BasicsSavings&Banking

15 Surefire Ways to Make Your Money Grow Faster (UK)

ways to make your money grow faster

If you’re looking for ways to make your money grow quickly, then listen up. We’ve put together this comprehensive list of 15 brilliant ideas on how to make your money grow fast, sourced by finance-savvy professionals across the globe. Whether it’s investing in a high-yield savings account or investing in your skillset, there are a ton of things you can do right now to help your wealth grow quicker. Let’s dive in.

Offer Your Skills

“The fastest way to make money online is to offer the skills you already have to people you already know” – Kristin Wilson

It is probably no secret to most people, but if you have the skills, then you can get paid for those skills. The good thing here is that “skills” can mean a lot of things. 

Even if you aren’t a trained coder, you probably have some kind of skill or specialisation you could offer someone, whether that is writing, decorating, cleaning, etc. I can guarantee that you have at least one skill that is marketable. The trick, however, is knowing where to find people who need your skills

That is where your network of friends and acquaintances comes in. Your personal network is a great source of clientele and people that you know can give you valuable feedback on your skills and services.

A lot of people overlook this simple step and try to overcomplicate things. You don’t have to spend years creating a dropshipping empire or freelance portfolio to make money online. Odds are you already have some way to make money, tucked away in your skillset. So give your skills a thorough review and see if you have any you can market.

Figure Out Your Net Worth

“Most people have never visually seen their net worth on paper, and it’s usually an eye-opening exercise.” – Michael Pappis

Your net worth is an important metric that says a lot about your financial health (use our handy net worth calculator to figure yours out!). It’s the figure you get when you tally all your assets together then subtract all your debts. The remaining amount is how much you are “worth,” in a monetary sense. Most people just use their income to gauge how much money they have but net worth is a much more specific target, which takes into account your debts as well as the value of your assets such as car, house, personal items, etc.

Figuring out your net worth is a good way to determine your financial health. If your net worth is negative, then that means you have more liabilities than assets. If your net worth is positive, then you have more assets than liabilities. Experts recommend you should try to have at least 30% more assets than debt at any given time, preferably more. 

Invest 15% of Your Income for Retirement

“3 out of 4 millionaires (75%) said that regular, consistent investing over a long period of time is the reason for their success. Building wealth doesn’t happen overnight!” – Dave Ramsey

Many people greatly underestimate the potential of investing. It might seem risky as there is always the chance that you could lose money in the stock market. Experts recommend saving at least 20% of your income in a savings account but we would go further and say that you should invest an extra 15% into your retirement investment accounts.

That extra 15% of income invested will go miles to build your wealth for retirement. Even if that extra 15% amounts to just an extra £100 a month, over a year that is £1,200 more invested. Taking compound interest into account, and that is a lot more money in your investment accounts than you would have otherwise.

Have a Solid Financial Plan

“All areas should be addressed and some areas have a greater level of importance at different times in each client’s financial life cycle.” – Faron Daugs

You cannot build your wealth if you do not have an absolutely clear game plan. Nobody ever became wealthy by just winging it and investing whenever it feels good. No, most millionaires got that way because they had a very clear plan laid out, to the nearest pound amount. You need to sit down and create a workable plan and stick to it to build your wealth. Planning and looking to the future is important because there are several aspects of finances that need to be kept in check, such as savings, insurance, debt management, investing, retirements, estate/will planning, and more. 

If you want to take growing your wealth seriously, then we would recommend talking to a professional financial adviser. They can help you put together a solid life plan for your finances so you have a clear path to walk. Even if you are a bit older, it’s never a bad time to start planning your finances for your future.

Automate Your Savings

A lot of places out there right now, like Betterment, they let you automate savings… You forget about it, and then it starts to accumulate.” – Christine Centino

One of the easiest things you can do to get a leg up in the wealth department is to automate your savings. Most banks and other types of accounts allow you to set up regular automatic deposits, so you can set an automatic £200 deposit every month into your savings account and then just forget about it. Automating your savings is a good idea as you then do not have to worry about remembering to make the transfer every week/month and you can focus on other things. Besides, it’s nice to watch your account balance grow without you having to do anything. 

