Warren Buffett was a millionaire by the age of 30 and he is by far, the world’s most successful investor. While we all dream of becoming rich early in our lives, the chances of that happening may be slim. However, you can certainly build your wealth over time by simply being wise with the money you earn today.
5 Money Savings Tips to Build Your Personal Wealth
1. Start early
This is the number one mantra of growing money. The sooner you start saving, the greater the cumulative return on your money. You don’t have to start big. As soon as you start earning, put away 5% of your income in a separate savings bank account. Once you have a lump sum amount, make your first investment (e.g. invest in stocks, gold, or even have a fixed deposit account with the bank).
As you earn more, save at least 10% of your monthly income.
2. Have financial goals
Goals keep us motivated to achieve what we set out to do. So why should your finances be any different? Set financial goals for different stages of your life – how much money will you need by when? Work backwards to see how much you need to start saving today to have the money you need in the future.
3. Some amount of penny pinching is good
Spend your money wisely. As Warren Buffett himself said, “If you buy things you don’t need, you will soon sell things you need”. Assess unnecessary expenditures that you can cut. Surrender that gym membership that you don’t use and reduce the amount of food that goes waste in your home. Avoid compulsive buying.
4. Limit borrowings
Most of us don’t think twice about using credit cards or taking loans to buy a car or finance a wedding. But the more you borrow, the more difficult it becomes to realise your financial goals. If you use credit cards, ensure that you have enough money in the bank to pay it off at the end of the month. If you must take a loan, also plan to prepay it.
5. Invest wisely
Rarely will you find fast and risk free ways of making money. There is always a trade-off between risk, timeframe, and return. Diversify your investments to balance your financial risk with your financial goals. Have a long-term view of investments.And in fact, be like Warren Buffett and invest in undervalued stocks or businesses.While you can splurge some of the profits made from your investments, reinvest your gains to continue to enjoy higher returns.
Warren Buffett’s investing philosophy is in Value Investing and that is to search for stocks of quality companies that have an intrinsic value that is lower than its market value. In other words, they are currently undervalued by the market and holding onto these stocks in the long term can allow investors to profit! Our one day Value Investing Unleashed event explains in value investing in greater detail with case studies to support. Click here to register your seat!
At the end of the day, the more you save and invest, the more your money will grow. More importantly learn to enjoy life. No money in the world can buy you happiness. We are sure even Mr. Buffett would agree with that!