Get richer than your boss!
With superior money-management skills, you could become wealthier than your manager. Here's how to beat the system.
I reckon that a sensible worker with a will to win can end up richer than his/her immediate boss. This is particularly true if your manager lacks the money-management skills that make such a massive difference over the long haul. Although she or he may earn more money than you right now, by making use of superior financial planning, you can come out on top at the end of the day.
Now for a cautionary note: acquiring wealth is a marathon, not a sprint, which means that many people lack the stamina to strike it rich. However, it's not as tough a task as you'd think, because all you need are eight good habits, a few hours a year and plenty of patience! Here's how to beat the system:
Related how-to guide
Set a budget and stick to it
Learn how to successfully squeeze your budget.
See the guide
Skill 1: Master budgeting
Related how-to guide
Set a budget and stick to it
Learn how to successfully squeeze your budget.
See the guideBudgeting is the foundation -- the very cornerstone -- of sound financial planning. Just like the finance director of a FTSE 350 firm, you need to know exactly what's coming in each week/month/year and how much is going out. Indeed, budgeting is the best tool at your disposal for maximising your disposable income, because it allows you to boost your income and reduce your expenses.
To get your budgeting boost off to a cracking start, adopt our goal on budgeting. Then, sign up for online banking with lovemoney.com. It's free, and allows you to track and categorise all your transactions from different bank accounts with a single log-in, so it's easier to see at a glance all your incomings and outgoings. Find out more
Skill 2: Control your spending
Once you've got to grips with your household budget, you can then move on to the next step: cutting your core expenses. For example, you can slash your energy bills; find cheaper car insurance; batter your phone bills; massacre your motoring costs; and so on - adopt our 'lower your household bills' goal for more help. Again, online banking can be very useful here as it allows you to categorise and keep track of your spending on a month-by-month basis. Also, it's worth remembering that "convenience costs", so aim to resist impulse buying; instead, shop around for bargains and discounts on everything significant that you buy.
Related how-to guide
Destroy your debt
If your credit card bills and debts are getting you down it's time to make a stand - here are five easy ways to start.
See the guide
Skill 3: Bash your borrowing
Related how-to guide
Destroy your debt
If your credit card bills and debts are getting you down it's time to make a stand - here are five easy ways to start.
See the guideThe Golden Rule of Borrowing is simple: borrow only what you need, pay it off as quickly as you can, and hand over as little interest as possible. Alas, most borrowers fail this test, because they borrow more than they should ("a little extra for a few treats"), pay off their debts too slowly, and pay far too much interest because they fail to shop around.
Generally speaking, most consumer debts fall into four main categories: mortgages (home loans, secured loans and second mortgages); store and credit cards; car and personal loans; and bank overdrafts. If you learn to master all of these, you can avoid enriching lenders too much. This goal will help: Destroy your debt.
Find and compare cracking cards, perfect personal loans and magnificent mortgages today!
Skill 4: Repel risk
No matter how cautious you are and how much you try, you cannot entirely eliminate bad luck from your life. At some point, fate is going to overhear your plans, laugh and then hit you over the head with a pig's bladder. Thus, you need to take action to dispel the everyday dangers of life - and that means taking out insurance. Just make sure you don't get ripped off! Read Insurance essentials versus the rip-offs for more help.
Get quality quotes for car, home, life and travel insurance!
Related how-to guide
Build up your savings
Here's how to get into the savings habit, find forgotten money, work out the real value of a savings rate and build up that emergency savings pot.
See the guide
Skill 5: Switch on to saving
Related how-to guide
Build up your savings
Here's how to get into the savings habit, find forgotten money, work out the real value of a savings rate and build up that emergency savings pot.
See the guideHaving been raised in a period of national austerity, our parents and grandparents were super savers, but the same cannot be said for the latest generation. Sadly, the art of saving has fallen out of favour these days. Frankly, if you don't have any savings, you don't have any solid financial foundation at all, so adopt our Build up your savings goal without delay.
Discover superior savings accounts via lovemoney.com
Skill 6: Invest in your future
Once you've got to grips with the first five steps in my wealth-creation programme, you reach my favourite stage: investing. There's nothing quite like the money in your stocks & shares ISA making even more money for you while you work, rest and play. Hence, this next phase is absolutely crucial: you must set aside some of today's money to invest in a brighter future.