Find a Side Hustle

“Small or medium side gigs can seriously put you in the top 5% of people by wealth over time… If you save an extra £5k per year, and invest it at just 7% per year, you’ll have £100k extra in your portfolio in 15 years after adjusting for inflation.” – Lyn Alden

The term “side hustle” is just an in-vogue way of saying “second job.” A second job sounds awful to most people, but remember that you can make a second job doing whatever you want. A good side hustle can bring in extra cash for either spending or savings. If you are serious about planning for your financial future, then a side hustle can help you maximise your earnings in the time you are given. 

Thanks to the internet, there are countless ways for you to make money on the side. You could freelance, work as a tutor, sell used clothing and other items, or even offer professionals services like consulting, advisery services, etc. It all depends on what your skills and passions are. Side hustles are especially good ideas because many of them have the potential to turn into a full-time job.

Keep Debt Low

“Paying off debt can be one of the best wealth-building tactics that can be utilised.” – Josh Cumrine

When many people start off building wealth, they put so much attention on increasing their assets and less attention on keeping their debts low. After all, it is a pretty well-known fact that when people make more money, they tend to spend more to reflect their increased income. This is commonly referred to as lifestyle inflation (more on that in a bit). More spending incurs more debt, which over time can eat into your net worth, especially if it is high-interest debt from things like credit cards.

The key to making your wealth and keeping it is to keep your overall debt burden low. Experts recommend that your debt to asset ratio should never go above 50% and should stay below 40%. Ideally, a lower debt to asset ratio is better, such as 20% or 30%. The main problem with debt is that most debt carries interest, so if you do not pay it off quickly, you end up paying much more over the long run than you would otherwise.

You should try to hold off on investing until after you clear out any high-interest debt. Then your investment gains won’t be spoiled by interest on debts.

P.S. check out our post on consolidating debt here:

Cut Spending

Spend less than you earn. It’s the absolute key to every financial success a person will have in life. As long as you’re spending less than you’re bringing in, your finances are going to head in the right direction.” – Trent Hamm

For many people, their spending habits are what keeps them from holding on to any wealth that they build. A lot of people don’t realise it, but lifestyle inflation is a thing. People tend to spend more the larger their income is, up to a certain cut-off point. This is one reason why even people who have an excellent income of over £100,000 can still find themselves in debt—they have a massive spending problem.

Thus, avoiding lifestyle inflation is extremely important as the less that you spend on frivolous things, the more money you will have to put away for your future. Certain areas where you can cut spending include:

  • Food (eating out, delivery)
  • Entertainment (TV, video games, movies, etc)
  • Clothing
  • Transportation (walk or bike more)

Other strategies to reduce overall spending include reusing materials or buying certain items in bulk, like paper towels, toilet paper, soap, etc. Anything that you can do without should be cut from your spending budget and put into your savings instead.

Diversify Your Assets

“Another lesson for investors from the pandemic is that the market is unpredictable. And that highlights the importance of having a diversified portfolio. Diversification won’t protect you from losses, especially over the short term.” – Kiplinger

One mistake that many new investors make is that they do not spread their assets and investments around. Diversifying your assets will not completely protect you from losses, but it will ensure that you are insulated from losses. Diversifying your assets will also smooth out your investment trajectory over the long term. 

If you dump all of your cash into a particular stock and it tanks, then you will have lost everything. Instead, invest your money in a wide selection of asset classes to maximise your gains and minimise risk. Things like a mutual fund, real estate investing, retirement account, and more are good ways you spread your money and make your money work for you.

If you diversify properly, then when one sector of the market takes a hit, your other assets can compensate to insulate your losses. Failing to diversify your assets can result in a lot of lost money. 

Diversifying your assets will not completely protect you from losses, but it will ensure that you are insulated from losses.

Be Smart With Taxes

“Maximize your contributions to your tax-deferred retirement plans so that the money comes out of your paycheck automatically before you ever see it.” – Todd Tresidder

Taxes are one of those things that a lot of people neglect to think about when they are putting together their financial wellness plan. Taxes on income, capital gains, savings contributions, and more must be taken into account each year so that you are still hitting your savings and investment goals. You can also take advantage of tax-deferred investment accounts so your wealth can grow unimpeded until it’s time for you to access it in old age. Tax-deferred accounts such as a traditional ISA will let your wealth grow tax-free in the stock market, then you pay income tax on it when you use it.

Find out more about our take on ISAs here.

We would highly recommend meeting with a professional financial adviser to put together an efficient tax strategy that pays your dues while also still meeting your savings and investment targets on time. 

