Getting rich in 10 steps. Ha, if only it were that simple. Getting rich for most people, except for a few lucky bastards, is a matter of patience. Besides, being rich is a subjective concept and has a different meaning for everyone. In this article, what we mean by ‘rich’ is: being fairly well off and having the freedom to go your own way. And these 10 tips to get rich will give you a good start. Learn, save and invest!
1 > Create insight
The first step to improve your financial situation is to map your income and expenses. Make an inventory of your monthly spending on various cost items, such as groceries, clothing, living expenses, insurance policies and your car. You’ll immediately see where most of the money goes. Also, think about how good each expense makes you feel. Those new pants, that coffee you have at the station; do they really make you happy? Yes? Definitely keep them. Meh? Look at how much it would save you to not have them. We always keep in mind: every euro you invest can be worth 500 times as much in 30 years because of compound interest.
2 > Set a budget
Did you map which matters you spend too much money on? Set a monthly budget for these costs and stick to it strictly. Make it a challenge and think about what you can do with the money you have left. Once you realize how profitable even small amounts can be… my oh my!
3 > Pay off your debts
Debt interest is higher than interest you get on your savings. If you have any savings, use them to pay off your debts. Credit card debts and overdraft charges strike especially hard. You can also make use of low interest by refinancing your debts. That could save you tens of euros a year. But always beware, because borrowing money costs money. So don’t get yourself tangled up in a web of loans; paying off expensive loans is always the priority. Check what your overdraft charges actually are or what it costs to pay your credit card spending in installments.
4 > Check your mortgage
Many homeowners unknowingly pay too much for their mortgage, because they forget about it as soon as they take it out. If the mortgage rate you’re paying is higher than the current rate, see if you can refinance your mortgage. Did your house rise in value by a lot and/or have you paid part of it off? It could be that the risk margin of your interest rate can be lowered. By submitting a new valuation report, your interest rate is lowered and you end up paying less each month. A valuation report has tax benefits too. Ask your broker or mortgage advisor about them!
5 > Start investing
Yes, investing! Investing is the only way to make more money out of the money you have. Simple as that. Read all about that here. Savings are currently one of the biggest bleeders. Savings rates are close to 0%. Some institutions make you pay for even having savings, while your piggy bank’s value continues to drop imperceptibly because of inflation and the wealth tax that you have to pay. Consider (honestly, do it) investing your money!
This might feel scary and give you the idea of having less control than over having savings. And to some extent that is indeed the case, because by investing you’re reallocating your money in the economy. And as the economy fluctuates, so does the value of your investments. But the past has always shown, yes always, that investment value grows, despite price falls or rises. Every 10 years on average there’s a stock market crash or other trouble, but in the long run your capital increases. Anyway, we trust the process and team ELFIN are investment fanatics. Sensibly, of course, not cowgirl style.
6 > Check your insurance policies
Insurance policies are needed, but it could be that you have an unnecessary or double insurance. It’s a pity to spend money on risks you can easily carry yourself or on double coverage. Having a liability insurance or travel insurance with 2 companies, for instance. You wouldn’t be the first this happens to. So check it!
7 > … and your energy contract
Comparing energy contracts is also worth the effort. Many consumers sign a one-year contract at an attractive promotional rate, after which the energy contract is tacitly converted to a more expensive, indefinite contract. Comparing energy contracts can save you tens of euros.
8 > What about subscriptions?
Subscription here, subscription there. Next thing you know your credit card is imperceptibly charged with a substantial amount each month. It’s so quick and easy after all to get one subscription after the other via the Appstore. Add in your magazines, newspapers, flowers, food and tv subscriptions and it becomes a pretty penny. So take an hour and sort it out.
9 > Build up a buffer
Emergency fund, super important! We call for ‘the means to last a minimum of 3 to 6 months without income’. Do you need €2000 a month to get by? Make sure to have at least €6000 to €12.000 in your savings account. Call it your fuck-it fund!
10 > Set aside a fixed amount each month, both for your buffer and your investment account
If you’re just starting out being smart about your money, you’re going to have to get into the right flow. Give yourself some time. Try starting with setting aside 1% of your net income and slowly build up. Wanna bet it’s almost going to become a sport?
10 tips to get rich made easy!
10 tips to get rich. Easy, right? Get to work on taking control of your finances and feel that confidence boost. It’s not a joke: research has shown that financial independence is the #1 self confidence booster.
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