Monday, 17 March 2008

Saving Your Way to Wealth

One of the biggest (and most overlooked) secrets to wealth is saving.

In order to achieve your financial goals, you will need to save. It sounds so obvious that it surely can't be a secret! But without a good savings plan, whatever money you make will go straight out the door because you are spending it on things that don't contribute to your wealth building strategy.

Savings shouldn't be confused with investing. Savings are the regular or lump sum amounts you put away. Investments are the various options you use to make money on your savings.

To successfully save, you need to create some sort of regular savings program. This can be as simple and effective as arranging an automatic payment to transfer a portion of your income to a savings account that earns interest. It is important to always remember that saving is a long-term venture.

For many people, however, saving anything is just not possible. Not because they don't earn enough, but because spending is just too good and easy an option. From experience, the best saving option for most people is to seamlessly move money out of their bank accounts and into an investment which is locked in some form.

An investment that is locked doesn't mean you can't get your money out, but it does make it more difficult. For example, it's easier to get money from your bank savings account than it is to sell your property or managed fund investments.

Part of my current savings strategy is to put away $500 each month into some selected managed funds. This is done automatically through direct bank transfer into the managed funds, and you'll find that most funds offer similar regular savings plan. Not only is it very easy to save this way, but you will also make great returns on your savings with little effort.

So, remember that it is vital to set up some sort of savings program, as whatever you save up will directly contribute to your wealth and help you achieve your financial goals sooner.