Today I will briefly touch on automated payments. Automated payments will enable you to grow wealthy without the requirement to remember to carry out a transaction on a monthly basis. Yes I know it sounds an odd statement but how many of us forget to do a monthly task in their diary and end up doing something completely different instead.
With automated payments you can effectively become wealthy without even noticing.
Firstly if your response is: ” I dont have any free cash .. I have a big mortgage, I have lots of outgoings.” then dont worry I will start by suggesting a few ways of freeing up some capital.
- Do you buy lunch at the office? If the answer is yes then how much do you spend. Only £5 a day? Well lets do some sums. £5 x 5 = £25 per week multiplied by 4 weeks = £100 a month outgoing. And how about that latte or cappucino that you pick up on the way to the office or at lunchtime. If we are talking starbucks then thats around £3 a day x 5 =£15 multiply by 4 and thats another £60 a month. So these daily items using my examples are worth £160 a month.. Now that may not sound a lot but how about investing £100 a month in a fund that will bring in 15-20% interest. We are talking almost £1500 in the first year. This may not seem a lot but by minimising your daily budget just by skipping the daily latte and spending spending £3 a day on lunch you have freed up £100 a month. And after a while you will adapt and not even notice these small changes. A more drastic step would be to start making your own lunch. In this case you could save even more cash. I hope this explains a little about the concepts around increasing wealth.
Now lets move on. Automated payments are now a part of our lives. Unfortunately most automated payments are utility companies, loans and credit card payments withdrawing money from your bank account on a monthly basis.. This isnt much fun now is it.
Well its time to start reversing this. To start with set up a high interest savings account such as ingdirect.co.uk online. Once this is done login to your savings account and set up a monthly direct debit from your main bank account. Dont worry you can change the payment amount anytime, stop the payment or move the payment back to your main account if absolutely required. Look at your outgoings and look at your monthly salary and find a reasonable figure that you wont miss monthly. How about £100 a month or more if you have additional left over after your outgoings. If you dont have left over cash then read above (perhaps you could adapt your daily expenses and change your routine to free up capital. :-)
Now once thats done you dont need to think about investment or cash for a rainy day. You will find you dont notice these payments leaving your bank account on a monthly basis. You may even find you can afford to increase the direct debit to a larger payment after adapting your lifestyle and minimising your outgoings. Your savings account will swell and with the power of compound interest grow at a steady rate. If you have a plan (as all millionaires do) then perhaps you could save enough in this savings account to cover at least 6 months wages. This way you have greater security and at the same time this capital will grow. If you have plans such as starting your own business (perhaps from home) thenthe plan would be a lot easier to manage with 6 months – years salary in a savings account.
Ive only touched on a few points but there are hundreds of ways to minimise and reduce outgoings that enable you to increase the amount you invest in your future. Stay tuned for more ways to increase wealth.
[tags]Automated Millionaire, Direct debit investment, Millionaire Blog UK[/tags]