Many people believe building wealth is reserved for high earners, but that's simply not true. The key to financial success lies in smart habits, not a hefty paycheck. Here's how you can start investing and grow your wealth, even on a low income:
Budget and track your spending
Creating a budget (like the 50/30/20 method) allocates funds for needs (rent, groceries), wants (entertainment), and savings/debt repayment. Track your spending with a budgeting app or spreadsheet to identify areas where you can cut back. Every dollar saved is a dollar you can invest!
Prioritize debt repayment
High-interest debt can cripple your wealth-building journey. Focus on paying off credit cards and other high-interest loans first. Consider strategies like the snowball method (paying off smallest debts first) or the avalanche method (targeting highest-interest debts first).
Automate your savings & investments, and be consistent
Set up automatic transfers from your checking account to your investment account. This ensures you're consistently investing and removes the temptation to spend that money. You don't need a huge sum to begin investing. Even $50 a week invested consistently can grow significantly over time thanks to compounding interest & returns.
Be patient and stay disciplined
Building wealth takes time and discipline. Don't expect to get rich quick. Stick to your plan, ride out market fluctuations, and don't panic-sell during downturns. The long-term trend of the stock market is typically positive.
Get professional help
Navigating the world of investments can be complex & time consuming. This is where investment financial advisors come in.
Remember, even small beginnings can lead to significant wealth creation over time. By following these steps and staying committed, you can build a secure financial future, regardless of your income level.
The above blog was written by Reid Mckenzie a financial adviser working for Mckenzie Financial Planning (www.mckfp.co.nz).
The above information is general in nature as is not meant to constitute personalised financial advice. Reid recommends seeking personalised financial advice from a registered financial adviser before making financial decisions.