Simple Habits to Help You Build Wealth

Building up a fortune does not require any special tricks. In many cases, it comes down to small things that many people take for granted. This moneyland.ch guide takes you through the simple habits that can have a big impact on your ability to build wealth.

Systematic and regular saving

Regularly putting aside money is the basis of building wealth. The easiest way to do this is to put away a certain amount every time you receive your salary. Setting up a standing order so that money is transferred to your savings automatically greatly simplifies this process. It also ensures that your savings do not get confused with your spending money.

How much you can save depends largely on how much you earn. The general rule is: Building wealth is not about how much money you earn, but how much of your money you save.

Before you start building your fortune, you should first build up an emergency fund that you can draw on to cover unexpected expenses. Without an emergency fund, you may be forced to get expensive loans to bridge financial gaps.

Keeping tabs on your spending

Housing, health insurance, holidays, groceries: With so many different expenses, it can be easy to lose the overview of where your money is going. Taking control of your finances is essential to building wealth. Without keeping tabs on your expenses, you run the risk of spending more money than you earn, leaving you with nothing to put aside. Simple rules like the 50-30-20 rule provide a good structure for outlining your budget. 

Tip: Consider dividing your money between separate bank accounts based on what it is designated for.

Investing your savings

If you want to build wealth, you have to make your money work for you. As cliché as that may sound, investing your money really is central to wealth building. The compounding interest effect makes your savings grow. While you can hoard your money in savings accounts, the returns are low, and your wealth may actually decline in terms of purchasing power after accounting for inflation.

Investing your money in a diversified selection of stocks – using exchange-traded funds (ETFs) based on global indexes, for example – have historically brought much higher yields. Savings accounts are generally better suited to short-term investing and for your emergency fund. 

Only buying what you can afford

The world is crawling with traps designed to separate you from your hard-earned money. With credit cards, installment plans, and buy-now-pay-later (BNPL) services, you can now make expensive purchases no matter how small your bank account balance is. But buying too much on credit will cripple your financial future. Firstly, you run the risk of losing control over your spending. Secondly, you may end up having to pay interest on loans, which can be costly.

If you find it difficult to discipline yourself and tend towards unnecessary spending, then it can be beneficial to forgo using credit cards and buying on credit altogether.  

Tip: With a few possible exceptions, such as buying a home, you should never buy things if you cannot afford to pay for them in full, up front. 

Not falling for lifestyle inflation

An increase in your income provides the perfect opportunity to save more money without cutting back on your existing lifestyle. But many people fall victim to lifestyle inflation – increasing their spending to match their new income. While their income may be higher, their savings hardly increase because the additional money goes towards extra spending. 

A more sensible approach is to first increase the amount you save to match your higher income. Any increase in your consumer spending – if an increase is necessary at all – should be done based on what is left after increasing the amount to save.

Avoiding impulse spending

No matter how good your financial plan is, impulse spending can always burn a hole in your wallet. The more frequent the unbudgeted spending is, and the more expensive the purchases, the more serious the financial damage will be. On top of the financial implications, purchases made spontaneously are often for things that were never real needs to begin with.  

Always give yourself a long waiting period to think things through before you buy anything – especially before making any big-ticket purchases. Structuring your spending based on clear rules – the 30/30 rule, for example – can help you avoid the trap of impulse spending.

Optimizing your regular expenses

Whether it's an unused gym membership or an expensive health insurance, there is always room to cut out unnecessary costs. In many cases, you can cut down on costs without having to make any changes to your lifestyle whatsoever.

A good place to start is to review your mandatory health insurance, other insurance policies, your mobile plan, and your banking solutions. Even cost differences that may seem negligible can add up to substantial amounts over long periods of time.

Tip: The interactive comparisons on moneyland.ch help you to find the cheapest offers for investment services, bank accounts, telecom services, and insurance.

Prioritizing quality over price tags

Es mag paradox anmuten, doch wenn Sie beim Einkauf sparen möchten, sollten Sie nicht allein auf den Preis schauen. Wichtig ist vor allem, wertig zu kaufen. Beispiel: Kaufen Sie Laufschuhe, deren Lebensdauer bereits nach wenigen Monaten abgelaufen ist, hilft Ihnen der geringe Preis auch nicht mehr weiter. Die finanziell bessere Entscheidung wäre gewesen, ein teureres Produkt mit höherer Qualität zu kaufen, das Sie nicht nach kurzer Zeit wieder ersetzen müssen.

It may sound like a paradox, but looking at the real value you are getting out of a purchase is more important than looking at the price tag. For example, a low-cost pair of shoes can be an expensive bargain if the shoes wear out after just a few months. Paying more for quality goods that provide many years of service is often a better deal.

Minimizing everyday expenses

Buying secondhand or bringing your own coffee: Everyday life offers numerous opportunities to cut down on spending without having to go without. Choosing affordable hobbies is one example. If you enjoy spending time outdoors, for example, you may find hiking trails, lakes, and points of interest near you that can be enjoyed at no cost at all.

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