The evidence is in: You get richer as you get older. In Canada, the average net worth for citizens under 35 is just shy of $50,000, while for those over 65, it’s at a staggering $543,000.
Even if you are young, there are things you can do now to build wealth and secure your finances in the long run.
Want to learn more about how to build wealth at any age? Let’s jump in with these key tips.
Start Investing Early
One of the biggest benefits of investing is compounding growth. Your account balance will grow when you earn interest on your investment income. Then, you can re-invest that money to create compounding growth.
Even investing a small amount on a regular basis can create huge results over time. If your money has a few decades to grow, you may find yourself with a lot more than you expected.
Your investment risk depends on your age and how much you want to save. If you’re young, you can afford the ups and downs of the stock market. It may be better to be aggressive with your investments. For older investors, conservative investments are good for steady growth over a shorter timeframe.
Avoid Unnecessary Debt
Not all debt is bad, but there are a few things you can do to avoid it. When you want to purchase something big, make sure it’s something you need. If it’s something you want, you might want to save up for it, rather than go into debt.
Many types of debt, like credit card debt, have higher interest rates if you don’t pay off your balance in full. These extra payments could tack a lot of money onto your credit card bill.
Some purchase plans include promotional interest-free financing. Make sure to pay off the entire balance within the time frame to avoid paying all the accumulated interest later on.
Pay Off Existing Debt
Building wealth doesn’t have to be difficult if you’re in the red. However, when you pay down existing debt, you can then use that money every month in your wealth-building strategy.
Two of the most popular methods to pay off debt fast are the avalanche method and the snowball method. The avalanche method tackles your debt with the highest interest rate first. Once it’s paid off, you can apply that money toward your other debts.
Snowballing your debt is similar to the avalanche technique, with one key difference. For the snowball method, you start with the smallest amount, then go by debt size rather than interest rate.
Budget, Budget, Budget
Do you know where your money is going every month? Establishing a budget and evaluating how you spend money is one of the best ways you can build wealth.
When in doubt, overestimate how much you spend on something that may fluctuate month to month. It’s better to have money left over than to scramble for additional funds.
Writing it all down can show you where you need to cut back if necessary. You may be able to shift money around and make more payments toward existing debt, or add to a contingency fund.
You also need to take things like holidays, birthdays, and other expensive periods into consideration. For example, you’ll probably be spending more during the month of December, so make sure you have money allocated for gifts and holiday activities.
Have an Emergency Fund
An emergency fund is absolutely essential for your wealth-building plan. If you lose a job or have an unexpected bill, you’ll have the money you need to cover it.
Fast loans in Canada can help you cover emergencies if you don’t have enough. Many companies offer no credit check loans, so there’s less of a hassle.
Use a reputable business like KingCash to get an instant loan. You can work with the company on a flexible payback plan over a designated period of time. This is helpful when you need money immediately and meet the requirements.
For even faster service, online loans only require you to fill out a simple application. Usually, the money will get approved very quickly and deposited into your account from the information you provide.
Don’t Live Outside Your Means
It can be tempting to get the latest and greatest things on the market, but everything comes at a cost. Many people struggle with living inside of their means, resulting in a whole lot of debt.
If you know you want something, save up for it or find an interest-free way to pay for it. You also need to evaluate how those payments will impact your monthly budget or your plans to pay off existing debt.
Even if you can afford those luxuries, you can’t save money when you spend money. Consider the financial gains you could make by investing or adding to an emergency fund, rather than getting a new phone or something else you don’t really need.
Put Money Into Retirement
With people living longer, it is more important than ever to make sure you have retirement funds available. You may not want to think about it when you’re younger, but your older self will thank you by investing early in your retirement.
Invest in a retirement account with tax benefits, such as an RRSP. Make sure to follow the guidelines for annual contribution limits so you don’t have to pay a penalty.
You can also open an investment account for general investing, with a long-term retirement goal. This is where you can strategize your wealth-building plan so you have enough money when you’re ready to leave the workforce.
Build Wealth Today
Making a wealth-building plan should not be intimidating. With this guide, you can build wealth and create a sustainable financial future.
One of the best ways to manage your money today is through an instant loan. Reach out to us today to see if you qualify or take a look around our website to learn more.