenses to the barest minimum, what next? There is no doubt that cutting your expenses will put some pressure on you that should not last for too long. Not only that, you will still struggle to move very fast as there is a limitation to how much you can save. The second angle of the square is that you find ways to increase your income. There is no limitation to the amount you can make, especially in this digital age. Start a side hustle to your current income. It will help you to increase your saving plan and as well live a comfortable life.
Reinvest all dividends.
Dividends are the sweet and fascinating reward for your investment, right? You made your money work for you, and here is the fruit. What should you do with it? There are many answers to that. But for someone like you who is trying to build his way to a hundred thousand dollars, eating your fruit is not a good decision. Why not replant the fruit and let it create another money tree for you? The next time you get your dividend, reinvest it into your portfolio so that you can reach your financial goal faster.
Leverage tax advantage account
Tax is one of the biggest loopholes in your money. It sucks your income even before you, that work for it, can enjoy it. Wouldn’t it make sense if you could save some of your money from tax and direct them to your portfolio? We hope you are nodding your head in agreement. There are several ways you can reduce the tax on your income. It all comes down to putting your money in non-deductible accounts like IRAs and 401k. Any money you contribute to this account will not be taxed. This will allow you to grow faster towards your saving goal.
Remember that saving has something to do with safety. You are not saving today to punish yourself. You are doing it so that you can build your financial freedom and a better life for yourself tomorrow. Do whatever possible you can do, and getting there will be faster than you expected.
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