Regardless of whether your financial goal is to create enough wealth for financial security or a multi-million dollar empire, the starting point is the same. Fortunes are only made on a solid financial base and to build one means getting rid of some old money habits and developing some new ones. Here are five resolutions that will help you build wealth in 2011:
Spend less than you earn
Spending more than you earn will use up your savings or take you into debt. Spend less than you earn and you will save. It’s a principle that is simple to understand but very hard to do. Get it right, throw in some compound interest on your savings, and you will add to your wealth effortlessly.
Make the most of KiwiSaver
If you haven’t joined KiwiSaver make it one of the first things you do this year. It’s an easy way to double or even triple your money. If you are already a member, get advice on whether your money is being invested in a fund that is appropriate for your needs.
Set up an emergency fund
Life is full of unexpected surprises, some of which can be expensive. Having money on hand will help you stay out of debt, particularly expensive debt such as credit card debt.
Pay off debt
Just as compound interest on savings helps make your wealth grow more quickly, interest on debt will destroy wealth and debt repayments will make it more difficult to spend less than you earn.
Review your life and income protection insurance
Protecting your wealth is just as important as creating it. The death of a life partner or the loss of your or your partner’s income through health problems can see your life savings quickly disappear and your standard of living fall.