Thursday, April 15, 2021

5 Steps to Improve Your Financial Future

 

Photo: Micheile Henderson/Unsplash


Financial freedom is something we all strive for, but in today's economy, it can feel quite elusive. If it feels like funds fly out of your account seconds after they arrive, you're not alone. The good news, however, is that there are plenty of small but powerful steps you can take today to improve your financial future. 


Take Charge Of Your Debt

The first thing you're going to want to do is take charge of your debt. The sooner you can reduce and eliminate any unnecessary outgoing expenses, the sooner you'll have better cash flow. Start by checking out a debt repayment calculator to see how much you're currently spending and how long it will take you to pay off your debt at this rate. Then bump your payments up to the maximum you can afford so you can see how much less interest you'll pay by getting rid of your debt sooner.


Consolidate 

Now that you've worked out exactly where your money is going, it's time to set up a more proactive debt-smashing plan. If you qualify, look into consolidating your debt into a no interest loan scheme. This will allow you to pay down the capital sooner and greatly reduce your overall expenditure. 


Establish An Emergency Fund

One of the most important factors in your financial security is the ability to deal with a crisis. A solid emergency fund is key to your financial future. Start by working towards having three months of living expenses saved, then slowly build up to six months and then a year. This may seem excessive, but as 2020 showed us, things can go sideways very quickly, so it's important to be prepared. 


Adjust Your Budget

You’ve probably heard that you should be living below your means, and while that can certainly be a challenge in many cases, it really is the only way to get ahead. The best way to ensure that you're achieving this is by analysing and recalibrating (or creating) your budget. 


Any discretionary spending that does not align with your goals should be cut, especially if you're currently living paycheck to paycheck. You don't need to suck all the fun out of life, but anything that doesn't bring you joy or serve a purpose is just dragging you down. 


Enable Round Ups

Many banks offer the option to round your transactions up to the nearest dollar (or five or ten). You don’t notice the extra dollars or cents that go missing, and they don’t really go missing. Rather, they go into a high-interest savings or investment account. This is a great way to save without missing the money being put away.  


Look Into Investing

Yes, we're aware that in order to invest you need to have spare cash, but if you can find the money, compound interest will soon become your best financial friend. If stocks feel too risky or are out of your price range, consider looking into micro-investing in ETFs. They tend to provide a more stable return and can be bought more easily in the micro-investing market. 

Note: You should only ever invest money that you can afford to lose and won't need in the next couple of years. The stock market, like any other trading platform, comes with its own unique set of risks, so you should consider carefully whether this option is right for you. 


There you have it – our best small but powerful tips for improving your financial future. Implement the ones that work for your situation, share any others you may have in the comments, and go live your best life. 







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