Financial concerns can make it hard to sleep at night. Whether you’re saving for a house, trying to pay off debt, or dealing with rising living costs, building personal wealth can feel overwhelming. The good news is that it doesn’t have to be as scary as it seems.
To help you get started, we asked the wealth management specialists at Investment Quorum for their best advice on how to build and sustain wealth over time. Here’s what they recommend:
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Start with a Clear Goal
If there’s one thing all financial experts agree on, you need a strategy to build wealth. Having a clear financial goal is like having a map for a trip – it shows you where you’re going and how to get there.
An expert from Investment Quorum says, “You wouldn’t start driving without knowing your destination.” Your financial goals work the same way. “Knowing your goal makes a big difference, whether you’re saving for a house, preparing for retirement, or building a safety net.”
However, many people don’t set clear financial goals.
Instead of saying, “I want to save more,” try saying, “I will save £5,000 by next year, putting away £417 each month.” Making your goal specific changes it from a wish to something you can achieve.
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Save First, Spend Later
Creating wealth requires good saving habits. However, many people are not saving enough. According to Money, one-third of households in the UK have less than £1,000 in savings. This means that one unexpected event – like a car breakdown or a health issue – can lead to financial trouble.
What can you do? Make your savings automatic. Set up a direct debit to transfer money to a savings account once you get your salary. This way, you won’t miss the money and will be less tempted to spend it.
If you want a simple way to manage your money, consider the 50/30/20 rule:
- 50% for needs (rent, bills, groceries)
- 30% for wants (dining out, entertainment, hobbies)
- 20% for savings and investments
If saving 20% isn’t feasible right away, start smaller. Even saving 5% of your income can add up over time.
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Investing: Don’t Let Your Money Sit Idle
If you keep money in a bank account, you are missing out on opportunities. Inflation reduces cash value over time, making it less able to buy what you need. This is why investing is very important.
A 2023 report showed that many people in the UK keep most of their money in low-interest accounts, limiting their chances of investment growth. In contrast, people who invest – even small amounts – usually see better returns over time.
Investing means making your money work for you and by spreading your investments across stocks, bonds, or real estate, you can manage risk and ensure steady growth.
For beginners, tax-friendly accounts like ISAs or pensions are great places to start. ISAs lets your investments grow tax-free, and many employers offer pension contributions. This is free money that benefits you.
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Pay Off Expensive Debt First
Debt can make it hard to build wealth, especially high-interest debt like credit card bills. According to the Bank of England, the average household in the UK owes over £30,575. But don’t worry; you can manage it if you plan carefully.
Start by focusing on your most expensive debts – those with the highest interest rates. This method, called the “avalanche,” helps you pay less interest overall. If you find it hard to stay motivated, try the “snowball” method. With this approach, pay off smaller debts first to feel a sense of accomplishment before tackling larger ones.
The goal is simple: pay more than the minimum amount due and stop interest from piling up.
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Multiple Income Streams Are a Game-Changer
Relying on just one income source is no longer a smart choice. With global uncertainty, having multiple income streams can help you achieve more financial stability.
Go Daddy reports that one in five adults in the UK now have a side job. This makes sense – an extra £200 to £500 a month can greatly boost your savings and investment plans. You can earn additional money through freelancing, consulting, selling products online, or generating passive income from rental properties. These options give you crucial financial flexibility.
The goal is not to wear yourself out; it’s about having choices. The gig economy has created more chances than ever to earn extra money without exhausting yourself.
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Plan for the Future, Not Just Today
Creating wealth means saving and investing now while also preparing for the future. Key elements like estate planning, insurance, and emergency savings are vital for long-term financial stability.
Sadly, many people do not prepare for the future. Research by Money and Pension Service (MaPS) shows that 60% of adults in the UK do not have a will, which can put their assets at risk.
An expert from Investment Quorum points out that estate planning is not just for wealthy people. A simple will ensures your assets go to the proper beneficiaries and can reduce inheritance tax. Estate planning is often overlooked in financial planning.
Having insurance, such as income protection, can keep you safe in case of unexpected illness or job loss and help ensure your financial security during difficult times.
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Financial Literacy: The Key to Long-Term Success
Most schools do not teach financial literacy. As a result, many people learn about it on their own. Knowing how to manage money is one of the best ways to ensure long-term success.
According to UK Finance, only 24% of adults in the UK feel confident about handling their finances. So, how can you build that confidence? It’s essential to stay informed. Reading finance books, subscribing to newsletters, or following financial blogs can help. Also, check your financial plan regularly to ensure it matches your goals.
If you need more help, working with a financial advisor can make a big difference. They can help you with complex decisions and create plans that fit your needs.
Final Thoughts
Wealth doesn’t happen overnight. It comes from making smart and steady decisions. Start small, stay focused, and give yourself time to see results.
The goal isn’t to be perfect. It’s to make better decisions today than you did yesterday. Remember, those small steps add up to big results over time.
