Wealth-Building Tips

Living comfortably, particularly in our later years, is a worthwhile goal most Canadians strive for. Growing a financial nest egg is not as difficult as it appears, though it will certainly require some discipline and a solid financial plan on your part. Here are five tips to guide you in building wealth the steady and practical way!

 

Live below your means. Some of the wealthiest Canadians are not the ones who are driving luxury cars or dressed in designer duds. On the contrary, these rich folks have made the conscious choice to put their money away in investments and live a modest lifestyle. Distinguish between your wants and needs, set up a budget and resist the urge to pay for things on credit you don’t have. This may initially seem like a daunting rule to live by, but once you commit to it, you’ll have put yourself on the fast track to wealth.

 

Start saving NOW. It’s time to forget the excuses about why you can’t start saving at the moment, and just do it! Financial experts recommend you put away at least 10 per cent of your net income per paycheque, but even putting away five per cent is better than nothing. Whatever percentage you begin with, make it a personal finance goal to gradually increase this percentage within six to twelve months.

Pay yourself first. Think of putting away savings for yourself as a financial obligation you’re required to just meet like any other, such as your monthly phone bill or rent. The easiest way to put this concept into practice is to set up a separate savings or investment account, and direct a set amount of money into it, ideally through a pre-authorized contribution (PAC) payment. By automatically deducting the money out of your primary bank account, you’ll be saving for your future without even having a chance to miss the cash.

 

Invest in mutual funds. An ideal way for most Canadians to advance their financial situation is to invest in the market. One of the advantages of doing so is that your money will grow at an increasingly faster and larger rate than if you simply stick it into a high interest savings account. Wondering how to get started? First, read up on the subject using trusted resources (we like The Wealthy Barber by David Chilton and Balancing Act: A Canadian Woman’s Financial Success Guide by Joanne Thomas Yaccato). Next, book yourself an appointment with a financial advisor—either at your banking institution or by asking friends for referrals—who will be able to assess your risk tolerance and assist you with determining the funds that are right for you. 

Stay in it for the long haul. Once you’ve begun investing, keep in mind that mutual funds are a practical way of growing your money over a long period of time. Throughout the lifetime of your investments, it’s a certainty there will be highs and lows, not to mention times when your funds are down and you may be tempted to pull out lest you lose all of your money. During these instances, the trick is to not panic and wind up doing something you’ll later regret. As the stock market history has indicated, if you ride out the bad times, it’s almost guaranteed you’ll reap the benefits once the market rebounds. So have patience and stay positive!