Investing money smartly contributes to an overall increase in your net worth and, potentially, a very comfortable retirement. One reason people do not save enough is because they do not have much money left over at the end of the year to invest. You might incorrectly think you fall into this category. Through taking a proper annual audit of what you spend money on, you may be able to reduce expenditures and build up an impressive investment portfolio.

Perform a One-Year Audit

The minute you decide to improve your finances, examine all your credit and debit card statements and examine 365 days of past expenditures. Upon looking over your spending, ask yourself whether or not the expenditure was necessary. Likely, you'll find a lot of spending worth eliminating. Once you take steps to cut similar expenses in the future, you end up "finding" money to go into a retirement fund.

Do not be angry with yourself for spending too much. Simply allow your new-found knowledge to guide you toward being more prudent from this point forward.

Determine if a Future Expense is Needed

An example of being more prudent with your funds can be found in simply not buying a new appliance such as an oven.

You may have owned a particular oven for ten years and it really is an old model. A new $600 model would definitely help improve the look and decor of the kitchen. Improving decor is always nice, but it is not always necessary. If the current oven works, replacing it makes little fiscal sense.

Put the $600 into an Investment Vehicle

The $600 you saved on the cost of a brand new oven could then be deemed "found money" and put into a long-term investment. What would have happened on December 31, 1984 if $600 was put into a blue chip stock like Coca-Cola? Today, the $600 would be worth over $19,000.

Would you rather have $19,000 worth of stock in your portfolio or an oven you barely use? Again, that $19,000 would only reflects one stock in your overall portfolio. 

Compound the Savings

Do not think a "mere" $600 is just a minor savings. Remember, the value of your money grows over time in a good investment. Imagine if you cut $2,000 from your annual budget every year and put that money into safe, diverse investments. That would come out to $20,000 in ten years excluding the compound interest. 

Your retirement starts to look very comfortable when you take on a financial planning mindset such as this. For more information, contact Global Wealth Consultants LLC or a similar company.