One of the crucial mistakes that many of us make when it comes to handling personal finances is that we are too involved in the process of making more money that we forget to take a step back and ensure that the money we already have saved up is being utilized properly. This is more so the case with young adults and millennials who are so caught up in their fast-paced modern lifestyle that most of them have paid no attention to what would happen to their personal finances post retirement.
Now this is a big problem, not just for the future but also for the present. Savings is important not just so that you can have a pension plan for the future and an ability to lead a comfortable life post retirement, it has a gigantic role in our everyday life. If you are someone who has a lot of debt and lives from paycheck to paycheck, you need to do a major overhaul of your personal finances right now so that you can get back on track.
1. Create a Personal Budget
So how do you do it? Well the first step starts with budgeting. Even if you are someone who is not good with numbers, there are plenty of tools available online as well as apps on both Android and iOS that can help you figure out your monthly expenditure. It is vitally important that you strike out any unnecessary expenditures so that you can get your monthly spending down to a reasonable level. Along with that it is also highly important to stop purchasing items that have long term expenditure associated with them as it will gradually eat into your savings.
2. Invest Wisely
Instead of opting to save all your money in a normal savings account, you can choose to invest it so that at the end of the day you can see higher gains on your savings. One of the easiest ways to invest money is to get into stocks and shares trading but then that does come with the risk of market fluctuations. So, unless you are already well versed in the ups and downs of the stock market or you can dedicate some time to researching before you invest, we really wouldn’t suggest this route.
The much safer option is to invest in stocks and shares ISA where you are still investing in the stock market but this time the calls are being made by an experienced financial advisor who can maximize your profit margins while taking the least possible risks. Before investing, you should also find out how many ISAs you can have.
3. Chip Away at Your Debts
Saving money in an Invested ISA doesn’t really make sense if you are already under crippling debt. So, the first step to making sure that you are headed towards long term financial freedom is to make sure that you chip away at your debts on a monthly basis till they come down to a manageable degree. Also, if you feel the need to pay off a large debt and you don’t have the necessary capital to invest in an ISA, forex markets are great for short term investments that can net huge profit margins. However, be aware that the risks associated with it are pretty high as well so tread carefully!
There is a very thin line in between heading towards a penniless future and financial freedom and that line is something that many modern adults are dangerously close to, In the words of Charles Dickens
“Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty-pound ought and six, result misery”
From misery to happiness is a long arduous journey but if you keep these 3 tips in mind, your eventual financial freedom is bound to come sooner rather than later!
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