How to spend your money to grow your wealth?

money, bills, calculator

Unless you have unlimited financial resources, which is unlikely, you will no doubt find yourself reaching limits in the amount of money that you have available to spend. All of us have a salary or income that has a ceiling. This means that what you spend your money on, is probably the single most important choice you have to advance our financial independence. Every day, month, and year you have expenses that have to be paid. Some are fixed and others are variable. This will affect the amount of money you save or whether you even have any money to grow your wealth.

Make sure you have a budget in place, if you not sure where to start, check out our article: 8 Ways a Budget Helps Achieve Financial Success.

Assess your expenses and the value they add?

In order to control their finances, most people will resort to reducing their expenditure as a strategy to create savings. The problem with this methodology is that 9 times out of ten, by cutting expenditure you might well create a shortfall in another area of your life.

For example:

Let’s say you decide to cut spending on your mobile phone. So you cancel your contract and migrate to a pay-as-you-go service. Initially you save the dollars you were spending, but now you find that on your pay-as-you-go service, you have less capacity to communicate. On top of that, your costs are higher when phoning or using data.

This can happen for a variety of different expenses. This is why it is important to calculate the cost-saving vs the alternative cost for not spending on that service or product.

Another example:

You decide to move to a cheaper residence. It’s further from your work and from your children’s school. On paper it looks great, you going to save a packet of money. Then you move to your new apartment. Suddenly you see your fuel costs skyrocket. You didn’t factor in all the additional trips and extra driving required to do what you would usually do for less in less time.

Do a cost analysis before making financial decisions

The key is comparative cost analysis is to determine if your cheaper option is truly cheaper! There are always hidden costs and these need to be assessed or you might just find yourself spending even more than you budgeted.

If you decide to reduce expenditure on anything, assess how will this affect you. If it is a non-essential product or service you can live without, drop it! If you going to incur more costs in the long run by saving a buck now, then its not worth doing.

Ask yourself the following questions:

Do I need this product or service?
What will it affect if I don’t spend money on this?
What is this expense saving me in other areas?
What expenses will I incur by not having this?

Identify whichever expense you can live without and remove them from your list. Then consider investing the savings into areas where you need to build better resilience.

What other strategies could you use to build financial stability?

One option is, instead of obsessing about saving money, spend your money on things you know you always need. You know there are monthly expenses you cannot live without. Expenses like food and groceries, pet food, school fees, or whatever is an essential expense.

Instead of operating from fear and trying to save, focus on spending your money on what could save you down the line. Purchase more items you can’t live without.

For example:

You purchase one jar of coffee each month. So this month buy 2 or 3. Then do the same on other items you can afford, start small. The key is getting ahead of your expenses, you can’t get away from spending money, so use it to leverage capacity.

Wealth is not purely about how much money you have in the bank, wealth goes deeper than that. It is about capacity and what you can do:

  • How long can you live without needing income?
  • How long can you live on the resources you already have?

By being ahead of your expenses will give you the room you need to deal with the bigger financial issues, like paying up any debt. It will also allow you to save up for larger financial goals you might be working toward.

Break down your expenses into two sections:

Fixed Expenses: Expenses like rent, home loan, policies, etc. that have a fixed monthly amount

Variable Expenses: Expenses like groceries, fuel, entertainment, etc. that can fluctuate.

Now assess your variable costs and find opportunities to invest in areas that are critical.

  • Categorize your expenses from high to low.
  • Start with the lowest expenses first.
  • Assess which of these you could go without and commit to not spending money on them.
  • Now for one month invest in one or more of these items.

By investing in things you always need and having several months’ worth in stock will allow you to invest in other items next month.

You can repeat and apply this to higher and higher value items until you have grown your capacity to a point wherein a few months you can go a full month without paying for many or all of those items.

This will free up money for expenses that you are not able to currently afford. It could give you the needed sum of money to settle an outstanding account that has been pending for months!

Control Your Spending or you will Waste Money

Spending money is not the problem, we all have to spend money to purchase goods and services we need every month. The problem lies in how we choose to spend that money. If you spend it wisely and grow your investment in the things you need, you will make more money available for the things you truly want.