Reinvest Dividends

“Take that income that you’re earning thanks to your investments and reinvest it. Rather than pocketing that rent check or those dividends, roll that money right back into stocks or into buying your next rental property.” – Trent Hamm

No matter where you choose to invest, eventually you will get some kind of return. The next question is: what should you do with that return on your investment? Instead of spending it or putting it in a savings account, reinvest that money right back into your brokerage account. This is especially useful if you have invested in any dividends stock. Reinvesting dividends is a surefire way to build up your wealth and give yourself a steady stream of non-work-related income. Dividend reinvestment lets you grow your money and make your money work for you.

The result of dividend reinvestment is a snowball effect. Each time you get dividends, you reinvest it, which produces even more dividends, and so on and so forth. This means that the growth of your wealth will get faster as time goes on, meaning that your total balance will increase more and more over each successive compounding period. 

Invest for the Long-Term

“Simply holding onto your investments for a while means that when you do sell them to collect the profits from the increase in value, you’ll get to pay a lower tax rate on that money. In fact, most of the income that wealthy people earn comes from selling things and paying only long-term capital gains tax on the sale.” – Trent Hamm

Investing is something that is most noticeable and works best when on long time scales. Not only will holding onto investments long-term mean you will make more money, you’ll also pay a lower tax rate on those gains. Tax law distinguishes between long-term (0-20%) and short-term capital gains (up to 37%). Short-term capital gains are those incurred within a year and you have to pay the same as your income tax on those gains. Long-term gains are those made from stocks held for more than a year and are taxed at a lower capital gains rate.

So in other words. The longer you hold on to some particular investment, the lower your tax rate on that asset will be in the future. This is why investing in wealth is a long-term deal. It is only in the long-term that you get the benefits of both exponential growth and a lower capital gains tax rate. 

Have an Emergency Fund

“Keeping a cushion of cash is an extremely important wealth-building tool – especially when unexpected events occur. If you lose your job or the economy takes a hit, you can tap into your cash reserves instead of swiping your credit card.” – Clint Haynes

Before investing your money, the first thing you should try to set up is an emergency cash fund. This fund will ensure that you will be able to make it through at least a half year’s worth of bills if your finances go south. Most experts recommend having between 6 months to a year of your living expenses in a cash account you can access immediately

The good thing about cash reserves is that you can buy stuff without having to incur debt through something like a credit card or taking a personal loan. Emergency funds make it a lot easier to manage difficult times and also ensure that you have some money that cannot be lost through a bad investment. 

Insure Expensive Assets

“Insurance doesn’t help you build wealth, exactly. But it protects your assets: Without adequate coverage, a fire, car crash or health emergency could decimate your savings accounts or push you deep into debt.” – Kiplinger

Insurance can be a lifesaver if you have expensive assets that get damaged. If you are unlucky and lose your home in a fire or your car is totalled, then you can be out a lot of money if you do not have a decent insurance plan that can cover the damage. 

Other types of insurance, such as life insurance or disability insurance, can ensure that you and your family can still live comfortably if you lose your job or suddenly pass away. Insurance can also save you from having to drop a ton of your savings accounts on repairs or buying something new if something important gets stolen or damaged. 

Be Patient

“When it’s done correctly, it takes time, saves, invests, and builds wealth. There’s no secret formula for doing it quickly.” – Michael Pappis

At the end of the day, wealth takes a long time to grow. Like a tree, it starts small and takes a long time, but eventually, it will grow to be massive and last for a long time. The best thing that you can do is stick to a solid investing schedule and make sure you are always looking for opportunities to grow your wealth. Things like compound interest and dividends have the best returns over long timescales. Even a difference of just 5 years of saving and investing can make a significant difference in how much money you have built up by retirement. 

That is why it’s a good idea to start as early as possible. The only time to start investing that is better than today is yesterday, and since that is impossible, you start better investing today. The sooner you get started, the sooner you will be able to retire and enjoy your hard-earned wealth. 

Wrapping Up

Building wealth is an important part of being able to enjoy your life through retirement and through any emergencies you might encounter. Having money and options means that you have more freedom, and being smart with your money ensures that you can be financially independent much sooner in life. 

Taking charge of the way that you make your money and grow your money is important for any investor. So if you’re ready to invest in your cash flow, get good at stock trading, make investment plans, and make the smart decisions good investors make and grow your money — then act today.

Tom
About author

Fully qualified CISI Investment adviser for 5 year. Managed UK private client portfolios.
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