Taking Control of Your Finances in 2021

How many times have you taken a knowing glance at your bank account and thought “I could do better.” The only thing standing in your way might be yourself. Taking control of your finances is the first step towards financial independence and it’s something anyone can do as long as they have the drive and determination to do it. But what advice is there for those who aren’t great with finance or finding investment opportunities?

Finding your FIRE

Financial independence, retire early” is a mantra that has become popular amongst millennials who are looking ahead at their future and thinking “am I ever going to retire?” It’s a movement that relies on frugality, savings and investments but that doesn’t mean you have to live a completely boring and chaste life. It just means taking responsibility for your spending and knowing how and where to invest your resources.

Taking back control

If you’re trying to achieve financial freedom in your lifetime then you have to start now. Use lockdown as an opportunity to wipe the slate clean and start afresh with a renewed vigour. Taking control of your finances is something that won’t happen overnight but by taking heed of the following tips you’ll certainly be off to a good start.

The best financial independence, retire early books contain the following themes for achieving FIRE as swiftly as possible.

1. Sort your debt – The first thing you’ll want to do is work out exactly how much debt you owe. This includes credit card debts, bank loans and even your mortgage. Clear the immediate debts first (the ones with the highest interest) and work out a plan to be debt-free as soon as possible.

2. Check your spending – Financial control means being able to go over your expenses with a fine-tooth comb and be brutally honest about which expenses you could frankly have done without. Every penny counts here so don’t hold back.

3. Think about passive incomePassive income is comfortably the best way to build a foundation for your retirement. Think about these kinds of investments (property you can rent out is always a good shout) when you’re putting together your grand plan.

4. Evaluate your investments – Every investment is a potential way to earn more to put away for that glorious retirement day. What changes can you make in your investment portfolio that will provide you with deeper long term returns?

5. Review your insurance terms – Are you covered well enough and are you paying too much for that cover? Go over your insurance and ask yourself if you even need certain kinds of cover. You don’t want to be paying for unnecessary cover unless you really are a glass-half-empty kind of person.

6. Consider a pension now – It doesn’t matter if you’re 25 and feel as though you’re going to be young forever right now. Old age comes to us all and remember, money put away into pensions and lifetime ISAs is gloriously tax-free. And those words should really be music to your ears!

Further FIRE resources

Remember, even the best retirement planning books won’t necessarily contain great FIRE tips. Achieving retirement in a short space of time requires an entirely different approach to someone steadily saving over 30 years towards retirement by 50 for example.

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