How to make money

According to Google research, this is one of the most searched topics online. Millions of searches daily on the subject, both here in South Africa and everywhere else, is a clear indication that many people are looking for easy ways to make more money.

In South Africa, too many people have bread-and-butter issues and are stuck in survival mode where their income simply isn’t enough for their basic needs. If you are one of those people who wish to improve their earning potential, what are your options?

Do not look for a get-rich-quick scheme. It will only end up in you losing the money you have. Criminals prey on people who believe these schemes exist. They promise unrealistic returns that investments cannot practically deliver. These fraudsters use new “investors’” money to pay existing ones until the scheme gets too big and falls apart, with many not realising what was promised in addition to losing what they “invested”.

Instead, follow these steps to a more sustainable way to grow wealth:

STEP ONE  - Look after what you already have

As a financial adviser, I see how people earn and spend their money. Helping people structure practical and sustainable budgets is a big part of my job. For many people, most of their issues are solved by putting what they already have to better use. A big part of that is tracking where your money goes. Read more: How can I draw up a budget that works for me? and use our Budget Planner.

STEP TWO – Prioritise paying off short-term debt

Short-term debt usually attracts higher interest rates and can cost you a lot of money if it is not paid off as soon as possible. Read more: What does credit cost?

This step requires a lot of discipline and courage, as it means forgoing many things in the short to medium term. However, it will be well worth it, and you will reap the rewards over the long term. Here are a few examples of this kind of debt:

• Credit cards;
• Overdrafts; and
• Personal loans.

The sooner you pay off this kind of debt, the sooner you’ll be able to increase your disposable income and go to the next step – saving money.
 

STEP THREE – Start saving

Once you’ve paid off most or all of your short-term debt, you can channel funds toward your goal of making more money. You will be able to do this when you master the art of living within your means on a consistent basis, which allows you to save.

However, it will be impossible to save money if you don’t have a spending plan or budget that you stick to. With a budget, you get to really understand what leaves your bank account monthly, which allows you to reduce or eliminate unnecessary spending.  

Read more: How do I set savings and investment goals?

STEP FOUR – Grow your savings

The best way to make money over the long term is to invest. There are two major ways in which you can invest, and that is either through the stock market or through entrepreneurship.

• Invest – there are a number of ways to access the stock market. You can do so using retirement funds such as retirement annuities and pension and provident funds.

You can also invest through products such as tax-free savings, endowment policies, share portfolios, unit trusts or exchange traded funds. These products give you exposure to a combination of the following so that your investments will achieve inflation-beating growth and diversification to minimise your investment risk:

• • Shares
  • Bonds
  • Listed properties
  • Cash
  • Commodities

• Entrepreneurship – setting up a business with the view to making money has made many people a considerable amount of wealth. The trick is fulfilling a desire or need for which people will reward or pay you on a large scale. Unfortunately, most people set up businesses in line with their passions without much consideration given to the needs or desires of the people they hope their businesses will serve.
  
  Setting up and sustaining a business doesn’t necessarily need to cost a lot of money, but it must be a product or service that someone (or a group of people) is prepared to pay for on a consistent basis for you to make money. So, where do you begin?
  
  Consider your immediate surroundings and what the needs or desires of those people are. Ask yourself the following questions:
  
  
  • Are there businesses already set up to fulfill those needs?
    
    • If so, are these businesses effective and servicing everyone?
      If not, would your business idea be able to complement what’s in existence?
  • Do you possess the necessary skill, experience or qualification to do this?
    
    • If not, is there a way for you to upskill yourself in a cost-effective and relatively easy way?
  • How can you set up a business in a cost-effective and relatively easy way for your budget and skillset? Read more: Where can I get funding to start a business?
    
    
  • How will you charge for or price your product or service so that people are happy to pay while you make a profit over the long term?
    
    
  • How can you partner or leverage off other people’s knowledge/skills/experience in order to bring this idea to life?

The final point is a particularly important one. It has been proven time and time again that partnerships, if done correctly, can seriously enhance the potential, output and capabilities of any business, so consider working with others, in one way or another, in all aspects to maximize wealth.

In all my years advising individuals regarding their personal finances, I have never met anyone who was able to take shortcuts to make money.

Making money in a sustainable manner requires a combination of hard work, consistency, good counsel from the right people and a dash of luck.

The first three ingredients are within your control and may, to a large extent, influence how lucky you get while you’re at it.