The true secret to growing your wealth is not necessary just increasing your income. It is even more important to evaluate how you are spending your money! Are your expenses growing your financial capacity or are you being wasteful in your spending?

How important do you thinking your spending decisions are in your progress to achieving financial success?

Want to learn more.

Check out our tips to improve your financial independence:

7 Strategies to Improve your Basic Financial Literacy

6 Great Alternative Investment Options To Supplement Your Strategy

What happens if you don’t have enough money for retirement?

How to Manage Two Jobs and a Family?

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Passive Income vs Active Income

passive income vs active income

What Is Active Income?

So, to find out what passive income is, it’s best to start with the opposite. Active Income! Yeah, sounds like hard work. And essentially it can be. The hours you put in allow you to earn money. Depending on the type of work you do, you typically get paid a certain amount of money. Hours for Dollars. The top athletes in the world work hours for dollars, but they can earn ridiculous amounts of money. Lionel Messi earns around $126 Million Dollars a year. But the average person with a good job will earn around $25 000 to $100 000 per year.

Typically, this type of work means you hit an earning ceiling. You can only work so many hours a week, so you can only earn so much.

Examples of Active Income

  • Salary: Work from 8 – 5 each weekday, get some holiday. You are trading your skills for money.
  • Hourly Wage: It’s often not set hours. You work when you can, or when needed. The benefits here are you can earn overtime and work in shifts.
  • Commission: These are typically sales jobs. Often you can earn a small basic salary, but the true benefit here is that the better you perform (more sales), the more you make.
  • Tips: These jobs offer the ability to make tips from assisting others. Delivery’s, waiting tables, and car guards fall into this category.

Passive Income Meaning

So how can you get more?

Wikipedia defines passive income as follows:

Is income that requires little to no effort to earn and maintain. It is called progressive passive income when the earner expends little effort to grow the income.


Passive income means that you are receiving a consistent amount of money for doing nothing! Sounds good right? But life is never that simple, there simply is no such thing as a passive income that did not start without action! And even a so-called passive income will require your time, some of the time. It may take years to truly start to be passive.

Examples of Passive Income

  • Dividends from Investments: Typically, a bought passive income. You can accumulate shares over a long period of time or a one-time lump sum. If you can invest 5 Million Dollars over time, you could get around 5% per annum and make 25k per year.
  • Affiliate Income: This is online marketing. Typically, you will build an email list through online adverts or SEO and then provide value and offers to the list. This can be easily scaled once you have a recipe that works.
  • Rental Income: If you have the means or the money, you can acquire a property and rent it out to a tenant. It often requires money upfront, but there are some tricks of the trade that can give you no money down deals.
  • Courses: The nice thing about a course is you write it once and sell it many times. If you pick the right topic for your market, it can sell for years beyond the work you do up-front. This can also be done by getting the services of a facilitator or you can put it online of course!

Is Passive Income better than ordinary income?

Well, the short answer is YES! Who does not want money coming in while you are doing nothing? But just remember that you always need either time or money to build a passive income. They also do not just grow overnight.

Freedom through Passive Income

There are 3 types of freedom.

  • Time freedom: Being able to decide each day exactly what you want to do this second, minute, or hour. If you decide you want to go to a movie at 11:00 am on Monday morning, you do it.
  • Location freedom: Being able to decide where you want to be today. If you decide you need to visit a friend in Tokyo, you get on a plane and go.
  • Financial freedom: Being able to pay for anything you desire and not think about the cost. Look at the menu and decide you want the lobster (SQ)

To be honest, financial freedom will probably get you all the freedoms you want. To be financially free, you only really need to earn $1 more than your expenses in passive income.

How do we do this?

A coach of mine once told me to throw a pencil on the ground. After doing so, she said, “Oh no, you missed”. When I said, “But you didn’t tell me where to aim” she proceeded to tell me “That’s the point! If you don’t know the target, you are unlikely to reach your goals”.

