Today we want to share strategies to achieve financial freedom. Across the UK, the rising inflation, utility bills, and rent have caused an increasing number of households to deal with high levels of financial stress. And, after the economic hardships of the past two years, the events of the past months have made the situation even more critical.
So, if you have been living paycheck-to-paycheck or you have not been able to save as much as you would have wanted to, you are certainly not alone. At the same time, there are multiple strategies you could adopt today to boost your income, stabilise your financial situation, and start actively working towards financial freedom.
In the sections below, you can find some easy ways to make your money work harder for you that you can try out today.
Assess Your Current Financial Situation
The first and most important aspect to look at when trying to boost your finances is your current financial situation. Indeed, too often, it is easy to underestimate how much we spend on unnecessary items and entertainment, while multiple income streams make it hard to have a clear picture of how much you are earning.
So, before getting started, take some time to review your finances and craft accurate estimations of how much you spend per month, your debt, and your realistic household income. And, don’t forget to plan out your financial goals!
Make a Plan – And a Budget
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Once you have a clear idea of what you are working with, it is time to take action. The first step to do so is to make a plan to repay your debt, boost your savings, and increase your income. This might not happen overnight, and having a plan in place can help you stick to your commitment.
If you are unsure how to craft an efficient budget for your household, the 50\30\20 budgeting rule can help. This strategy is simple and straightforward, and it will only require you to subdivide your after-tax income into three main chunks, which will be used for living expenses, savings, and entertainment, respectively.
Start Investing Today
With the availability of beginner-friendly investing platforms, the world of investing and trading has become accessible to everyone. Simply, you’ll just need to open an account with your preferred provider, pick a stock or a fund according to your goals and risk tolerance, and invest a small percentage of your income (ideally, one that you would be comfortable losing).
If you believe that you don’t have the needed expertise or enough time to dedicate to investing, this bit index ai review can help you discover the world of automated and AI-powered bot investing.
Tackle Your Student Debt
While obtaining a university degree is one of the best investments you could make for your future – and one that delivers a high ROI -, student loan debt represents a significant financial burden for many. According to recent statistics, graduates will have around £45,800 in debt when they finish their course – a considerable amount of debt if you have not yet begun to earn!
Making a plan for repaying this kind of debt can help you start moving towards a debt-free life.
Build Up Your Savings
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With the rising consumer and rental prices, it has become increasingly difficult for individuals to save up as much as they did before the pandemic. However, luckily, there are simple strategies you can use to save money.
Some of the best ones include automatically transferring a portion of your monthly income into your savings account each month and leveraging tools such as budgeting apps and virtual piggy banks to build up a fund for emergencies and rainy days.
Address Your High-Interest Loans First
If you have taken out multiple loans, the chances are that you have been feeling overwhelmed and unable to maintain control over your finances. However, you can easily tackle this issue by reviewing the different loans and start repaying one of the highest interest rates first.
If you have been able to build your credit score or your income has improved since you have taken out the loan, you might consider financial moves such as refinancing and consolidating your debts.
Learn How To Use Your Credit Card
UK households have, on average, £2,033 in credit card debt. While this is certainly a smaller amount compared to other countries’ averages, it is something not to be underestimated. Indeed, credit card balances are often affected by high-interest rates that can quickly inflate your debt.
To address this issue, consider implementing the best practices of credit card usage, which include:
- Keeping your credit utilisation rate below 30%
- Repaying your balance in full each month
- Only using your credit card for expenses you can afford
- Keeping track of deadlines for repayments
Consider Remortgaging Your Home
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For many households, their home is their main and most valuable asset. Learning how to make the most of your mortgage can be a great way to boost your finances.
Some options include:
- Remortgaging your home to take advantage of your improved credit score, higher household income, or low-interest-rate environment
- Remortgaging to release the equity you have been building in your home over time.
Monitor Your Credit Score
According to statistics, around 50% of UK adults have never accessed their credit reports or are unaware of their credit score. While this three-digit number does not fluctuate much overnight, it is still important to monitor it to ensure that it stays within the “good” or “excellent” categories.
After all, a good credit score is a vital tool that allows you to obtain better mortgage rates, greater loan amounts, and lower interest rates.
If your spending habits and current finances have affected your credit score, consider outlining a plan to boost it by lowering your debt, boosting your income, and paying bills on time.
Live Below Your Means
After two years of social distancing rules and travel bans, it is only natural that you’ll want to spend time with your friends, enjoy family holidays abroad, and treat yourself to little luxuries. However, living beyond your means can affect your ability to achieve financial stability and freedom in the long term.
Reconsider your priorities and start living a more frugal – but fulfilling! – life.
Read more lifestyle articles at ClichéMag.com
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