Investments

Exercise to maximise

Do you want to maximise your money? We all spend so much time and energy earning the money we do. With the cost of living continuously increasing we need to make sure we get the most out of the money we earn – not only by watching what we spend but also by making sure that we do the best we can with the money we have and maximise its potential.

To maximise or optimise in personal finance is to both create and build on opportunities and assets. If you do so, you will be well on the path to creating financial stability.

One of the best ways to ensure you have the tools to maximise your money is to understand key financial concepts. Financial literacy is the awareness, understanding and application of financial concepts which equip you to make informed, positive and impactful decisions.

Here are some key concepts for you to focus on to maximise your money:

An asset has or can be used to create value – now or in the future. This includes things such as the money you earn, your home, car and savings. If you’ve got assets, you’ve got backup and more importantly, the possibility of using your assets to build further wealth.

You probably haven’t thought about it this way, but your ability to earn an income is an asset. Focus on developing your career by building on your skills and experience to grow your income – “learn more to earn more”. You can also explore additional income streams and side hustles to maximise your earning potential.

Get the most out of the money you earn, by understanding your payslip and benefits. Speak to your HR consultant or a coach and review your benefit statement.

Compound interest is a frequently used term worth taking the time to understand. It means your money grows, based not just on the initial amount invested, but on the initial amount PLUS anything additional earned – it’s a powerful tool! Watching compound interest in action is hugely motivating – it has a big impact long-term on your ability to maximise your money.

The concept of risk vs reward can make or break your hard-earned efforts. It’s an important concept in investing – the higher the risk, the higher the possible reward, but also the possible loss. Whilst it is essential to balance your risk based on your circumstances, the biggest risk to maximising your income can be taking no risk at all – this is where good financial advice from a professional comes into play.

Diversification is another key term. It’s one of the pillars in riding out difficult financial times. Diversification reduces investment risk by ensuring you invest in different areas so that if one area is badly affected, the others will pull you through.

Savings and emergency funds are crucial when it comes to creating wealth. If you have backup funds, you are less likely to fall into debt for unplanned expenses. It’s often the lack of savings and emergency funds that hold people back from maximising their potential.

Finally, understanding the importance of budgeting and managing your expenses will go a long way to putting you on the right path to maximise your money. You first need to get a handle on your budget and unnecessary expenses to actively and successfully take care of debt so you can move forward and focus on building wealth.

Speak to a financial adviser to see how you can maximise your money.

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