Instead of thinking how to get rich quick in 2021, change your mindset and think about what changes to your saving habits you can make that will benefit you in the long term. Financial planning is a longer term strategy, not an opportunity to get rich quick. Even the world’s most famous investor, Warren Buffett said: “You can’t produce a baby in one month by getting nine women pregnant.” So, what changes should you make in 2021 to ensure you are setting yourself up for future financial success?
Start with the end in mind
Why are you building your wealth? Is it to create financial independence? Or are you saving for a particular item for your life or business? What do you want your wealth to help you to achieve? Once you have a series of goals, write them down on a timeline. Then ask yourself, what do I need to do today to make each of these happen? Online calculators allow you to plan and show the effects of long-term compounding. When you know why you want to build wealth, the next question is – how much is enough? How much do you need to invest at different investment rates to achieve each of your goals?
The little wins can be big wins
Sit down and really scrutinise your finances to see where you can save money. Little things every day or every week, can soon add up. A daily coffee for £3 can be over £700 a year. There are apps such as MoneyBox and Plum that can help you save and invest. For me though, saving is a habit – work out how much you can afford to put away each month and stick to it.
Make the most of tax free allowances
ISA’s and LISA’s offer a tax effective way to save, make sure you are maximising them. If you are saving for a house deposit, LISA’s give you a 25 per cent bonus, so it makes sense to utilise them. Shop around for ISA’s though, as the interest rates on them can be notoriously low. If you own a business, speak to an accountant about how you can maximise your tax-free allowance.
Max out your pension now, even if retirement feels a long time off
Paying into a company pension can be one of the best ways to future proof your retirement. It is fully tax deductible as a business expense and can be an excellent way of drawing profit out of the business. Starting early and paying in as much as you can afford to maximise company contributions, will help you later in life.
Can you create a side hustle?
If you are really serious about saving, can you make extra money through a side hustle? Either by freelancing, selling online or taking a second job? If you choose to invest any of the extra cash you will see quicker returns.
With this in mind, what are your financial goals for 2021 and how will you achieve them?
~Novel Serialisation: Heavens Fire~
By Thomas Skinner, Director & Financial Planner, Barnaby Cecil
