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The Frugal Guide to Building Wealth

So you want to build up some savings and family wealth? There’s nothing wrong with that.  It’s only the love of money that’s the root of all evil. The often misquoted verse is located in 1 Timothy 6:10.

“For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows.” 1 Tim 6:10

The Contemporary English Version puts it this way:

“The love of money causes all kinds of trouble. Some people want money so much that they have given up their faith and caused themselves a lot of pain.”

This is actually the theme of many modern movies. As the star chases wealth it results in his own destruction.

But the Bible also admonishes us to provide for our own families and take care of them and God blesses those who use their money wisely.

In this short guide you will get tips for gradually increasing your wealth while living up to your convictions. This is not a get-rich-quick guide, but a method of using wisdom and dedication to create the savings you need to provide for your family.

What’s Your Goal?

First of all, you need a plan for what you will do with the money. Perhaps you are saving to get your first home. Some people save for weddings, college funds for the kids, a retirement account or even a long-postponed family trip. It doesn’t really matter why you want to save, but it’s helpful to have goals in mind as you follow these steps.

Choosing an Account

US Currency- Building WealthBefore you even start your saving plan, think about where you will keep your savings. If you keep it in your regular checking account, there’s always a chance that you might dip into the funds if things get tight. A far better choice is to keep the money in a separate account and avoid setting up easy online access or any of the other ‘advantages’ that go with bank accounts these days. The harder it is to get at your money, the more likely it is that it will stay in the account, which is exactly where you want it until you reach your goal of building wealth. On the other hand, choosing an online account sometimes brings additional benefits such as a higher interest rate on your savings, so weigh up the pros and cons before you make a decision.

If you’re looking for the best bank account for your savings, check out the interest rate you will receive. The higher it is the better return you will get.  And if you are saving on behalf of a large organization, such as your church, a charity bank account will bring big benefits.

Saving At Home

Now, you may already be stretched to the limit financially and may be wondering how to save. The good news is that you can start the process at home by reducing your expenditure on utilities. Anything you save can go straight into your new savings account. What you’re willing to do depends on how important saving really is to you. Now is the time to assess all your outgoings to see if you are on the plans that work best for you. You may have to change cell phone providers or get a different cable package from a cheap cable provider. You can also save money by running your electrical utilities more efficiently. In fact, you’d be amazed how much you can save each month just by switching things off and unplugging them instead of leaving them on standby. You can also keep a jar around the house to put all your spare change in – that will soon add up to a tidy sum to add to your savings account.

Keep Spending Low

Avoid spending money you don’t have, so put your credit cards on lockdown for a while. Even better, make sure you are paying as low an interest rate on outstanding balances as you can get away with. Pay off your debt as soon as you can and then you can put that payment into savings. You can also save money by using store brands instead of major brands, avoiding buying items you don’t need and never wasting anything – all of these are also good moral principles.

Pay Your Savings First

Here’s a really important tip: if saving really is a priority, make it a priority. That means that when you get your monthly salary, you put the amount you’ve settled on into the savings account first. Then take care of your expenses and outgoings. Anything you have left over can be used to make another payment to the savings account. Make the process easy by setting up a regular standing order for the amount you want to save. Then you won’t even have to think about it.

Making an Investment

Finally, once you have developed the savings habit, then you can increase your savings and your family’s wealth, by a cautious investment plan. IRAs, certificates of deposit and the money markets (take some advice on doing this) are all great ways to increase your savings.

See Also:

The Wealthy Buy Assets, the Poor Buy Liabilities, and the Middle Class Buy Liabilites Believing They Are Assets

Tax Deferred Retirement Account

Building Wealth through Mutual Funds

ETFs: Do You Really Know What You’re Buying?

Investing in Structured Bonds?