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How to set yourself up for a financially strong future

By | Linda Carter

As the coronavirus has continued to rage, there’s evidence to suggest that households throughout the UK are spending less and instead focusing on repaying their accumulated debt.

More specifically, it’s thought that credit card and loan repayments hit their highest level on record during 2020, as people began to change their spending habits and manage their finances more effectively.

But what other steps can you take to set yourself up for a financially secure future? Here are some ideas to keep in mind:

1. Create Monthly Budgets and Set Savings Goals

The key to financial security lies in the development of positive habits, with the creation of monthly (or weekly) budgets and manageable savings goals offering relevant examples of this.

In the case of the former, you should strive to create a weekly or monthly budget depending on how you receive your salary, in order to determine the total values of your income and expenditure and the difference between these two numbers.

This value is referred to as your ‘disposable income’, and it can help to set realistic and manageable savings goals that enable you to accumulate wealth without compromising your ability to pay bills.

Just remember that accuracy is key when budgeting and calculating disposable income levels, while it’s also important to manage your expectations and prioritise the payment of bills.

2. Learn How to Invest and Create New Income Streams

 Historically, one of the best pieces of debt advice was to reduce your expenses, but this may not always be possible as the cost of living continues to rise at a disproportionate rate to earnings in the UK.

Given this and the immense earning opportunities that have been created during the digital age, it now makes more sense to focus on creating new income streams and learning how to invest your hard-earned cash successfully.

The practice of forex trading enables individuals to create a passive stream of income, for example, by allowing you to target short and long-term gains through the deployment of knowledge, strategy and algorithmic trading.

Other assets can also be traded freely through the financial market over time, as you look to diversify your portfolio and optimise your investment income successfully.

3. Minimise Debt

On a final note, we’d also recommend that you focus on minimising debt as you look to build towards a more financially secure future.

This makes obvious sense, as otherwise you’ll continue to repay mounting debt and interest rate levels without ever being able to effectively save money.

Of course, some forms of secured debt can be seen as positive, such as mortgages and finance agreements for vehicles. Securing a loan to launch a new business is also a viable option, as this will be with a view to creating a lucrative source of income going forward.

However, you should never borrow frivolously or as a way of funding your lifestyle, as this habit can be increasingly detrimental to your financial wellbeing over time.

 

 

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