Despite less than favourable reports and portents at the start of the year, wage growth is set to blossom and outstrip rent rises throughout 2014. This also means that disposable income levels are likely to rise among British citizens annually for the first time since the Great Recession, which in turn suggests that the UK may be finally emerging from the shadows of debt and financial austerity.
What exactly does this mean for British citizens, however? It is not merely enough to have additional disposable income, for example, especially if you are unable to manage this wealth effectively and translate it into long-term savings. This article will look at how to achieve this, and how to create enough capital to fund big-ticket purchases.
With this in mind, here are 3 practical steps towards saving money and creating wealth for savings, investments and big ticket purchases:
1. Develop a Core Base of Knowledge and Understanding
Your ability to save is often shaped by your level of financial knowledge and literacy, so it is important to learn as much as possible before attempting to build your wealth. This applies to small as well as large details, as it is often the former that can derail your plans and cause you to lose significant sums of money. As a starting point, you may want to consider the impact that fluctuating exchange rates can have on purchase costs, especially when you buy or trade items abroad. This can help you to save considerable sums of money over time and build your wealth organically.
2. Budget in Pence rather than Pounds
Another key step towards successful money management is budgeting, which enables you to calculate your precise level of disposable income and use this productively. When you do begin to budget your income, however, it is important to deal in pence rather than pounds and adopt a precise approach towards detailing each transaction. By using exact amounts rather than generalising and making broad estimations, you can save small amounts of money regularly and develop your financial savings over time.
3. Consider the Role of Investments
The act of saving money must be continuous if you are to accumulate wealth, while you must also be prepared to adapt your outlook as your bank account begin to bulge. Once you have built a solid foundation of income, for example, it may be worth looking to invest some of this so that you can ensure that this money continues to accrue interest and additional revenue over time. This means that while you are continuing to work hard and commit a percentage of your income to savings, the money that you earn is being optimised and delivering the highest possible fiscal return.
These steps are part of a single process that can help you develop a more frugal lifestyle and get the most from your disposable income. Above all else, remember that it takes time to accumulate wealth and that you will need patience, focus and knowledge to achieve your long-term financial goals.
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It’s not easy out there for UK start ups right now. Sourcing business funding is, frankly, a blinkin’ pain – especially for those hoping for conventional funding from their bank. Entrepreneurship is no easy road even when the banks are open for business, but in these tough times, aspiring business owners must work doubly hard to find the funding to get their baby off the ground.
There are plenty of options out there, but none of them are a saunter through the park. Business funding is now available online from Everline, through online crowd funding platforms like Kickstarter or can even be sourced from an angel investor. These routes are not suitable for all businesses, B2B start ups typically fare poorly in crowd funding websites, while angel investors are not always ready to take a leap on an ‘out there’, creative project. If you’re out in the financial cold, but are still passionate about your business, there’s really only one thing for it…Bootstrapping.
What is bootstrapping?
Bootstrapping is a general term referring to doing, well almost anything, yourself without assistance from outside sources. You’ve heard of pulling yourself up by the bootstraps, well now it’s time to take a good hard look at your personal resources and make it happen in business.
Within a start up business, bootstrapping really is an all or nothing approach. It involves putting your own assets into your business – so you really have to be sure that you’ll see a return. However, it’s also a very good benchmark – after all, if you’re not prepared to risk your own finance on your start up, why should an investor? If you’re not confident about what you’re doing, maybe you should stick to the day job…
How to bootstrap
Most entrepreneurs ease their way into this solution, taking the time to evaluate the risks and gradually putting more and more into the enterprise as success becomes increasingly likely. This gives you freedom which straightforward investment simply doesn’t. It also gives you complete control over the initial development of your business – without the interference of investors. Many business owners start by simply ‘financing’ with their own time. Moonlighting on evenings and weekends to grow their new business. This is very hard work, but it ensures there is money coming in, and you’re not risking your future on a pipe dream.
The big steps…
Once success looks close and the day job becomes unsustainable, many entrepreneurs quit and start to think about putting their own finance into the business. Some will remortgage houses, sell cars and max out credit cards to get the business ball rolling, others will approach relatives to find finance.
An interesting idea
One interesting way to free up some capital is to employ staff in return for equity or deferred payment. If your offering is exciting enough to attract employees tempted by this set-up, you’re likely onto a winner. It ensures you team work harder for you than any other staff anywhere else, and it keeps costs down too – what’s not to love?
Know your assets
Of course, the resources available to each bootstrapping start up business will vary considerably from entrepreneur to entrepreneur and this finance really is all about doing it yourself. So look at what you have, and don’t just think in terms of capital, take a really close look at your assets – then focus on turning them into a way to boost your business.
Very good luck, start ups!
I haven’t had much time for hobbies in the last few months, and I can’t say for sure that it will be getting any better.
First, I broke my arm which really ended my golf and softball playing for the year. I did manage to play 9 holes on October 20th, right before the weather started turning nasty. The good news is that I shot better than I had hoped and was really pretty consistent with my efforts before the fracture. My wrist and arm was sore, but no worse off than when I started. But my ball flight was a bit off since I was afraid to take a divot and hit my arm on the ground. However, it continues to feel better each day and has been pretty good the last few days.
Second, I had a huge test to take on the 19th, which limited my ability to much of anything the past several months anyway. I started studying in July and continued during August when I was off work with the break. But once I started working again in September, I spent almost every waking moment studying to the exclusion of blogging, which I still consider a hobby. Now that the exam is done and there is no opportunity to play due to weather, I feel like I have a lot of free time.
Alas, it won’t last long. Of course I have a lot of catching up with items around the house plus I will, in all likelihood, become the owner of a small printing business as part of an ongoing issue that goes beyond this blog post. It will probably consume some of my time as I have to work with mainly oversight issues, but still. Ultimately, I hope that it is worth it.
It does feel good to be writing a bit. I have taken the past week to do a little pleasure reading which was a nice break. I re-read “Catching Fire” since the movie will be coming out soon (November 22nd), and I wanted to be able to compare the book to the movie and didn’t remember all the details. I enjoyed being able to read without feeling like I had to memorize each detail.
Anyway, I do hope to be able to do a bit more blogging over the next couple months. It feels good to be able to write a little again.
I need to catch up with a few carnivals, but had stopped doing this since I wasn’t publishing as much. Plus I really don’t want to put any money into the blogging adventure preferring it to pay for itself. With a decrease in revenue, I needed to watch the expenses so paying to have articles posted to carnivals was the first thing that was cut.
But, I do have to link for the last few so here goes: