Today we want to share strategies to achieve financial freedom. Across the UK, increasing numbers of households are facing high levels of financial stress due to rising inflation, utility bills and rents. And, after the economic crisis of the past two years, the events of the past month have made the situation even more complicated.
So, if you’re living paycheck-to-paycheck or just don’t want to save as much as you’d like, you’re definitely not alone. At the same time, there are several strategies you can adopt today to increase your income, stabilize your financial situation, and start actively working toward financial independence.
In the sections below, you’ll find some simple ways to make your finances work harder for you that you can try today.
Assess your current financial situation
The first and most important aspect when trying to improve your finances is your current financial situation. In fact, often, it’s easy to underestimate how much we spend on non-essential items and entertainment, while multiple income streams make it difficult to get a clear picture of how much you’re earning.
So, before starting, take some time to review your finances and make an accurate estimate of how much you spend each month, your debt and your realistic household income. And, don’t forget to plan your financial goals!
Make a plan – and a budget
Once you have a clear idea of what you’re dealing with, it’s time to take action. The first step in doing this is planning to pay off your debt, increase your savings and increase your income. This may not happen overnight, and having a plan in place can help you stick to your commitment.
If you’re not sure how to create an efficient budget for your family, The 50\30\20 budgeting rule can help. This strategy is simple and straightforward, and requires you to divide your after-tax income into three main parts, which will be used for living expenses, savings and entertainment, respectively.
Start investing today
With the availability of beginner-friendly investment platforms, the world of investing and trading has become accessible to all. Simply, you just need to open an account with the provider of your choice, choose a stock or a fund according to your goals and risk tolerance, and invest a small percentage of your income (ideally, one you’re comfortable losing).
If you believe you don’t have the necessary skills or enough time to devote to investing, this is it Bit Index AI The review can help you discover the world of automated and AI-powered bot investing.
Dealing with your student loans
While earning a university degree is one of the best investments you can make for your future – and one that pays a high ROI -, student loan debt represents a significant financial burden for many. According to Recent statisticsGraduates will have around £45,800 in debt when they finish their course – quite a lot of debt if you haven’t started earning yet!
Creating a plan to pay off these types of debts can help you move toward a debt-free life.
Build up your savings
With rising consumer and rental prices, it is increasingly difficult for individuals to save as much as they did before the pandemic. However, luckily, there is Simple tricks you can use to save money.
Some of the best ones include automatically transferring a portion of your monthly income to your savings account each month and using tools like budgeting apps and virtual piggy banks to build a fund for emergencies and rainy days.
Address your high-interest debt first
If you’re carrying multiple debts, chances are you’re feeling overwhelmed and unable to maintain control over your finances. However, you can easily overcome this problem by reviewing different loans and start paying off the one with the highest interest rate first.
If you’ve been able to build your credit score or your income has improved since you took out the loan, you may want to consider financial steps like refinancing and consolidating your debt.
Learn how to use your credit card
UK households have an average of £2,033 in credit card debt. Although this is certainly a small amount compared to other countries’ averages, it is something that should not be underestimated. In fact, credit card balances are often hit with high-interest rates that can quickly inflate your debt.
To solve this problem, consider implementing credit card usage best practices, including:
- Keeping your credit utilization rate below 30%
- Paying off your balance in full each month
- Only use your credit card for expenses you can afford
- Keeping track of payment deadlines
Consider remortgaging your home
For many families, their home is their main and most valuable asset. Learning how to get the most out of your mortgage can be a great way to grow your finances.
Some options include:
- Remortgaging your home to take advantage of your improved credit score, higher household income, or lower interest rate environment
- Remortgaging to release the equity you build in your home over time.
Monitor your credit score
According to statistics, around 50% of UK adults have not accessed their credit report or are unaware of their credit score. While this three-digit number doesn’t fluctuate much overnight, it’s important to monitor it to make sure it stays in the “good” or “excellent” category.
After all, a good credit score is an essential tool that allows you to get better mortgage rates, larger loan amounts, and lower interest rates.
If your spending habits and current finances are affecting your credit score, consider outlining a plan to improve it by reducing your debt, increasing your income and paying bills on time.
Live below your means
After two years of social distancing rules and travel bans, it’s natural to want to spend time with your friends, enjoy family vacations abroad and treat yourself to a little luxury. However, living beyond your means can affect your ability to achieve financial stability and independence in the long run.
Rethink your priorities and start living a more frugal life – but full! – life