Finance Your Road To Freedom In Five Steps
Deep down, why are we so keen to learn how to manage our finances better and save money? It’s not for the dream home or the faster car – those are just milestones along the way.
What money really brings us is freedom. Freedom to make the choices that we want in life, freedom to take care of our loved ones, and freedom from the money worries that can be the bane of our lives. It’s this that makes us so fascinated with the idea of striking it rich. But it’s unlikely that you’ll win the lottery, discover oil in your backyard or discover some lost treasures that have never been found. Instead, it’s likely that any gains you make will only come through patience, hard work and smart money management.
As with all goals, the flaw in a lot of our financial plans is that we set the bar way too high. Being unrealistic with our ideas means that we set ourselves up for failure. It’s just not sustainable to think that we’ll cut every bit of frivolous expenditure and become financial paragons. Learning to set achievable goals is the first step to really taking back control of our money. Broadly speaking, when it comes to finances, you have three options. You can find a way to increase your income, you can make savings from your existing budget, or you can grow your cash through investments.
Making More Money
You might think this is easier said than done, but actually there are ways to boost your income without demanding an unrealistic pay rise. The trick is to figure out what really works for you and not aim at things that are never going to work. Your first option could be to look at getting a second part time job if you have spare time available. This tends to work if you have a specific, medium/term money goal you’re aiming for, and can be flexible with your time and find a side hustle you can scale up and down as needed. You could look at doing some driving work on the side for Uber or Lyft, or if you want to get fit, delivering for Uber Eats on a bike can kill two birds with one stone. Or you can look at computer based work from home options, like becoming a virtual personal assistant. Consider what will fit around your existing commitments and what you are likely to be able to keep up. If you have marketable skills, consider taking on some freelance work. From painting and decorating to coding websites, if you have something to offer, start by creating a Facebook page or a website to build up a portfolio and start spreading the word. If you’re serious about freelancing on the side, consider setting up an LLC to keep your business and personal affairs separated – if things take off and it ends up becoming your main source of income, you’ll be glad you kept that division as it makes for far less administrative headaches further down the line.
Make Some Savings
If there’s no way you can increase your earning power, review your outgoings and see what you could trim or save on here. If you’re not in the habit of monitoring and reviewing what you spend, you may be shocked to see what that beauty habit is actually costing you in black and white. Only by having a realistic picture of what you’re spending can you know where you can make savings. Using an app like Mint gives you an easy pocket picture of your finances on your phone.If you haven’t already, consider opening a high-interest, hard to touch savings account to act as an emergency fund.
Finally, you can look at making those savings work harder for you to get your bank balance looking healthier. If you’d like to dip a toe into investing, but the complication of it all scares you, it’s now easier than ever thanks to a bunch of micro-investing apps that have appeared. You can set a regular contribution, alongside opt-in weekly ‘top up’ amounts, or choose to have your card transactions rounded up and the difference added. Track your fund through the app and choose from low, medium and high risk portfolios pre-selected for you. It’s a pretty painless way to save a little extra. Also look at optimising your 401k with a robo-advisor who can analyse the account and make sure you’re in the best position.