One of the best ways to do this is to invest in a low-cost index tracker. Read the following to get started straight away:
- Two simple ways to invest better in shares
- Top 10 index trackers
- The four biggest index tracker mistakes
Make tax-free gains with my favourite cheap, simple stock-market investment!
Skill 7: Plan for retirement
Unless you're a workaholic, there'll come a time when you part company with the world of work. When you do, you'll need alternative sources of income to fall back on, or you could suffer a substantial drop in your living standards.
As with investing in general, retirement saving is horses for courses: you could live on the proceeds of property, shares, cash or whatever you see fit. The good news is, saving for retirement is not as complicated as it often seems. In fact, you can become a pensions expert in five days by reading this series of blogs by lovemoney.com head of consumer finance Ed Bowsher.
Donna Werbner gets your two pence on the scams you hate, and finds out how you can protect yourself and stop the scammers from stealing your cash.
Skill 8: Be suspicious!
No matter how little or how much lolly you own, there'll always be some dodgy geezer keen to nick it, so you need to be on your guard against scams and swindles. I'd recommend reading 10 ways to spot a scam to learn the ropes. Alternatively, watch our video: The scams that make you shiver.
For the record, any investment which promises returns of over, say, 6% a year carries a risk to your capital. In other words, unlike a safe savings account, it could lose you money. Thus, be wary of 'get rich quick' schemes offering mouth-watering returns over short periods. Ninety-nine times out of a hundred, they'll be a complete con, as victims of boiler rooms, Ponzi schemes and fake lotteries have learned to their cost.
If you're ever suspicious about an offer that sounds too good to be true, why not head over to Q&A to ask other lovemoney.com readers what they think? In fact, whatever your money worry is, Q&A is a great place to go to get free advice.
Good luck with your plan to make your millions -- now is a good time to start!
More: Use lovemoney.com to find top-quality bank accounts, credit cards, energy bills, insurance, mortgages, personal loans and savings accounts!
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Comments
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Love money may think their online banking is a good thing but it does mean they can access your bank account - I signed up for this and stupidly listed all my access details. I then found my bank account and credit card account had been accessed while I was asleep - fair enough LM say htey only have read access and can't change anything but it does give them access to a hell of a lot of info about you. Also I always check the last accessed date to make sure I haven't been hacked - you can't do this if someone else has access to your accounts. Be wary
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There is some good advice in this article, particularly the first three. I would add to "invest in your future" something about education and constantly learning new skills and/or taking on a job for what you can learn from it, as much as the pay cheque. The more skilled you are the more opportunities tend to open up for you in life. Good business, communication and sales skills are as important as anything in my view. From my own experience, I wish when I'd started work in 1994 that I'd started setting a personal budget, and had stuck to it religiously. I've earned a lot of money in my business career, but I haven't managed to hang on to much of it. Stuff magazine cost me a fortune for the 6 years I subscribed to it !!! Two books that have changed my financial life around are Rich Dad Poor Dad, and the Richest Man in Babylon. The latter in particular advocates that whatever you earn you save 10%, spend 20% on reducing debt, and live on 70%. You can play around with the percentages depending on your own personal circumstances and budget, but it's great, simple, advice. Just ensure all three are covered and make the "live on" percentage as low as possible, save as much as possible if you have no debt, if you have debt then save minimum 10%, and throw everything else at the debt with the highest interest rate (the snowballing concept). The debts disappear quite rapidly if you do that ... and when they've gone then the serious saving starts. Now that I work to a fixed budget I actually worked out that if I'd kept to it from day 1 in my employment history, I would today be debt free, own my two houses outright, and have close to £400K of cash at hand. Just from being sensible, without any risky investments at all. I work in sales and whenever I used to get a commission cheque I would go shopping, buy a load of expensive junk that I really didn't need, buy "the best" of everything, expensive holidays blah blah blah. I regret buying all that crap now. The other thing that is vital is setting short, medium and long term financial goals. Have something to aim at and then make it happen. Everyone can do it, but it does take focus and discipline to achieve them ... Well done Iniq on getting it right !
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Iniq, Im 20 years your junior and I still envy you ;-)
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26 May 2010