So, pick your number; how much money do you need each month in passive income to live the life you want? When do you want to be earning that?

Let us say the number is $15k per month in 5 years from now. There is your Target, now all it takes is planning.

Which passive income model suits you best? Which ones can you see yourself doing? Then find someone who has already done it. Follow them and immerse yourself in the work. Learn everything about it, and just do it.

It may take time in the beginning, but in the end, it will be worth it.

If you need more assistance with how to get stuff done, visit one of my other blogs here “DMO – Daily Method Of Operation”

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6 Great Alternative Investment Options To Supplement Your Strategy

alternative investment options

Why invest at all?

Investing your money is a critical skill we all need to learn. The quicker the better. Money must be invested to build your wealth. If your money sits in your wallet, it has no potential to earn any rate of return. When you do not invest, you will miss several chances to increase your financial position. There is of course a chance you can lose your money from the investment, but that is why you must learn some strategies. You will fail from time to time, but that is how we learn. There are traditional and alternative investment options and its good to know about them.

Here are the reasons you should invest your money.

  • Growth – By investing your money in vehicles that give you a return, your money will start to compound over time.
  • Retirement – Everyone wants the option to not have to work one day. To not rely on family support to get you through the month. Putting away money throughout your life is necessary to gain this freedom. The better your choices today, the quicker you will reach your goal. What if you don’t have enough when you retire?
  • Start a business – A business can be an expensive thing to start. If you need to go into it full time you will need to support yourself while you are earning no money. Savings can come in handy down the line and make the decision to so your passion full time easier. There are some businesses that don’t cost a lot to start!

Traditional Investment Vehicles

Financial symbols of stock market

Before we get into what alternative investment strategies are, let us see what we mean by traditional. The well-known ones are bonds, cash, real estate, and shares.


As an investor in bonds, you are typically buying debt issued by companies or governments. You get an annual return until the debt is paid off. Due to the fluctuation of interest rates, the bonds become more or less valuable over time. They tend to be lower risk, so they are a good choice when nearing retirement age.


This money is usually put into short-term, low-risk investment vehicles like deposit accounts, money market accounts and high yield bank accounts. It’s always a good idea to have some of your investments in cash when an emergency arises.

Real Estate

Here, the investor buys property to make money. There are several strategies here including buy to let, flipping (When you buy a cheap run-down home, fix it up and sell at a higher price) and REITs. These are normally long-term investments and can be highly leveraged.


Companies often sell shares to the public to raise capital. This capital is used by the company to invest in and grow the company further. When you buy these shares, you are a shareholder and part-owner of the company. Hopefully, over time the value of the shares grows and provide you with dividends.

Alternative Investment Options

Financial growth and business success with the best investment choices from professional financial advice for picking the right equity stocks to invest in for r

These are good investment vehicles, but its only part of the picture. Here are some alternative ways to invest your money.


These include paintings, stamps, wine, cars and much, much more. If you have a passion in an area and learn the value of your passion you have a good chance of making money through appreciation over time.

Hedge funds

These tend to trade relatively liquid assets. There are many strategies, but the aim to provide a higher rate of return on investment. The skill required include long-short equity, market neutral, volatility arbitrage and quantitate strategies.

Private Equity

Instead of becoming a public company, some private companies want additional investment. There are a few kinds. Venture capital, growth capital and Buyouts.

Private Debt

These are investments not funded by the banks or traded on the open market. Private debt is leveraged during the growth phases of companies. The extra capital can be used to push to a new level.

Cryptocurrency (Bitcoin)

This is a modern form of currency that can also be a store of value. Bitcoin was the first and still the most invested in. What makes them appealing is a decentralised model that is not controlled by an entity. The blockchain is spread across many nodes on the network to manage transactions.

money on the table


Gold and Silver will forever be the original money. It still has many uses today and it maintains its values over time. Many people including me like to invest in coins and bars and keep them locked in storage. It can be seen as a type of hedge or insurance against the markets.

