Becoming financially independent is an admirable goal for any adult. However, achieving financial freedom depends entirely upon how you protect and build them in the first place. Looking after your money looks like many things. It is undeniably an active process that you have to fully engage with in order to see positive progress.
Therefore, for anyone looking to see growth and feel safe with their finances, the guide below has some helpful pointers.
Ways to Protect
The first question is about how best to protect your finances and what that looks like within your personal journey. So, how do you protect your finances and where do you start? This question has hundreds of answers, and your starting point is unique to your circumstances. Think about the following factors to give you a better idea of what your options could be for this part of the journey.
Make a Debt Plan
Debt is not a shameful thing. Most people, at some point in their lives, find themselves with some debt in one form or another. Whether it is a credit card that you became overwhelmed with or a poor decision on a raft of payday loans, it is a normal thing to navigate and there is so much help out there to take advantage of. It might be tempting to bury your head in the sand and ignore mounting debt, but when the day is finished it will all still be there to deal with. The longer you leave it, the bigger it becomes. Fees will be added, administration costs will escalate, and the consequences of not engaging will get more serious as the months tick by.
If you are struggling, start small. Make a list of what you owe and who you owe it to. Pick one at random to engage with and make a goal to do it, even if it takes you three weeks to get there. Make a point of touching base with anyone asking for repayments to let them know you are willing to engage and see what they have to offer you in terms of settlement offers and ways to move forward. Not all creditors are mean, and a lot of companies have a genuine interest in collaborative solutions that suit the customer.
Go Electric with Your Vehicle
Major assets like cars are often financial drains where the money goes straight down the drain with very little return. It is true that when you buy a car, the value is bound to depreciate over time naturally. However, there is a lot to be gained from making the switch to electric wherever that is an option. You can learn everything there is to know about electric car charging times, and how electric chargers vs traditional fuel sources are extremely economical options for the average household. There is also lots of information about how to get set up and where you should make a purchase while also discovering the multiple advantages these vehicles have to offer when it comes to making smart moves around your finances.
Costs saved on petrol or diesel will be substantial and you will feel this immediately. Electric charging is more accessible, convenient, and better for your wallet too. There are also cost savings on insurance and tax which are two of the major expenses of running a vehicle. You will save money on repairs and maintenance because electric vehicles simply need less input than fossil fuelled ones.
Get to Know Your Credit File
Aside from looking at your assets and how to make them work with your finances, you also have to dive a little deeper into the wider picture. What is your credit file saying lately? If you’ve never taken a look before, today is the day to do it. There are plenty of free access platforms where you can get some clue about what your credit score is and where you can improve it. It is also a great way to see what your debts and major outgoings are too, in case you were struggling to piece together that puzzle.
Ways to Build
When you have gained some insight into how to protect your finances and make smart moves on their behalf, you can make some moves toward building your financial future on a positive trajectory. Building is about sticking with the right path and making sure your decisions are built around growth as well as security.
Make a Budget
Budgets are one of the most valuable ways to stay connected to your money. Having a clear visual of your incomings and outgoings is essential for growth. If you know what’s coming in and what money is owed out again, you will be able to find space for saving, accumulation, and investment. These three factors are essential for accruing wealth in a meaningful way as opposed to just staying in stasis.
Have a Goal
With your budget, you can observe enough factors to create a viable goal. Goals are important, even if you don’t think they work for you. The purpose is to feel guided toward a direction, instead of making random decisions that might not synchronise down the line. A financial goal could be as simple as, ‘I want to invest in stocks this year’, or, ‘In the next two years I will have a house deposit’. With an aim, you have something to focus on, and your building mission is given a specific purpose. This is always more motivational than the alternative.
Focus On Active Savings Accounts
When it comes to savings accounts, there are loads of options. Speak with a professional or do some online research to decipher which account will suit your financial profile in the best way and therefore optimise your capacity for tangible savings. The purpose of these accounts is to build your pot of cash for a range of purposes like a holiday, a new car, a house deposit, or a university fund for your dependents. It doesn’t matter what it’s for, what matters is that it exists.
Build an Investment Portfolio
When you feel confident in your ability to understand your finances, you might want to look at ways to branch out. A pot of savings with no specific assigned purpose, for instance, is the perfect gap to think about building some sort of investment portfolio. Whether it is stocks, shares, bitcoin, or NFTs, there is money to be made in this arena. There is also money to be lost, so if you are going to go down this route, make sure you connect with the basics before taking the plunge.
If you’re not ready to explore online investments, your money could be well spent on property. Buying a house to sell or rent out has been a long standing way to increase your passive income. While the market is not entirely favourable at the current time, this is forever changing in line with socioeconomic fluctuations so it is worth keeping an eye on for the opportune moment to stake your claim.
Being a landlord doesn’t have to be a major responsibility, either, because there are lots of ways to outsource this (like estate agents) to create an entirely passive investment model.
Protecting and building your finances takes many shapes. How you make decisions around your financial commitments is a habit building exercise and a lifestyle choice that you need to engage with in order to see results.