In an era where financial advice often revolves around the same popular topics, there lies a world of undervalued strategies waiting to be discovered. One that allows us to unearth hidden treasures that reshape our understanding of wealth building.
In this article, we will unveil these six hidden gems of financial wisdom that take us beyond the beaten path, inviting us to explore unique perspectives on sustainable ways of generating and growing your wealth.
Re-evaluate your Earnings
No matter what industry you’re a part of, there are several ways to re-evaluate your earnings and increase your wealth.
People often underestimate the potential of job-hopping, a strategy that involves moving from one company to another for better remuneration (pay and work benefits). While it might not give the best impression on your resume, when everything else is constant, you have the opportunity to significantly boost your wealth, especially if this effect is multiplied over several years.
Let’s say you earn $30,000 and you change jobs twice, each time securing a 20% raise. You would end up earning just under $45,000 – a hike you’d likely not get staying at your original workplace. Some sectors also offer larger salary hikes without needing to change roles or seniority levels.
On the other hand, loyalty also has its rewards, like fast-track promotions or fair compensation. There are also several benefits of developing in a familiar, enjoyable workplace that cannot be dismissed. Just ensure regular salary reviews are part of the agreement and you are getting rightly compensated for your time and effort.
Whether you choose to stay or leave your current role, dare to ask yourself questions about your career ambitions. Are there companies in my industry that pay more for my role? Am I ready to apply for a higher position in my company or another? Can I negotiate a raise with my current employer? Be aware of your market value and negotiate effectively.
Use Intelligent Budgeting
The word “budget” might induce fear due to its implications of control and restriction. However, effective budgeting can be freeing. To budget effectively is to understand your income and expenses fully, treating your personal finances like a business. Carefully monitor your financial activities and maintain a close watch on your cash flow.
Thanks to Open Banking, there are numerous budgeting apps such as Frollo, Spriggy, and WeMoney. They allow you to categorise and analyse your transactions, giving you insights like how much you spend on groceries or unnecessary food items monthly. This data can guide your spending habits.
Build Smart Fixed Spending Habits
Proper budgeting reveals your fixed costs, which are unavoidable expenses such as phone bills, gas, electricity and council tax. While some costs are inflexible, like council tax, others like energy, mobile phone and broadband expenses can be minimised by regularly shopping for the best deals.
A comprehensive analysis of all your fixed costs can uncover opportunities for negotiation or switching providers, potentially saving you a substantial sum over time.
Spend Prudently on Luxuries
Effective budgeting also uncovers your discretionary or luxury spending, which includes non-essential items or luxuries. Having clear data on such spending can help you reevaluate your habits and make it a controlled part of your overall budget.
To minimise excessive non-essential spending, consider purchasing luxury items in cash, questioning their utility and worth and delaying purchases to ensure they’re not impulsive decisions.
Opt-in for Pension Savings (Superannuation)
Disregarding workplace pensions or superannuation can be harmful, given that employers are legally required to contribute to your pension, sometimes exceeding the mandatory minimum.
If you opt-out, you’re effectively rejecting free money. Besides, regularly allocating funds for long-term investments, like a pension, is good financial practice. However, ensure that your pension funds are invested ethically by doing your research and choosing the right provider.
Set Aside Money for Regular Savings
Consistently saving money is an age-old wisdom that has proven true time and time again. Setting up a direct debit just after payday to funnel money into a separate savings or investment account can help accumulate wealth over the years.
For instance, if you save $250 every month for a decade, with an expected annual growth rate of 7% (an average stock market performance), the outcome would be $43,000. This is remarkable because even though you deposited a total of $30,000 over the years, your accumulated savings grew significantly due to the power of consistent savings and investment returns.
In conclusion, these six simple strategies can help you ascend the financial peak. They require discipline and commitment, but if you’ve been seeking ways to enhance your financial status, it’s a sign you need to take action.
