If we could influence all young people who are disappointed with their track record in building wealth, here are our tips to turn around their money fortunes.
1. Do a financial inquiry into “you”
What assets do you have, such as a car, cash at bank, shares, super, etc? You then compare this to your debts and the leftover bit is your equity. To understand equity, imagine you bought a house for $600,000 and the loan was $500,000. You’d have equity of $100,000.
2. Know what you want
You might want a diversified share portfolio. Write down that goal. Then get an idea of what this would cost. You also need to get a picture of it where you see it every day, for example, on your fridge. If you can’t do this, you really don’t want to achieve your goal. And remember, change is critical if you’re going to change your wealth results
3. Create a wealth plan
For example, it might be this: “I spend $30,000 a year so I’ll GST my spending and cut back by 10 per cent to find $3,000 worth of saving. I might invest $3,000 in a Managed Fund that buys the top 200 stocks on the Australian stock market. I’ll do this for 10 years and put $30,000 into the stock market, which should become about $70,000 by then. That will be used as a deposit on an investment property, which I’ll rent out to someone else for income and tax-effective reasons, until I can afford to live in it and pay it off. You might even plan to form a relationship so you can own that investment property earlier! That’s real money-life planning!
4. Get to know your money
Now you have to work out what you can save to grow your wealth or use it to pay back a loan on an asset that could help you grow your riches. This is about getting to know your money “you”. Work out your after-tax-income and then create a forensic financial file on your spending. This is just another term for a budget, which many people find boring. However, there’s old saying about successful businesses: “if you can’t measure it, you can’t manage it”. And you have to manage your money if you want to grow richer.
5. Create an income plan
You might study at nights, create a side hustle or part-time business. This can not only really bump up your savings and help achieve your “get rich” goal, it could become a great full-time business.
6. Make it a full-time hobby
Read about it, watch videos, go to conferences and hang out with people who can teach you stuff about investing to build wealth and to get great jobs, big promotions and pay rises or to build a business that ends up in the fast lane for growth.
7. Become an expert
One of the best lessons I learnt was that it’s good to invest in quality stocks after a stock market crash and that a market often went up for 10 years on average after a crash. I then learned how smart it was to buy stocks that paid good dividends. These were like great properties that paid a good rent and also delivered capital gain over time.
8. Seek advice
Do this by paying experts like us to do it for you. Knowledge is not only power, it can also help you build wealth by knowing the rules and laws that can help turbo charge your wealth-building.
9. You really need to want it
This much loved quote from one of the greatest athletes of all time is very relevant here: Chris Evert, the tennis great, who once said “There were times when deep down I wanted to win so badly I could actually will it to happen. I think most of my career was based on desire.”
10. Happy things = building wealth
It can be the material stuff you love such as cars, clothes, holidays overseas and property accumulation but it can also be the ability to help the people you love or those you know need your support. It doesn’t have to be all about you. It can be about others, if you stretch yourself to become exceptional with money, business or success as an employee.
To build riches above the average Aussie doesn’t come from dumb luck. It comes from you deciding that you want to be different, committed and focused on becoming a money expert. It’s about building a new and improved you.
Your Choice Mortgage Brokers Pty Ltd atf Halo Innovation Trust trading as Heart Mortgage Services - Australian Credit Licence 38643
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