Wage growth is flat in many parts of the world after rising historically for decades. Economists thought it might be a blip because of the economic disruption over the last twenty years, but wages remain stubborn, and simply refuse to rise as rapidly as the increase in housing costs.
For this reason, many people are struggling to get ahead. The conventional approach to financial planning worked in the past, but simply putting in more hours at the office is infeasible for many people in the present.
Fortunately, this post is here to help. We take a look at some of the ways you can get ahead financially, even if wage growth is flat. We show you what you need to do to build a sizable portfolio and grow your wealth over time.
Set Clear Financial Goals
Without specific goals, it is difficult to make meaningful progress. Set short-term and long-term financial objectives. These could include building an emergency fund, paying off debt, saving for retirement, or buying a home. Having a clear roadmap will keep you focused and motivated.
For each financial goal, break it down into smaller, manageable milestones. This makes your objectives less daunting and allows you to track progress more effectively. Regularly assess how close you are to achieving your financial goals. This can help you stay motivated and make necessary adjustments to your strategy.
Celebrate your achievements, no matter how small. Treating yourself when you reach a financial milestone can help maintain your enthusiasm for your goals.
Be Proactive To Improve Your Income
In the past, graduates left university and found jobs almost immediately. For many, there was no competition whatsoever. They simply walked into work.
Now, things are changing. Relatively few high-status positions are available relative to the number of people who could potentially fill them.
That’s where being proactive to improve your income could help significantly. Reminding yourself that job promotions won’t happen automatically is one of the best things you can do to improve your financial prospects.
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Take a look at the salaries firms are offering for roles in your niche and figure out what you might need to do to obtain one of them. Think about the skills you’ll need and what your earning potential could be realistically, based on the data out there.
Don’t be afraid to hop from one firm to another in search of higher pay. You are much more likely to get the pay packet you want from third-party organizations, not the company you work for right now.
Live Frugally
Another approach is to live frugally, watching what you spend your money on often leads to massive savings over the long term.
Just as a side note, don’t live frugally if it means cutting down on the absolute essentials. For example, don’t eliminate nutritious food from your diet because junk food is more affordable. At the same time, don’t neglect your health or medical costs. These too are essential.
Be Patient
Everyone wants wealth to happen immediately and automatically, but the opposite is often the truth. Building a sizable portfolio takes a long time, usually several decades, of consistent effort. Unless you are extremely lucky, it is not the sort of thing that happens overnight.
Seek New Methods Of Generating Returns
You’ll also want to seek new ways of generating returns so portfolio income can offset some of the loss of regular income.
One option is crypto mining. Many people earn returns in excess of 10% using these strategies, which are significantly better than conventional assets.
Diversify Your Income Streams
Another approach is to diversify your income streams. Instead of relying on a single job, look for ways to make additional money elsewhere.
For example, you might consider starting a side business, based on your skills or assets.
For instance, you could make money by letting a room in your home on Airbnb. This could generate plenty of passive income to offset any loss in wages over recent years.
Network With Others
You also want to make a habit of networking with others and building strong professional communities. The more people who know who you are, the more likely you are to succeed.
Remember, promotions come on the back of how your peers view you. If they see you as highly competent, they are considerably more likely to recommend you for promotion into higher, better-paying roles.
Eliminate Your Debt
With flat wages, you also want to eliminate your debt. Forking out for large interest payments can take the place of money you might save for a rainy day. You should assess all your debts and start paying them off from bigger to smaller.
Build an Emergency Fund
Life is unpredictable, and unexpected expenses can arise at any moment. Building an emergency fund with at least three to six months’ worth of living expenses can provide a financial safety net during challenging times. If you’re unable to save a significant amount initially, begin with a small monthly contribution to your emergency fund. Over time, increase this amount as your financial situation improves.
To avoid the temptation of dipping into your emergency fund for non-urgent expenses, keep it in a separate, easily accessible account.
Invest Wisely
At the same time, you’ll want to invest wisely. While picking winners could net you a 100X return over 10 years, these stocks are extremely challenging to find. It also puts you at risk of choosing stocks that don’t offer any returns at all, which is something you’ll need to strenuously avoid.
Investing wisely usually means picking a diversified stock portfolio and moving in tandem with the markets. You can pick winners if you believe you know something about a company that others don’t.
Automate Your Savings
Finally, you’ll want to automate your savings. This approach means you’ll never forget to put money away in your account and meet your savings goals. Lots of savings apps and tools are available these days that can help you save for future.
