Having “5 Steps to Grow Your Savings” makes increasing your wealth very easy. And for most people, there isn’t too much magic to growing your savings. You just have to follow these five savings steps. But keep in mind…
Even though these 5 steps to grow your savings are time tested and will definitely help increase your net worth – they are pretty simple. And while they are systematic steps you can take to consistently and incrementally grow your savings, you are not going to get rich overnight using this approach. Got that?
The cold hard truth is that growing your savings requires dedication and commitment. But the sooner you start the sooner you’ll be able to retire. So, here are…
5 Steps to Grow Your Savings:
1) Earn Money: This might sound facetious. But I’m being serious. The simple fact is that you can’t grow your savings if you don’t have any money to save. And before you can save money you need to earn an income. While earned income is not going to get you rich, it is a good place to start growing your savings. Consider your earned income your operating cash flow. And you need to find ways to generate cash flow in the first place before you can ever grow your savings or make it rich living off your investments. This is the first step to growing your savings. Cool?
2) Save Money: Of course step two of growing your savings is all about saving! Makes sense, right? I’m sorry if these tips aren’t groundbreaking enough for you. But it’s surprising how many people want to make it rich investing, and they haven’t even saved any money. So if you want to grow your savings in 5 easy steps, make sure you listen to step 2 and pay down any debts and then save your money in the first place. This isn’t complicated. But commit to putting 10, 15 or 20% of your personal earnings into index funds or mutual funds. There’s no other way around it. You need to save if you want to grow your savings.
3) Dollar Cost Average: For most people, investigating specific stock ideas and trying to time the markets is a waste of time. If you want to grow your savings, and you are already regularly earning money and putting some aside, then congratulations! The next step to help your savings grow is dollar cost averaging. While this term sounds a little fancy, it just means commit to buying mutual funds, index funds or stocks every month. By regularly investing in stocks each and every month you are probably going to have a good average cost basis and don’t need to worry too much about the specific price you pay each month. That means you won’t have to worry about timing the markets because you are consistently putting your earnings to work. This is a key step to growing your savings. And luckily, learning to buy mutual funds and stocks online is easy. So once you get started, just stick with it!
4) Re-Balance: Even if you are not actively managing your own investments, rebalancing is a tactic that you should pay attention to because it can really help you grow your savings. You probably only need to rebalance once or twice a year. The key thing to remember about re-balancing is that if you have some huge gains you might want to lock some of them in. It’s okay to take some profits if you have large capital gains – just be aware of the tax implications and make sure you put your money back to work immediately by reinvesting it in another asset or fund.
5) Learn, Learn, Learn: The fifth and final step to help you grow your savings is about learning. And if you stay focused on learning more strategies, tactics and tips for how to grow your savings then you’re setting yourself up for a rich future. By constantly seeking out knowledge (like this article on 5 steps to grow your savings), you are soaking up wealth-building information that can help you get more out of your stock ideas. It won’t happen overnight. But little by little you’ll discover more and more ways you can grow your savings.
So there you have it. I hope you found these 5 steps to growing your savings useful. Of course you could add more steps to help you grow your savings, but after giving it much thought these are the 5 steps that I think are most important for the average person to grow their savings.
On the other hand…
If you’re already growing your savings quite effectively and you want to learn more about how to earn a better rate of return from the stock market, then I encourage you to read some stock investing books, or sign up by entering your email in the form below to get more exclusive analysis and ideas to improve your stock picking….