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This week, we’re looking at some top tips for financial success and laying out 5 tried-and-tested techniques for setting yourself up for life.
Pop culture has a real thing for money, doesn’t it?
Whether it’s Scrooge McDuck diving head-first into a pool of money (which had to hurt, right?) or the endless stream of Instagram posts, films and songs about getting rich fast, we’re all constantly fed ideas of getting rich and leaving all of our troubles behind.
The thing is: unless you win the lottery or get very, very lucky, the fairytale get rich quick idea doesn’t really happen. However, it is possible to take small but decisive steps towards financial security and setting yourself up for life.
Because even if you can’t live in an LA mansion, drive sports cars and walk red carpets, being secure enough to not worry about money would be nice, right?
Here are our 5 top tips for financial success
Tips for financial success #1: Get paid what you’re worth
Lots of articles about financial success or tips for financial success focus on spending less but it’s also equally important to get paid more or, at least, get paid correctly.
The first thing is to check whether you’re getting paid correctly.
Last year, an estimated 439,000 people were paid below the hourly minimum wage (which ranges from £7.70 to £3.90, depending on your age or whether you’re an apprentice) and included 369,000 people missing out on the National Living Wage of £8.21, despite the fact that they’re entitled to it by law because they’re over 25.
Next, make sure you’re getting paid what you’re worth.
Sometimes, managers and corporations pay you how much they think you’re worth, not what you’re actually worth. Other times, they’re too busy to realise that you are long overdue for a pay rise.
In these situations, the thing to do is to ask for a raise. The problem is, it’s a tricky and scary thing to do.
First, you have to get your head around the idea of telling your boss you want more money, which isn’t always easy. These three TED talks are a great place to start; they’ll help you realise that it’s not about being greedy, it’s about being paid what you’re worth.
Next, you need to handle how you’re going to ask for a raise. Now, we’ve still got 4 other top tips for financial success to talk about, so we’re not going to get into that here, but we will recommend an article that we wrote a little while ago that breaks asking for a raise down! Check it out!
Third, if you’re not in a situation where you can ask for a raise, think about bringing in more money.
Whether you’re thinking about a part-time job or a side hustle, bringing in just a little more money every month can help set you on the path to financial success and allow you to make money moves that’ll help set you up for the future.
Tips for financial success #2: Stick to a budget
Now you’ve thought about maximising what comes in, it’s time to think about limiting what goes out — or at least being mindful of what goes out.
You’d be surprised how easy it is to overspend each month, especially if you don’t have a plan for how much you can spend on what. And you’d be even more surprised at how hard it is to save and build a rainy-day fund without a clear plan, too.
A budget — whether you use an app or the ol’ pen and paper — is crucial if you want to start working towards financial freedom.
In short, we ❤️ a budget here at Bamboo. We’ve written post after post about how awesome they are, so check them out!
Tips for financial success #3: Pay off debt
Once you’ve worked out how to maximise your incomings and make the most of them, then it’s time to pay off any debt you might have and make sure that you’re working towards a debt-free life.
Now, this is a slightly dicey rule. Some debt — like mortgages and student loans — are considered good debt, so you don’t necessarily have to rush to pay them off.
However, other debt — like credit card debt, for example — can affect your credit score and become an on-going expense every month, so it pays (both psychologically and actually pays) to clear them as soon as you can.
Sit down with your budget — or even a professional financial planner — and work out how you can afford to pay off your outstanding debts a little quicker.
Tips for financial success #4: Plan for the future
OK, things are getting serious now. You’re bringing in more money, you’re spending it wisely and you’re heading towards a debt-free life. High five!
Now, it’s time to start doing the first of two top tips for financial success that future you will thank you for preparing for the future.
There are three ways we like to think of preparing for the future here at Bamboo: safety, savings and siestas.
Safety: Safety involves tucking some money away into a safety net fund to touch only in emergencies. Life has a funny way of throwing us all curveballs and having a safety net of one or two month’s living expenses (rent, food, bills, etc…) can stop those curveballs from morphing into sticky financial situations. The more you can tuck away into your safety net every month, the better.
Savings: Savings are slightly different from your safety net in that they’re there to spend on things you want or need, like holidays, weddings, new cars or even a house! The best way to handle savings is to tuck away a set amount of money — may be a lump sum or percentage — at the beginning of the month (or as soon as your paycheck lands) so you’re not tempted to spend it. Pretty soon, you’ll build up a nice lump of savings and be able to dive into your own pool of money. (Metaphorically, of course. As we said, that would hurt a lot.)
Siesta: While we should have called this section retirement, siesta just sounds better right? It’s not about planning to give up work, it’s about planning to be able to enjoy life when you’re older. That means doing less-than-sexy things like choosing a good pension plan and making regular payments. It might not seem fun right now, but trust us, old you will thank young you for being so smart.
Tips for financial success #5: Invest
Ah, the last stage on your journey to financial freedom: investing.
And, as US businessman Edgar Bronfman, Sr once said: “To turn $100 into $110 is work. To turn $100 million into $110 million is inevitable.”
And what he meant by that was this, once you have enough money to live comfortably and invest some of your money, it becomes easier and easier to become financially successful. If you invest wisely or conservatively, you essentially earn free money.
Of course, investing is a lot more complex than that and can be quite risky. Always make sure you look into whatever investment platform you’re opting for and the risk involved in it. But there are plenty of options out there and apps like Moneybox do make the whole process slightly less daunting. However, as mentioned earlier, they too say ‘As with all investing, your capital is at risk’.
The team over at Money Advice Service have put together a fantastic guide to getting started with investing that clears up lots of questions and breaks it all down clearly. It’s well worth checking out!
As you can see, there’s no real secret recipe to get financially secure! The best top tips for financial success are less about getting rich quick and more taking small actions that compound year after year to help you get to financial freedom.
- Author The Bamboo Team
- Posted 5 December 2019