To effectively build wealth, you need to be managing your money. No matter how much you earn you need to know where your money goes.
It is too easy to spend what you earn and more. Banks are prepared to give us credit cards with huge limits and shopping is getting easier with online shopping and “Tap and go”.
To grow your wealth you need to understand where you spend your money. Do you know how much you spend on bills, groceries, mortgage/rent, and entertainment?
A great start is listing all your bills and their amounts. This lets you understand where a great chunk of your earnings go. Ideally, setup a bank account just for bills. Work out how much you spend each year, and transfer each pay cycle an amount that will cover your bills. By doing so, you never have to worry about finding the money to pay bills again.
While you’re opening accounts, open another one for savings. Whether you are saving for a home loan deposit, an overseas holiday, or just to have some money in case of an emergency it is important to put money aside.
And lastly, have money for fun. We only live once so it is essential we enjoy ourselves.
The order is important, Bills, Savings, then Fun. Too many of us spend big on the Fun and then have a nasty hangover when the Bills arrive.
Being in control of your money can take away some of the stress in your busy life.