How to plan for a secure financial future
Setting yourself up for a financially secure future can be a hard task, particularly if your bills are mounting up, your savings are dwindling, and you are desperately trying to save to buy your first home. Times can be difficult when it comes to managing your finances. Therefore, it helps to keep on top of your spending by devising a thorough financial plan. Developing a financial strategy and writing a budget can be one of the easiest ways to reach your goals and live within your means. To guide you on your journey to achieve complete financial freedom, here are some financial tips you can follow to help you out along the way.
Devise a budget
Creating a budget and sticking to it can already stand you in good stead for the future and help you keep on top of your spending. There are so many ways in which you can do this, with one of the most common being in the form of a spreadsheet, although there are now many applications you can get on your phone that do the same job. Make sure you update your budget regularly to ensure you are always getting to grips with your income and outgoings and how much you can afford. There are so many budgeting templates available online that can be downloaded onto your computer, this allows you to properly keep a close eye on exactly where your money is going and help avoid any overspending.
The 50/30/20 rule for budgeting your money is one of the easiest to follow, while still producing an effective plan for your money. The plan is a structured outline of what percentage of your total monthly income you should be spending on each expense each month. The rule suggests that 50% of your income should be spent on needs. Needs are bills, direct debits, transport and food that you absolutely must pay in order to live.
30% are wants, referring to everything you want to spend your money on, although it is not essential. A new bag, tickets to a forthcoming event or the latest electronic device would come under this category. These are all little extras you wish to spend your money on to make your life seem more enjoyable and fulfilled. If you exceed the recommended 30%, you run the risk of delving into your savings which is a big no if you are opting to save.
The final 20% should be placed into a savings account. Understandably, it can be hard allocating 20% of your income into savings and investments, but you will thank yourself in the long run. Initially, it can be hard eliminating luxuries from a lifestyle you have become used to, but this method will help you realise that it is possible to save money still while treating yourself to a few things along the way.
To put this into perspective, if you earn £2000 per month, £1000 will be used on needs, £600 on wants and £400 on saves. It is as easy as that.
Invest in Property
Investing isn’t for everyone; however if you explore the possibilities, you may quickly grasp a firm understanding and realise how useful investments can be for your financial future. While some property investments may seem a little out of reach, particularly for those who have not accumulated much savings, it will always be an available option when the time comes, and you feel financially ready.
Property can help to secure a high return on investment, but this is location dependent. Choosing a suitable, high yielding location is imperative in achieving a successful property investment venture. If you do choose to invest in property, research your purchasing options fully as sometimes purchasing with a mortgage can be slightly trickier than normal. Furthermore, look into the which areas across the UK perform better than others in terms of returns, and opt for an experienced property company like RW Invest for guidance and advice.