1) Pay off your loan, credit and store card debt and resist the temptation to keep on spending money you dont yet have.

Credit cards and store cards attract the highest rates of interest and are the most inefficient way to work your finances. The average annual percentage rate (APR) for credit cards in the UK is 16.1% and consumers effectively waste 500 million each month on interest payments. Credit card companies profit massively from the rates of interest charged because few people pay off more than the minimum amount each month - so while you get less wealthy these companies continue to grow and even increase your credit limit without you asking them to which will enable you to borrow more, get deeper in debt for longer and enable them to profit further!

Stop the cycle!

Look at your cards APR, can you do a balance transfer to another card company and reduce the APR? If so, make sure the reduced rate is not just an introductory offer with the APR rising higher than the rate you currently suffer. Do detailed research and homework in this area, the internet is a great place for independent information, see if you can reduce your interest charges while you work to pay off the debt.

Remember - simply reducing the interest you pay will not make you wealthier, you will still be throwing money away as long as you do not pay back your complete balance.

Pay off the debt as soon as you can, reduce the temptation to buy anything other than your home on credit, watch the rates of interest youre charged on any money you do have to borrow and stop others profiting!

2) Pay off your mortgage before retirement.

The most significant asset most people have is their home, while they do not own it and are paying a mortgage on it, the most expensive asset most people have is their home! While youre working and bringing in a regular income youre in the best position possible to obtain and afford a mortgage, but when you reach retirement the majority of people find they have a fixed and limited budget on which they have to live and if they are still making mortgage payments this will restrict them massively.

By paying off a mortgage before retirement you will benefit in two ways. Firstly you will significantly reduce your monthly outgoings meaning you can live on far less and potentially enjoy a far better lifestyle than your peers who are renting or paying off debt on their home. Secondly the amount of equity you will have in your home is significant. This equity offers the potential for massive financial security. You can borrow against the equity if ever you absolutely had to or you could release the whole amount through the sale of the home.

3) Get a pension.

Pensions might not be sexy; in fact they are probably the most boring financial instrument around! However, qualifying pension contributions are tax exempt meaning that youre rewarded by the tax man for saving for your retirement via a pension plan. Added to this mini-bonus is the fact that some companies offer their employees a pension scheme into which they too pay an amount. This means that if you opt in to such a scheme you effectively get free money from your employer as well! So, fashionable and pretty they are not, tax efficient and wealth effective they most certainly can be!

4) Use a two tiered bank/savings account and earn better interest rates.

If you dont ask you dont get - and few banks promote that they offer customers the option to bank and save at the same time. However, such a structure is offered by most UK high street banks and should be available at no extra cost upon request.

How does it work?

Basically money in your bank account is automatically transferred into a savings account that attracts a higher rate of interest, as you draw down from your current account for bills, standing orders, nights out, so money is automatically transferred out of the savings account to cover it.

Like most people you may have a fast turn around of money in your account on a monthly basis and money may not remain in the savings account for long! However, every small step in the right direction makes a positive difference and if you can earn interest from your bank instead of being charged it by a credit card company youre going to be the winner instead of the financial institutions!

5) Profit from tax efficient savings schemes.

As already mentioned, pensions are tax efficient investment vehicles as they accept tax exempt contributions. There are also a number of savings vehicle that offer tax exemption on any gains accrued i.e., any interest your money attracts is paid to you gross without any tax being taken. Currently in the UK the most well known and widely promoted and used is the ISA or Individual Savings Account.

Consider setting up a standing order to pay a percentage of your income into such a scheme each monthafter the first couple of months you wont even miss the money and over the long term it may well accrue significant tax free interestyet more free money for you!