This is Day 4 of a 7 Part Series that will change YOUR ATTITUDE about money and Teach you How to Make your Money WORK for you instead!
After the next 7 days of effort and determination, we will have the Principles and strategies that will allow you to gain control over your Finances again and even work towards bigger Financial Goals like one day being Financial Free.
Day 4 // Time to Start Working on Your Fortune
An important lesson to learn is that You got to work to earn a living, but you work on your profits – You work on your Fortune.
Profits in our case being any way we can use our money to generate more money on top – think having your own Side Hustle/Business in your spare time and Investing.
We can Define Extra Incomes that work on our Fortune in two areas – Passive and Active Incomes.
Do your research and find a Passive Investment option that works for you – any advice in the below is purely based on my experience and research, it’s your Money – make sure you invest and use it wisely within your knowledge too.
// Passive Income – Max out that Company Pension Free Money!
I don’t need to worry about having a Pension as when I’m old the State will look after me, right? Completely wrong!
The critical lesson we need to all learn and teach our kids about money is that you need to use your income to create more income in the future – if you spend it all now you will have nothing left in the future.
Start by looking into your Company Pension – the earlier you start saving into a Pension the better, as the wonderful nature Law of Compound Interest could make you very rich with small amounts put aside each month.
Check out my “How to get Rich using Compound Interest” post and Video for more info if you don’t believe me!
If you work for a Company, chances are they will pay contributions into your pension based on what you give up to – Reason being, they receive tax breaks for doing so therefore in their interest to save money.
If your company even gives ANY money in addition to your payments – for example most companies will MATCH your contributions, effectively doubling your payment each month without you having to earn it – it is FREE MONEY. TAKE THE MAXIMUM AMOUNT OF CONTRIBUTIONS YOU CAN!
If you do this from the word go, you won’t miss it out your Pay Cheque each month, as it is taken straight before they take tax away – the very first line item in your pay.
You won’t be able to get access to any Pension until you are minimum age 55 – but again, it is free money that you haven’t earned and therefore you absolutely need to take it and run into your profits with it.
// Passive Income – Start Investing in Investments in Companies/Stock Exchange
Passive Income is where we give our money to someone else to use to make profits from it – You can take a gamble and open an Investment Account with any well know Investment Fund Companies such as Vanguard, but I would always say before you do that consider an Investment Stocks & Shares ISA as the first bucket of savings to grow each year.
ISAs are savings accounts with benefits – you are allowed up to £20k currently Tax-free on any increase, meaning when you make interest and the amount grows – you won’t be taxed on it.
Why I have an Stocks & Shares ISA in particular is that the Rate of Return in Interest is far higher than a normal savings account in the current economy. You can receive between 2-10%+ in some years, depending on the portfolio you keep.
As you are investing your money in the Stock exchange in this type of ISA, there is also the risk you could lose your money but the aim is to leave it as long term as you can – adding to it so that one day you can live off the increase each year, or use it as a source of investment later.
Other forms of Investment include Premium Bonds (also known as Cash Investments) where your interest is “won” in the form of a lottery with all the people who have taken out Premium Bonds. No guarentees to win an amount each year, but usually people make between £10-50 if they keep their Bond for a number of years.
// Active Income – Start a Side Hustle or Personal Business in your spare time
Actively invest in yourself with your money in some part – use some money each month to determine your own profits by having a small business on the side that brings you job.
In the current economy, we never know when our Day job might be taken from us and as many sources of income as possible will keep you protected as much as possible.
Stuck for ideas – Check out my Video and Post all about Work from Home Jobs and How to Earn Extra Income for your Family
// Savings for a Rainy Day
Personally I always advise having at least 1 months full household Bills covered in a Savings account you can get access to within 24 hours if you needed it – such as a Cash ISA or normal Savings account.
This money we aren’t worried about making money, we are just ensuring we have money if we absolutely needed it at short notice.
Start even with £1 and add to each month till you hit your target of 1-6 months Emergency Fund.
// Make that Money AutoPilot now
The key to my system is making everything about your money work on autopilot as much as possible, so you don’t need to stress about if you have enough to live and enjoy life.
We do this by setting up regular payments into all our Savings and Investments to ensure we don’t even miss the money as soon as it goes out the door.
I set my Monthly Investments and Savings to go out the next day after my monthly wage, so that I have time to check I have made enough in the month to live and enjoy life.
We do this by setting up regular payments into all our Savings and Investments to ensure we don’t even miss the money as soon as it goes out the door.
I set my Monthly Investments and Savings to go out the next day after my monthly wage, so that I have time to check I have made enough in the month to cover the bills and then know the money goes out and everything left in my account is for living.
You might even consider having separate bank accounts for Your Bills and Household Essentials; one for your Food and Petrol and then one for your Pocket money spending – similar in a way to the popular Envelope System. Whatever works for you to ensure you don’t get into debt and know where everything is paid from and to.
Remember to Log your Commitments in the 7 Day Money AutoPilot Workbook and let’s go straight to Day 5…