In Closing

As you can see from this article there are many types of investments. Plenty more that have not even been mentioned here. Everyone is unique and has their own skills and risk profile. So, take your time to always learn about new types of investments. Make your own choices. You will inevitably make mistakes, but the more you learn and the more you try, the better results you will get.

A great source of knowledge on investing and terms is Visit their site to find out more.

I am not a financial planner or advisor. This blog is not advice on how you should invest your money. Consult your financial advisor or accountant before making any financial decisions.

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7 Strategies to Improve your Basic Financial Literacy

Basic Financial Literacy

Every human being spends money on daily basis. The big question has always remained, how many know how to manage money? The skill of money management or the lack of it is financial literacy. Financial literacy gauges how well one can manage one’s money. Many consumers cannot answer the simple question, “What is basic financial literacy?”

Financial literacy is the ability to understand and effectively use various financial skills. Skills such as investing, budgeting, and personal finance management.

It has also been defined as the ability to understand how money works. This simple definition encompasses broad ramifications. These include, how well does a consumer resist the temptation of spending money? Has the consumer invested in themselves, family, or charity? Someone who lacks these skills is financially illiterate.

Patience in spending shows impressive financial literacy. They are frugal, always prepared, and keep track of their spending.

If you already think you got this, check out 6 Great Alternative Investment Options

Understanding Basic Financial Literacy

Evidence accumulated recently suggests that financial literacy is one of the essential determinants of any human being’s economic well-being. One will only make effective financial choices if their decisions are financially informed. A significant part of wealth inequality experienced during retirement can be explained by our differences in financial knowledge that we gain at our early stages of life.

Recently, financial services and products have had a widespread increase throughout society. Early generations purchased goods and services with cash. In recent decades, other methods of payment, such as credit products, have gained massive popularity.

Basic Financial Literacy
  • Mortgages
  • Credit cards
  • Student loans
  • Health insurance
  • Home equity lines
  • Credit insurance programs
  • Buying clubs
  • Self-directed investment accounts

The recent growth in usage of these credit products has made it imperative for consumers to understand how to use them.

You can categorize various skills under the umbrella of financial literacy. There are, however, popular and basic-financial literacy skills that have to fall under this category. They Include:

  • Household and personal budgeting
  • Learning how to manage and pay debts off
  • The ability to evaluate tradeoffs between different investment and credit products

These skills require a working knowledge of at least key financial concepts such as compound interest and the time value of money.

Why Do I Need Basic Financial Literacy?

Did you know that an estimated sixty-six percent of Americans today are financially illiterate?

This is how common financial illiteracy has ravaged society – Financial Industry Regulatory Authority (FINRA) research

Finance, in modern society, is essential. Lack of financial literacy is very damaging, especially to an individual’s long-term success.

A financially literate person is less vulnerable to financial fraud than their counterparts. They possess a strong financial foundation. This aids them in supporting various essential goals in life. These include retirement, education, responsible debt usage, and running of a business enterprise.

Udemy has some great courses including this one on Basic Financial Literacy.

It appears that decision-making is gaining more buoyancy among consumers when it comes to finances. Five converging trends have demonstrated the importance of making informed and thoughtful financial decisions:

Gold and Silver

1 – Consumers are tasked with shouldering an increased number of financial decisions.

Recently pensions are more have become rare, especially to new employees. They instead now participate in 401(k) programs where they decide how much to contribute and what to invest in.

2 – Investment and savings options are more complex

The dynamic financial landscape has introduced more financial participants and factors that influence it. Combining all these factors can lead to contrasting views. These create and implement the following financial roadmap.

3 – Lack of government aid

Past generations relied on Social Security as a major source of retirement income. It is no longer enough, and not all generations will receive it. It acts as more of a safety net for basic survival. This creates a need for more effective, efficient, and responsible financial decisions.

4 – Overwhelming choices of finance

Consumers have a wide array of financial sources to choose from.

  • Banks
  • mortgage companies
  • insurance firms
  • credit card companies
  • credit unions
  • financial planners
  • and other financial service companies are tough competition for assets.

This poses a huge confusion to the consumer with whom the final financial decision lies.

