In a nutshell, too much of our money is going to dayto-day expenses and not enough into assets that can grow and provide us with income and capital in the future.
With the substantial increase in the cost of living such as groceries, electricity and school fees, it is understandable that we have less to put into savings. But what little we do have, we need to invest correctly.
Take a house and car as an example. There are some households that will spend money on a luxury car, but continue to rent their property – paying the landlord instead of boosting their net wealth.
It is often only once we have bought that car that we realise that those repayments, insurance and petrol costs impact our ability to borrow money to buy a home.
When we do invest, we tend to avoid high-growth assets such as funds that invest in the stock market, preferring the “safety” of cash. What we don’t realise is that cash is anything but safe – it underperforms inflation and will never help us to create wealth over time.
If you want to improve your household net wealth and see your household balance sheet grow over time, you need to start investing. Whether it is by increasing the contributions to your retirement fund, opening a debit order with an investment fund or putting a deposit down on a home, you need to make your money work harder than you do.