You’ve likely heard many a person utter the words “you need to spend money to make money.” While this term has become so clichéd it’s almost meaningless, these over-repeated phrases get that way for a reason: they’ve packed full of truth.
Let’s take a moment to do the math: no matter what you multiply zero by, the result will always be zero. So if you invest nothing in your future wealth, nada is exactly what you’re going to be looking at. The million-dollar question is, where should you direct your money in order to bring in the prosperity you desire?
If your goal is to pay off debt and then start saving, one of the strangest yet most effective ways to do this is to get more debt. Most people don’t realize that there are viable options for small loans with super-low interest rates which you can use to pay off debts that have higher rates. While you’ll still have the same amount of debt overall, your repayments will be smaller, meaning you’ll pay less in the long-run and will be able to clear your debt quicker. Just be sure to read the fine print so you know you’re definitely getting a good deal.
There’s no need to send yourself to college for a financial planning degree. Simply investing in a course (or three) that will help you manage your money and understand wealth-building strategies will pay off immensely in the long-term. The best part is, there are plenty of high-quality online programs available, meaning you can study at home, or even make better use of your daily commute. Of course, not all classes are created equal. Figure out what your financial goals are and what kind of investments you’re interested in, and then do the research necessary to find a reputable course. Some investments can also help you reduce your tax burden, so speak to a good tax accountant to get some direction.
When you get into a saving mindset, it can be easy to go overboard on the frugality and cut away expenses that were contributing to your physical and mental health. While an expensive spa membership might be a luxury you can do without, be careful not to take this too far. There’s a phenomenon known as “false economy” which describes actions you think are saving you money due to their short-term benefits but are actually costing you a greater amount in the long-term. For example, if you cut out your fitness expenses and stick to cheap fast-food, you may save money in the short-term but then end up spending exponentially more on doctor’s visits down the line.
There are certain future-proofing expenses that you shouldn’t do without. Travel, health, car, and home and contents insurance may seem like unnecessary expenses when all is going well in your life. However, imagine if you injured yourself in a motor vehicle accident, had to cancel a trip as a result, and missed out on several months of work while recovering? With insurance, you could recoup the costs of the trip, have your vehicle and medical expenses covered, and have income protection take care of you while you recuperate. The same situation without insurance would be a terrifying prospect.
While saving is important and minimalism can be a wonderfully productive lifestyle to embrace, there are certain expenses that will always pay off in the long-run. Invest in clever debt reduction strategies, financial education, a happy healthy lifestyle, and protection from the unknown, and you’ll be well on your way to a prosperous future.
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