1. Pay off your debt first
Saving when you have debt is pointless. Why? The interest paid on debt is more than the interest you get on savings, creating negative wealth
For example, say you have £1,000 in credit card debt paying 19% interest and at the same time you have £1,000 in savings earning 1%. Net, you are losing 18% or £180 a year.
2. Increase your salary
Easier said than done. We get it. But in our defense, your salary is where most of your wealth comes from. The best time to negotiate a higher salary is when changing jobs. Don’t be afraid to ask for what you’re worth. A common interview question is ‘What is your current salary?’. There’s no harm in adding 10 to 15 per cent to what you earn but know your industry to gauge it right. If you take the job, your current employer may give you a counter offer. It’s a great situation to be in and could get you a pay rise overnight (bingo!). But don't use this as your game plan - you have to be prepared to leave if you don’t get that counter offer.
3. Save the right amount
Get your rainy day fund sorted. That should be enough to support you for at least three months if you lost your job. Next, consider your saving goals. Do you want to buy a house, get married, have kids? Map out how much you’ll need and by when so you can then set a monthly target. If you have money leftover you can either let it sit in a low interest account or you can start creating new income streams by investing. Think: pensions, rental income, dividends (aka company profit from stocks & shares), … psst! Check out #5 below.
4. Boost your pension
Here’s the deal: it won’t benefit you until you’re at least 55 (bummer), but, in the meantime, it’s one of the best ways to boost your wealth. Why? When you contribute to a pension you get income tax relief - that’s a 20% saving for basic-rate tax payers and a whooping 40% for higher-rate payers. Read our guide to find out how this works. MOXI tip: Aim to put at least 10% of your salary towards a pension (and most employers help you with this).
5. Get even more income (besides your salary)
There are plenty of options to help you do this. Buying a rental property is one but the initial outgoings are high – think deposit, fees and stamp duty (the government now charge an extra 3% if it’s your second home). If you don’t have that kind of money, you can create income by investing in companies big or small. When you buy their shares you’ll get a percentage of their profit each year (aka dividends) or if you lend money to them (aka buy bonds) you’ll receive interest payments.