Accumulating wealth for your family

3 December 2016
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Category Family
3 December 2016, Comments 0

Accumulating wealth for your family is a fairly straightforward task. It is also one of the basic financial moves that families will take. Yet, this simple and straightforward maneuver requires a lot of knowledge to pull of effectively and efficiently. Some families may attempt to accumulate their wealth, but see little returns and give up eventually. It is important to eliminate bad habits and form good ones, as this will make accumulation of wealth in the long-term much easier and rewarding.

accumulating-wealth-for-your-family

This is an effort that requires the full cooperation of your family; you should all come together with a financial planner to discuss about how the accumulation should be done. Below are ways you can accumulate your wealth.

Saving

Always devote a portion of your income to a savings account. While some sources recommend saving from 30% to 50% of your income, it highly depends on the amount you are earning. It will be good to get you and your partner together and consider how much you should save per month and stick to that plan. It is important to really stick to the routine instead of succumbing to spending the savings. When you see the accumulated wealth, the sacrifice will really pay off – literally. It will be good to save it in a good old-fashioned savings account. Find the best rates that they offer around where you live and settle for it.

Your child can also be part of the effort, as they can set-up their very own kid’s savings account. Contact the banks around your area and see if they offer such savings plans. Here in Singapore, most of the popular banks offer kid’s savings plans. Apart from merely saving the costs, they give material incentives for savings.

Cut costs

More often than not, people pay for things that they are unable to afford, such as an expensive car or excessive subscriptions. Don’t fall prey to this. Having a nice looking car when you are unable to afford it puts more pressure on you and your family. As long as your car is functional, decent and serves it purpose, that should be sufficient. The money saved every month will make a difference. This is very much the same for many other things.

You and your partner should map out running costs that you both have and consider if there are any costs that are able to be cut. Work on it until you come to a point where most running costs are within budget and/or absolutely necessary.

It is always worth it to do more research before committing to any sort of subscription or instalments contract. Find the best deal around before making the decision. Certain instalment payments have ways to trick you into paying more in the long-term, so always ask around before committing. Your family will thank you for being able to spend more on entertainment together.

Control your spending

Even though you already are saving a portion of your income, squandering the rest of it on unnecessary things is basically shooting yourself in the foot.

The money you do not save is basically your disposable income. By spending it under impulse or paying for something that has little value such as an expensive lunch during a quick lunch break, you short-change your family.

Hence, control what you spend on. This can be achieved by multiple methods:

  1. Plan for family weekend outings rather than spending impromptu.
  2. Eat affordable food over the week. That way, you can spend on better food and entertainment over the weekend with your family.
  3. Use the 2-week rule. Before committing to buying anything, always give yourself a window of 1-2 weeks before purchasing it. Although this is not 100% fool proof, it seriously helps to prevent any impulse purchases that you or your family members may regret. If you decide to purchase after that 1-2 weeks, at least you’re sure you want it.

These are just some guidelines on how to control your spending. At the end of the day, it is more about forming habits and discipline.

Increase your income

While this is pretty much obvious, it actually is not a commonly adopted practice. Most people consider about accumulating wealth, but in the process they rarely consider about increasing their income. They think about progressing up their career path and having a higher pay. While that is one way to do it, many either forget or are not aware of passive income. That is, minimal work is put into earning that income. Passive income is extremely important and can really make the difference in accumulating wealth. Here are 2 simple ways to make passive income:

  1. Start an online shop. Ship things in bulk and begin to sell them locally. Find niche products that can get the best returns with minimal effort. Just by sending out the items that your customers have ordered everyday on the way to work, you will make extra money to cover costs like food and transport, eventually being able to save more.
  2. Discuss with your financial planner to learn more about investing and the risks involved. Make an informed decision along with your partner and you will both reap the benefits in the long run.

These are simply some ways of earning passive income, as there are many other ways to go about doing it. Remember that this is a collective effort, hence it shouldn’t be a single person’s job to earn passive income for the family.

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