Financial illiteracy is a problem faced by developing countries as well as in developed countries. One must grasp financial abilities and principles to succeed in the game. Consumers from both worlds lack strong knowledge of the financial basics. Negotiating and managing the financial landscape is key to avoiding financial pitfalls.

The level of financial literacy varies with levels of income and education. Consumers on the higher income and education notch are ignorant of financial issues as those on the lower gap. The latter exhibiting greater economic literacy.

A financially illiterate person is faced with the likelihood of falling to several pitfalls. They are likely to accumulate unsustainable debt burdens. This is owing to a lack of long-term preparation or poor spending decisions. These pitfalls have been associated with bankruptcy, poor credits and housing foreclosures. Financial fraud victims are likely to be financial illiterates.

Basic Financial Literacy

Strategies to Improve your Basic Financial Literacy

Developing strong financial literacy is a measure of improving your finances. It involves learning and practising several financial skills. These include:

  • Money management
  • Budgeting
  • Debt Repayment
  • Investment
  • Credit options available in the market.

Here are strategies to consider to improve basic-financial literacy skills

1 – Budgeting

Plan your expenses upfront. Track how you performed against your expectations. Adjust according to your findings. You can do this on excel or paper. You just need to do it!

2 – Saving

Financial planners prefer terming it as paying yourself first. Accumulating savings involves a reverse budgeting strategy. Set your saving goals and decide the amount of money you want to save. Do it monthly and separate it from the amount required for your monthly expenses.

3 – Bill payment management

Consumers should always set a priority when it comes to paying their monthly bills. They should take advantage of automatic debits available from checking accounts and bill pay apps. You can also sign up for email, phone, or mail payment reminders.

4 – Get your credit report

Consumers are advised to acquire their annual credit reports. They can then review them and dispute any errors by discussing inaccuracies with the credit bureau.

5 – Confirm your credit score

Consumers with good credit scores obtain loans at the best interest rates and credit cards. You must monitor your credit score beware of financial decisions that can raise or lower your credit score.

6 – Debt management

Make use of your budget to remain on top of debt by decreasing your expenditure and increasing repayment. You can also consider taking advantage of a debt reduction plan.

7 – Save and invest in your future

You can take advantage of the 401(k)-retirement plan if your employer offers it. Consider investing in a diverse portfolio of stocks, commodities, or fixed incomes. Seek financial advice to determine how much money you require for a comfortable retirement. Develop the necessary strategies to reach your goal.

Basic financial literacy is a crucial tool to manage personal finances. It will help you save enough income for retirement. What if you don’t have enough for retirement.

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8 Ways a Budget Helps Achieve Financial Success

How to stick to a budget

Budget is a smart way of managing available finance. Coming up with one allows you to shop for specific items that are essential and utilizable at that period. Sticking to the planed list when purchasing goods and services has proved to be a challenging exercise, and many give up and spend money aimlessly. Impulse buying remains the primary cause for failure to stick on a budget. Emergencies and forgotten items are two more reasons people spend funds in ways they had not planned. We’ll show you how to stick to a budget.

Spending your finances without a management plan can seem justifiable, but it destroys your financial status, throws you off balance, and you lose control. Unbudgeted spending can be disastrous as it requires you to go back for your savings. When you have depleted your savings, the left option to finance your spending is loans. The pile of debts creates financial stress, and before you know it, you become financially insecure.

8 Successful Ways on How to Stick to a Budget

1. Do not Spend more than you Have

Every fraction of your income is allocated to its purpose on a budget. The amount of money assigned to complete a particular activity should be enough to support it. When the funds are inadequate, you go back to your budget and re-evaluate if you aimed too high or minimize the number and some commodities forgone to keep the account in line. Resist the urge to source finances from external sources to boost your funds. Do not compromise on your savings to finance other personal projects unless that is the planned intention for saving. If what you have at your disposal is more than enough, you can always add to your saving in case you urgently in the future.

