6 Ways To Set Up A Successful Financial Future
A lot of advice may lead you to believe online that if you’re past your twenties, there’s little to no hope for you to set up a successful financial future. Yes, it is indeed easier to accrue a larger amount of money from this point, as time, in particular, is on your side. But all is not lost if you’re in your 30s, 40s or even your 50s. What matters is your mindset and willingness to repair any leaks in your finances, not just today but consistently from now on forward. For the keys to setting up a successful financial future for you (and your family), here are 6 points for you to think about doing.
Picture Nattanan Kanchanapratt
The beginning of the rest of your financial future starts and ends with a budget. Whether you’re an old school pen and paper type of person, you’re happy setting up on Google spreadsheets so that you can update it monthly, or maybe you could use apps specifically for financial planning. Essentially what you need to do first of all is note down every single outgoing you have at the moment. From car insurance to rent to your TV license, write everything down. Total your outgoing and simply subtract this from your income and see what’s leftover. This will give you a good indication on whether you need to downsize some of your expenses. For the sake of your financial future.
Even if you have hundreds of pounds left following your outgoings to play with, now’s not the time to pat yourself on the back and toss your budget to the side. It is time, however, to scrutinise your expenses. Can you spot any subscriptions that you are paying for yet never use? Then cancel them immediately. Have you noticed your spending on clothes appears to be excessive? Challenge yourself to wear the clothes you have for a while, and sacrifice some of your clothes budget. This is all in the name of helping you onto the next step – saving.
It’s a tried and tested form of securing a financial future, and although for some people the word ‘save’ may ignite many sighs and feelings of anxiety the world over, it is entirely necessary for anyone and everyone to do. You’ve created a budget and challenged your outgoings, so hopefully, you have money left over to play with. This is the point forward to decide how much you want to spend and how much you are prepared to save to build up an emergency fund to secure a successful financial future for yourself.
Picture by Fabian Blank
A better way to work out what you can afford to save/spend is buy tallying up the treats you want to buy for yourself that month. For example, you might allocate some money to buy a birthday gift for your relative, order in a few takeouts and maybe replace your worn-out gym trainers. Doing this will force you to reason what you actually need to spend money on for the month. The leftover money can go into savings. This method prevents frivolous spending on stuff you don’t really need, and that would do much better for you resting in a high-interest savings account.
Some of us are numbed into the perspective that debt is just a way of life. For most, it’s just what happens when you study at university, buy a house and buy a car. But actually, it doesn’t need to be this way. University fees are extortionate. However, this doesn’t mean you’re not capable of making up the cost to afford your education by going to work and earning the money you need for it.
Another important aspect of your finances to think about is, with each decision you make that will leave you in debt, what will this mean for your financial future. For instance, if you already have student debt, this doesn’t need to be exacerbated by purchasing a home that’s way out of your financial lane. It might mean making some sacrifices, such as living with your parents for a little while or choosing a smaller house to buy than you originally wanted. But in turn, you’ll reap the benefits of having to repay less debt in the long run that could affect you right up into old age.
A plan that should be on everyone’s agenda if you’re conscious about a successful financial future is a retirement plan. It’s easy to put this question off when you’re decades away from this moment, but having some consideration for it now will mean you will thank yourself later on. When you start working, you are automatically enrolled into a pension scheme, but this doesn’t mean you can’t contribute more than what your employer has assigned for you. The advantages of a pension in the UK is the tax relief you will receive. And so, the more you begin saving now, the better and bigger your pension pot will be when you retire.
While you are physically and mentally able to, make as much money as you possibly can. The time we have to earn money is limited up until our bodies begin to slow down and we’re no longer able to do the jobs we once did very well. Which is why it’s essential to take advantage of the years that you are fully capable of making money. For example, if you are currently in debt, and your part-time job on minimum wage isn’t making a dent your overall debt. It may be worth looking at other jobs that can offer you more money to pay off your debt sooner or side hustles that can help turn your bank account from red to green.
A successful financial future is one without debt and worry. And to get there, it means sacrifice and determination is needed. You will need to; create a budget, and revisit it regularly. Challenge your outgoings and source alternative, cheaper options. Prioritise saving a chunk of your money every payday. And be mindful not to add further unnecessary debt to that which you already own.