Tips for managing money: This is how it works with the first 100,000 francs

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He has a habit of handling several coins that could secretly devour a fortune. As a result, the person may feel trapped in a permanent state of bankruptcy. However, in principle, obtaining long-term financial security is in everyone’s own hands. These are considerations for how to successfully save money and increase financial well-being in the long run.

1. Improve attitude towards money

A healthy attitude towards money is crucial not only financially but also for overall well-being. This includes the perception of money, how valuable assets are, and how income, expenses and savings work. It is difficult to accumulate wealth if you constantly have to feel that money is limited. Millionaires don’t just fall from the sky – unless you inherit a large fortune to match. An estimated CHF 88 billion was inherited or given in Switzerland in 2022. But that money can be a long wait and you should be able to make a fortune no matter what. Many wealthy people started small and took decades to earn the million. The “dishwasher career” that has amassed an almost overnight fortune is mostly pure fantasy.

2. Take responsibility for your own finances

It’s easy to pick up bad habits if you don’t actively take care of your finances. This includes not checking bank statements, ignoring bills, or delaying financial decisions to their detriment. Taking responsibility means knowing about your own finances, making informed spending and saving decisions, and seeking professional advice if needed. How financial decisions affect the budget, assets, debts and expenditures should always be transparent and clear.

3. Improve your financial skills

Fundamental financial information about interest rates, the importance of saving, credit management and investment are actually essential information. Not only is “financial illiteracy” (lack of financial knowledge) more common in Switzerland than one might think. Lack of financial literacy is a major factor that can make you feel permanently broke. And not being able to make basic financial decisions can be devastating. For example, not saving for emergencies or retirement.

4. Create a budget

Budgeting is one of the basic building blocks of financial independence. Without a budget, you quickly lose track of your own financial possibilities. A budget clearly shows money earned on paper before it is spent on its own. Accordingly, discipline is required and the spending plan must be followed.

5. Don’t spend too much money on fun and entertainment

Everyone needs fun, leisure and hobbies to balance life. But if too much money is spent on leisure activities, vacations and unnecessary things, this can quickly exceed the financial framework. Free money for entertainment and leisure activities is budgetary, so you can enjoy life carefree and plan for the future at the same time.

6. Avoid unnecessary luxuries

Housing and mobility are already major expense items for most people, so pushing your budget with high rent, an expensive mortgage and/or a luxury car is risky. When housing expenses exceed 30 percent of income, it becomes almost impossible to meet other expenses or to save for the future. Giving up unnecessary luxuries gives you greater financial flexibility and the opportunity to save money for future financial prosperity and investment growth.

7. Keep an eye on savings and investment

After you save money, you need to deposit part of it. Money held in a low-interest savings account will depreciate over time due to inflation. Fund savings plans are a tried and tested way to build assets over the long term. This can also be done in small quantities. While investments always involve risk, education and careful planning can minimize these risks. In the next step, you should learn about financial markets and then invest in stocks yourself. Investment capital is the difference between what you earn and what you spend. If you spend everything you earn, you will never have investment capital.

8. The first 1000 francs are difficult, the first 100,000 francs are even harder

It is not easy to save the first 1000 francs as a young person, especially if you are still studying. And patience is required until it approaches 100,000 francs. Charlie Munger, billionaire and partner of US investment legend Warren Buffett (92), has repeatedly said that saving the first $100,000 is the hardest. But the first $100,000 is the most important for building a fortune later on.

Source :Blick