Spending Money To Make Money

Part 2 of CPA Australia's 30 Ways to Build Your Wealth series provides helpful tips on how to make money by spending money.

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Summary

1. Insurance - do you need it, how much, where from?

Risk is something that we all face; the question is whether you are prepared to take on that risk yourself or would rather take out insurance and pass that worry on to someone else.

2. Gearing

Where a property or investment portfolio has borrowings, it is considered to be geared. The borrowings will magnify any capital losses as well as capital gains. This means that you may risk not getting high returns, and you could lose the amount you borrowed, but still have to repay the borrowings. Gearing is complex and should only be considered after seeking professional advice.

3. Keeping fit and healthy

By spending a little in the shorter term on keeping fit and healthy, you could save thousands in medical expenses in the longer term.

4. Use credit cards to your advantage

Plastic money can be incredibly convenient as a way of purchasing while benefiting from frequent flyer schemes and interest-free periods. However, if you don’t pay the card off in full every month, it is an incredibly expensive way of taking out a loan.

5. Get good advice

It’s worth paying to get good fi nancial advice to make sure you’re on the right track and up to date with all the latest rules and regulations.

6. Renting versus buying

While it’s possible to calculate whether renting or buying will be best for you based on current conditions, most people dream of owning their own home, making it a decision driven by emotional rather than financial reasons.