When it comes to personal finance, there are two rules you should always live by:
1) Always live below your means
2) Always look forward to the future and save for it
Applying these basic rules to your daily life could mean the difference between feeling stressed out about finances and in control of your finances.
We’ve made a list of suggestions that you can follow to help build and maintain your wealth by age group. As you get older your financial situation will change. You will start earning a bigger salary, you will have expenses and you’ll need to save more towards retirement. Use our wealth building tips below to help you build wealth at any age.
Building wealth in your 20’s
- Open a savings account – open a high interest savings account while you’re young and build your wealth over time.
- Automate your savings – set up an scheduled payment that goes off as close to payday as possible. You’ll never forget to save your money again 😉 Here are our savings tips for 20-somethings.
- Understand how credit works – a great credit score can lead to better rates on loans, better insurance rates, and determine the deposit on your property. You can get a free report here.
- Avoid unnecessary debt – stay away from building up unnecessary debt that will take you years to pay off. If you can, rather purchase in cash or secondhand. If you are in a lot of debt, start getting rid of it as quickly as you can. If you are struggling, talk to a debt counsellor.
- Invest in yourself – while you may need to borrow money, an education is extremely useful.
- Learn about investing – understanding how investments work will help you build wealth throughout your life.
- Start a side hustle – you can explore various side hustles while you’re young and grow your business over time.
Building wealth in your 30’s
- Revamp your budget – As you get older your income, expenses and financial goals change. Adjust your budget to meet these new changes.
- Live below your means – as we get older, we start earning more and we tend to spend more of our income. This is referred to as lifestyle inflation. Instead keep your expenses the same and put more money towards your savings and retirement. How to live below your means?
- Continue saving money – always put money away for short- and long-term goals.
- Talk about money with your partner – be open about your financial goals with your partner and head towards the same goals as a team.
- Contribute to your retirement fund – include your retirement plan into your budget and set enough money aside for when you retire. How much money should you save for retirement by age?
- Keep building your credit score – a good credit will always be valuable. Continue building a good credit score and be responsible with credit. Find out how to build a healthy credit score?
- Get rid of your debt – you may have a few debt accounts by now, pay off your debt as soon as possible. You want to focus your efforts on saving for retirement.
- Explore investment options – invest some of your money in property or money markets and continue investing throughout your life.
Building wealth in your 40’s
- Create a debt plan – if you still have debt at this stage, create a debt plan to eliminate debt as quickly as you can. Make this your priority.
- Save for retirement – increase your retirement plan savings if you can. Make this your priority once you’re debt free.
- Continue investing – continue your investment strategy that you’ve built up throughout your 30’s.
- Avoid lifestyle inflation – avoid spending more money on the big expenses because you think you need to. If you can, continue living the same lifestyle as you did in your 30’s.
- Take out insurance – now that you’re 40, you need to consider various types of insurance like life insurance, disability insurance and good health insurance.
- Keep your side hustle going – don’t let that passive income stop. Keep looking for ways to earn extra money on the side as you build your career.
Building a strong financial foundation takes time. Remember to be patient and take your time when making financial decisions. If you enjoyed this article please subscribe to our weekly newsletter for future financial tips.