5 Simple Lifestyle Changes that can help you Build Wealth in 2020
If you are working towards a financial goal like building up an emergency fund, planning a large purchase or saving up for retirement, making certain lifestyle changes can help you reach your goal faster. We’ve compiled a list of our top 5 below.
Table of Contents
1. Diversify your Income Stream
If you are serious about building wealth, then your first focus should be on increasing your earnings. Having only one source of revenue is not the answer! In fact, 65% of wealthy individuals had a minimum of three streams of income before making their first million pounds.
If you work a 9-5, you can take on a side hustle or a part-time job. You could become an affiliate marketer, a freelance writer, set up an e-commerce store for dropshipping and so on.
2. Go on a ‘Cash’ Diet
One of the fastest ways to reduce how much you spend and increase your savings is to physically give away every single pound note you spend – in other words, pay with cash. It makes the purchase more tangible and visceral.
Try the tried and tested envelope budgeting system for at least a year and you’ll be amazed by how much less you spend. It might be a little uncomfortable, but there is nothing convenient about building wealth.
Begin by cancelling some of your credit cards or setting them aside. Then delete all data of your cards from the shopping sites you regularly visit. They are now out of bounds.
If you really must buy an item or pay a bill online, ensure that you are using your current account statement to keep on top of this money and make sure it is accounted for in your budgeted spend.
3. Drop one Bad Habit
Bad habits feel good, but they are often very bad for your wallet and wealth. In most instances, you do not realise how much your habit is costing you financially until you get rid of it.
For example, if you spend £5 on cigarettes every day, by quitting, you could save £2,170 a year.
So, consider cutting out alcohol and soda or reducing how often you consume them. The upside of this change is it will also make you healthier and have more money to invest/save.
4. Save to Invest
Saving alone is not going to do it, to build wealth; you also need to invest some of your savings. In fact, how much you invest and save is often more vital than how much you earn. Most millionaires invest on average a minimum of 20% of their household income yearly. And over time, their wealth isn’t measured by what they earn, but by how much they’ve invested and saved.
Eating out can be a serious money drainer. Apart from depleting your resources, it’s easy to pack on the pounds if you do not watch what you eat at your favourite restaurants. Choosing to eat-in more than you dine-out will save you money, and even though it might take some getting used to, it is great for your finances.
For example, if you’re currently spending £100 a month eating out, cooking at home can be a great way to save money. If you were to stop such spending completely, you would have another £1,200 a year that you could funnel into your emergency fund, holiday savings or retirement plan.