Saving money and improving your financial stability is likely to be a priority for many people. Whether you’re looking to save for something specific or you simply want to stop living paycheck to paycheck, money is a primary concern for most of us. It’s easy to become discouraged if your bank account balance never seems to reflect the many sacrifices you’re making in an attempt to save more.
You might have resigned yourself to the fact that your lifestyle or income simply doesn’t allow for extra savings and that you’re destined to continue working and earning just enough to get by.
But this doesn’t have to be the case. There are a number of ways you could increase your overall wealth.
Some of these options require some initial investment. Others might involve reassessing your spending habits. There are also options listed below that could enable you to earn a substantial amount without any upfront costs or unnecessary risks. As long as you have some free time on your hands and you’re willing to put in the work, there’s no reason that you can’t succeed in growing your overall net worth.
Net worth refers to the value of all of your combined financial and non-financial assets. For example, any property that you own outright will contribute to your net worth but any debts will be deducted from the overall figure. Having a good understanding of your net worth makes it easier to keep track of your finances and gives you a well-rounded view of your overall financial situation.
Be sure to see our other articles in this series on net worth:
- How to Calculate Your Net Worth
- 9 Convincing Reasons Why You Should Be Tracking Your Net Worth
- Liquid Net Worth: What it is, Why it Matters, and How to Calculate It
- Average Net Worth By Age
Listed below are five tried and tested ways of increasing your net worth and living a more financially secure life.
1. Steady Saving
First and foremost, you could consider a long-term savings plan that’s realistic for you and your income. This may seem like an obvious suggestion, and it’s likely to be something you’ve considered already or maybe even tried to implement, but saving consistently for the long-term takes a great deal of discipline.
When devising a savings plan, it’s good to start with a clear goal in mind regarding how much you would like to save each month. Once you’ve given yourself a goal, you’ll want to assess whether this is realistic in relation to your regular income and outgoings.
Start by removing this figure from your regular income and creating a savings line item in your budget. For example, if you want to save $200 per month and your income is $1600, take off the $200 and leave yourself $1400.
From here, deduct any essential outgoings such as rent or mortgage payments, phone bills and grocery shopping. Next up, look at your optional extras; these include things like Netflix or Hulu subscriptions and any other regular payments that can’t be considered essential. Assess which of these you want to keep and deduct these from the total you have left. This is a great opportunity to cancel any running standing orders that you no longer wish to pay – take this time to really get a hold of your spending.
Now, you should be left with a figure that can be divided up into your monthly budget and any emergency funds. If this figure seems reasonable and you feel you can live off this amount consistently, this is your new savings plan.
It’s important that you’re being smart with your money and you remain strict with your saving, but you also want to be realistic. If you’re leaving yourself with too little money to live off of each month, you’re unlikely to end up sticking to the plan. Find a balance that works for you and allows you to save continuously over an extended period of time.
It’s also equally important to create an investment plan for the money you’re saving.
2. Investing in Real Estate
If you’re looking to earn a significant amount of money, real estate is an excellent place to invest.
When it comes to investing in property, you have a few different options. You could buy and flip properties, adding value and generating a profit each time (hopefully). This option does involve a lot of time and effort and can incur some extremely high initial expenses. If you choose to take on this type of investment opportunity, the rewards can be really high but it’s likely to be a full-time endeavor and requires lots of research, particularly if it’s your first time.
Alternatively, you could invest in rental properties that generate consistent cash flow. Again, this involves an initial investment cost but can end up enabling you to gain a consistent, long-term passive income stream. This might involve some hard work to start off with, depending on the current condition of the property and any renovations or maintenance work that needs to be carried out, but once you have a consistent flow of tenants this is a great, easy way of securing a second stream of income. Many landlords choose to work with rental agents or property managers which makes their job even easier.
Like property flipping, investing in rental properties also comes with an element of risk. It’s important to do plenty of research and fully assess your projected income and outgoings each month before making a large-scale investment.
There are a number of ways to do this; this rental property calculator enables you to estimate your projected expenses and profits based on the property you are looking to invest in.
A hands-free alternative is to invest in Fundrise. This popular real estate crowdfunding platform makes it easy to invest in a professionally-managed portfolio of income-generating properties. You don’t have to deal with any of the headaches related to real estate investing, and you can get started with as little as $500. Read our Fundrise review to learn more.
If you’ve been sitting on a business idea for a while but have been reluctant to take the steps to bring your idea to fruition due to fear of the inevitable risks and hard work involved in starting a new business, it might be time to bite the bullet and invest in yourself and your ideas.
Starting a business can seem scary, it’s likely to be extremely time-consuming and you might not make a profit for the first year or maybe even more. But with consistent hard-work, in the long run, you could end up developing a highly profitable business that you’re truly passionate about.
Many entrepreneurs start successful businesses from home while still working their regular day job. Having the security of your regular income to fall back on can reduce the stress and pressure of generating profits immediately, and allows you to grow your business without sacrificing your financial stability.
Without a doubt, this is likely to be extremely taxing on your time and your schedule. You might end up working long days and unsociable hours for a period of time, but once the hard work begins to pay off and you start to reap the rewards of your new endeavor, you could be free to turn your business into a full-time job and invest your time into the things that truly make you happy.
4. Side Hustling
Similarly, you could invest your time in a side hustle. This doesn’t have to mean starting up your own business. If you’re not especially business-minded but like the idea of generating a second stream of income, there are so many side hustle ideas you could look into, most of which can be done from the comfort of your own home.
Remote working is extremely popular and there’s a huge range of companies offering remote work to people all over the US. You could spend your free time completing surveys, transcribing documents, writing articles, or delivering parcels.
The list is endless; if you have some spare time outside of work, then chances are you could be investing it in a side hustle that might allow you to boost your savings and your overall net worth.
5. Live a Simple Lifestyle
In The Millionaire Next Door, Thomas J. Stanley and William D. Danko argue that the uber-wealthy media-personalities we see so often on TV and social media, driving expensive cars and living in huge Beverley Hills mansions, are in fact an incredibly small percentage of America’s millionaires. Stanley and Danko claim that the truly wealthy typically opt for a more simple life, driving regular cars and living in respectable but modest homes.
They’re not the first to argue that the key to gaining and maintaining wealth is by living below your means. If you have a high income but find yourself regularly low on savings and without any real financial assets, it could be because you’re overspending.
By reducing your outgoings and spending less on lavish, expensive luxuries, you could dramatically increase your net worth and end up much more wealthy in the long run.
It’s a common misconception that in order to make money, you need to have money. If you don’t have any savings and are living month-to-month just about getting by on your current income, you could implement some of these tips and methods into your daily life to increase your overall wealth and also gain a clearer understanding of personal finance and your own financial potential.
By investing your free time and energy into a new side hustle; living a more modest lifestyle and making a genuine effort to save more consistently; or taking the plunge and investing in the high-income world of property development, you could dramatically increase your net worth and completely transform your lifestyle.
READ NEXT: 7 Steps to Grow Your Net Worth