Stop borrowing to pay for the things that may make you feel rich
If you want to start getting wealthy this year, stop borrowing to pay for the things that may make you feel rich – like fancy cocktails, designer clothes and furniture, luxury cars and overseas holidays.
Rather start saving to buy a home of your own as soon as possible. Rudi Botha, chief executive of bond originator BetterBond, says a lack of financial education is causing too many young people to confuse the outward signs of prosperity with real wealth, which “is all about acquiring assets that are going to keep growing in value”.
This misconception, he says, is reflected in the over-use of credit cards and personal loans and the fact that unsecured lending continues to grow at a much faster rate than secured lending – such as home loans.
“Recent figures from the US Federal Reserve show the net worth of the average homeowner is 44 times as much as the net worth of the average tenant, and the gap is even bigger for people over 65, when those who are homeowners have usually paid off bonds.”