The idea of financial freedom might seem a long way away, or even an impossibility. However, there are a number of things you can do to make this a reality. It might take time and it will require hard work and planning, but having more financial freedom is possible with these five steps.
1. Decide on a Percentage to Save
Saving is so important when it comes to financial freedom. The best way to do this is by deciding a percentage of your income which will go into savings every month. It could be 10%, for some it could be up to 50%, but by setting up a direct transfer so the funds automatically go into a savings account, you will be amazed at how quickly your savings add up. The percentage you save can be adjusted due to life circumstances, it is unlikely that many people will be able to save extra in December, but having a certain sum automatically saved every month is a great way to maximise your income.
2. Invest in Property
Property investment is one of the best ways to secure financial freedom and the benefits are well documented. Property is an asset that should continue to go up in value, in 1998 an average London property was worth £115,000, but twenty years later in 2018, the average property was worth £671,412 – a gain of over half a million pounds. As well as this potential to increase your money through selling the property, you can earn rental income too. Property investment specialists like RW Invest offer properties with rental yields up to 9%, meaning that the investment will pay for itself over time. Buy to let property investment is becoming increasingly popular in the UK, with many being able to retire earlier due to their property portfolio.
3. Have Back Up Cash
Whether it’s as a rainy day fund, so you don’t have to go into debt when major expenses come along or you are working towards a set savings goal, like buying a property investment or paying for a wedding, saving is the way forward. Having a backup amount of cash, which will cover your bills and commitments for a couple of months means that you can avoid getting into financial difficulties no matter what circumstances are thrown at you.
4. Diversify Your Income
Diversification is one of the key ways you can create wealth and secure financial freedom. Having more than one income stream allows you a greater level of security as if one income stream goes, you are still earning. Many people have avoided serious financial difficulties because of having a diverse range of income streams. If you are unsure on how to add more income to your household, consider selling things you no longer use, taking on some extra part time or freelance work or starting a business on the side.
5. Pay Off Your Debts
This may seem like one of the hardest steps, but as soon as you start paying off any debts, the closer you will be to financial freedom. If you are in a lot of debt, it is important to figure out how much you owe, who you owe to and come up with a plan to pay these off. Think about overpaying on your mortgage or credit card debt, as you will make huge savings on interest payments in the long run. Try and avoid payday loans and high interest deals and consider consolidating your debt with a personal loan with a lower APR.