6 tips for growing your money
Wouldn’t it be great if there was an app that could make you rich? Just imagine: with one click the download bar fills up along with your bank account. Sadly, growing your money takes longer and is far more complicated than a simple software download, especially when you have a young family. Aim instead for financial security over a personal fortune - something you and your partner can do even before downloading a baby.
Pay off your debt
When you’re trying to save and grow your money, having debt is like having your parents along on a date: it restricts your options. So get rid of as much debt as you can before you even start saving. Pay off any non-mortgage debt, such as credit cards, overdrafts and loans. Consider a credit card balance transfer whereby you move a credit card balance to another card, which charges a lower interest rate. Remember, if you pay off your entire credit card balance each month, you save money on the interest charges.
Pay off your mortgage
Remember that ‘get rich’ app I was pining after? If only there was one that would bump off your mortgage too! Paying off your home loan early is easily one of the safest and most tax-efficient investments you can make. Talk to your bank about your mortgage structure; you want to make sure you’re paying it off as fast as possible with the minimum interest.
Join a superannuation scheme
Unless you have an idea that’s bigger than Facebook, you’re probably going to be working for a few decades yet and will need to save for your retirement. Superannuation schemes help you do this, and are another safe investment – your money is not only tucked away so you can’t spend it, but it is also growing in the process. New Zealand’s KiwiSaver scheme involves a range of investment funds, with different levels of risk and potential return, where you can put your money.
Learn the lingo
You don’t need to take a degree in finance but it really helps to have some basic knowledge about how the world of money works. Knowing the difference between a table loan and revolving credit can help you decide how best to pay off your mortgage, while knowing the difference between a PIE and a PIR is useful when you’re reading up on superannuation schemes. The internet is your best friend here, so let your fingers do the walking. The weekend papers also tend to have a lot of information, particularly about investing, in their money sections.
Shop around for high interest savings accounts
Instead of putting your money into the most convenient savings account, shop around for a better deal. Many banks offer higher interest rate accounts where you’re incentivised to deposit and to keep withdrawals to a minimum.
Once you’ve saved some money (hurrah!), consider investing it. By now, you’re so clued up on financial terms and your investor personality type that you should have no trouble deciding where to put all your eggs - right? At least, you know not to put them all in one basket, which means reducing your level of risk by diversifying your investments. A financial adviser can talk you through the different investment options, such as bonds, shares and real estate.