2. Shop Online

Shopping cart isolated on the computer keyboard. Online shopping concept

Users who buy items online have little or no interaction with marketers online. When navigating with a cart, promoters have no interruption who persuade you to carry more items compared to local stores. A customer does not have a chance to try different things, limiting their option in selected commodities. Physical absence is a significant factor in eliminating impulse buying. Online items are also offered at low, relatively competitive prices, and commodities are high quality. Free shipping services provided by online sellers will help you save on your time, fuel, and energy. If the shopping exceeds your budget, you do not have to initiate a purchase. You have an option of temporarily abandoning your cart and cone save it later when your finances are in order and finalize the purchase.

3. Lower your Credit Limit

Limit the maximum amount of money that your financial institution allows you to use before maxing out. Consumers who have fewer credit card funds will be strict on their budget to avoid running out of credit. You cannot spend beyond your limit. Eventually, this will amount to less debt when paying back for the credit service to your financier. Exceeding the limit set would provide relief but impact heavily on your credit scores and the vastness of the debt. Find out more about Basic Financial Literacy, it will help you to make the right choices.

4. Think Long about your Purchases

Rushing your shopping process can make you pay for unnecessary items that you pick along with the required items. Since you paid little thought to the things you choose, you spend more money than budgeted. To avoid this error, take your time as you budget, which will help you narrow down to only essential items. The shopping list will guide you throughout the shopping process. If you encounter a new product and are somehow moved to purchase the item, take your time, and think before buying it. Evaluate its uses or applicability; it might have no utility in your home and save you an extra coin.

5. Eat at Home

A meal prepared at home has a variety of benefits. Besides the healthy ingredients, the homemade meal will save you money. Buying foods from restaurants and the food market is expensive. You do not pay for only food but for all the other services, including renting and maintenance expenses. You do not have control over the portion you are served and could keep o ordering until your stomach is full. Make your meals and leave your house after you have eaten to avoid feeling hungry in the streets. If you are working in an office, make it a habit to carry your lunch from home and brew your coffee in the office other than buying in the streets.

6. Use Cash (run out of money, you are done for the week)

Prefer cash transaction to credit cards. When you transact using cash, you avoid funding goods or services that do not make sense. Losing money on unimportant issues could be a somewhat painful experience. You calculate on every purchase and rethink because you are parting with such a massive amount of your cash and end up holding to it more. As a buyer, you will get better deals in the market if you are using cash. Negotiate the price to the amount your money in the pocket can finance. Cash also allows you to portion your money and carry a tiny amount with you on your shopping activities.

7. Compare Brands (Find Cheaper)

Make it a habit of comparing prices from different stores before you make your purchases. You will realize that different stores price their commodities differently. Some stores have fixed prices while others can offer discounts to their customers on purchases. Second-hand stores have refurbished or older gently used items to get at low prices and still serve the purpose. ensure you get the best deals out of every purchase that you make. Do not compromise on quality as you go for cheap commodities; it could be expensive in the long run.

8. Go Minimal

You do not have to quit shopping altogether to save money and stick to the budget. Minimizing the number of commodities, you buy in a shopping exercise can help you stick to the budget. Going minimal allow space for priority goods and services. You are more focused on the vital products, and the process of allocating the scarce resource becomes simple. If you have different commodities that are not useful around your home, you can resell them and retain more money. Perishable things will go bad if they are not utilized on time. There is a possibility of items going out of fashion, and if you had concentrated on purchasing maximum items, it would be challenging adapting to the new lifestyle.

If you want to learn more about minimalism, check out this blog on the 8 Essential Principles of a simple lifestyle.

In Closing

Becoming financially independent can be tasking but rewarding to a patient and focused individual. If your income is under your control, then you can enjoy a stress-free lifestyle. The benefits of budgeting and sticking to it are not to be underestimated as they create more balance in life. Your savings are essential in times of emergencies, retirement, and re-investing. When you take your time to manage your finances, the chances of spending money that you do not have and accumulating a considerable number of debts on unwanted goods are eliminated. Manage your money correctly and track your expenditure and account for every dollar spent.

Learn ways to save and invest using traditional as well as alternative investment strategies.

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