Getting rich in 10 steps. Ha, if only it were that simple. Getting rich is a matter of patience for most people, and all but a few lucky bastards. Moreover, rich is a subjective concept and has a different meaning for everyone. In this article, by wealthy we mean: being a little loose in the slack and thus having the freedom to walk your own path. And these 10 tips for getting rich will get you off to a good start. Learn, save and invest!
1 > Create insight
The first step to improving your financial situation is to identify your income and expenses. Take stock of how much you spend each month on various expenses, such as groceries, clothing, living expenses, insurance and your car. You can then immediately see where the most money is leaking out. Also consider immediately how much you like this issue. A new pair of pants, that coffee at the station: does it make you extremely happy? Delighted. Do you think “mwah…..” Then see what it saves if you don’t. We keep in mind ourselves: every euro you can invest can become worth 500x more in 30 years due to the interest-on-interest effect.
2 > Set a budget
Having identified the things you spend too much money on, set a monthly budget for these expenses and stick strictly to it. Make it a challenge and think of what you can do with the money you have left over. Once you realize how even small amounts can pay off….. my oh my!
3 > Pay off debts
Interest on debt is higher than the interest you get on your savings. If you have some savings, pay off your debts with them. Credit card debt and being in the red especially chop pretty badly. You can also take advantage of low interest rates by overdrawing debt. That can save dozens of dollars a year. But always be careful, because borrowing money costs money. So don’t make a web of loans for yourself, paying off expensive loans always takes priority. Check what you pay when you are in the red or when you spend your credit card spending on installments.
4 > Check your mortgage
Many homeowners unwittingly overpay for their mortgage because they don’t look at it once they’ve taken it out. If the mortgage rate you are paying is higher than the current rate, see if you can refinance your mortgage. If your home has increased a lot in value and/or you have paid off your mortgage, you may be able to reduce the risk premium on your interest rate. By submitting a new appraisal report, your interest rate will be lower and you will pay less per month. The appraisal report also has tax advantages. Ask your real estate agent or mortgage broker about it.
5 > Go invest
Yes, investing. Investing is the only way to make more money from your money. Simple as that. Read how here. Savings is currently one of the biggest bleeders. The savings rate is hovering near 0% – what are we saying, with some parties you even have to pay for having savings, but the value of your piggy bank continues to shrink imperceptibly, because of inflation and the wealth tax you have to pay. Consider (really, do it) investing your money.
This can feel exciting and feel like you have less control over it than you do over your savings. And in a sense it is, because by investing you are reallocating your money into the economy. And these can fluctuate, so can the value of your investments. But history has always shown, yes always, that the value of investments grows, despite price declines and increases. On average, every 10 years there is a stock market crash, or other misery, but over the long term your wealth increases. Anyway, we rely on this and invest fanatically with team ELFIN. But thoughtful, not like cowgirls of course.
6 > Check your insurances
Insurance is necessary, but you may just have unnecessary or duplicate insurance. It’s a waste to spend money on risks you can easily bear yourself or duplicate coverages. For example, having liability or travel insurance with 2 parties. You won’t be the first person this happened to. So check it out!
7 >… and your energy contract
Comparing energy contracts also pays off. Many consumers take out an annual contract with an attractive promotional rate, after which the energy contract is tacitly converted to a more expensive indefinite contract. By comparing energy contracts, you can save dozens of dollars.
8 > What about subscriptions?
Subscription here, subscription there. Before you know it, a hefty amount is being unknowingly charged to your credit card every month. After all, it is so easy and quick to get one subscription after another through the app store. Add magazines, newspapers, flowers, food and TV subscriptions, and it adds up nicely. Just an hour of desolation and a check on it, then.
9 > Build a buffer
Emergency fund, super important! We advocate being able to “stick it out for at least 3 to 6 months without income. Do you need €2000 every month to make ends meet? Then make sure you have at least €6,000 to €12,000 in your savings account. So-called fuck-it jar! Find out how to smartly build such a piggy bank here.
10 > Set aside an amount each month, both in your buffer and investment account
And if you’re just starting out smart with your money, you’ll have to get into the right flow. Give yourself some time. Start by setting aside 1% of your net income and slowly build it up. Bet this will almost become a sport?
10 tips to get rich made easy!
10 tips to get rich, easy! Right? Get started on getting a grip on your finances yourself and feel that boost of self-confidence. This is no joke: research shows that financial independence is the #1 booster for your self-confidence. Do you need some help and tools to understand money? Then become an Elfin member!
