The idea of Financial Freedom is something that might seem like a distant dream to some people. But it’s not beyond the realms of possibility. If you’re prepared to work hard, save your money, and invest wisely, then your goals could be closer than you think! Financial Freedom doesn’t necessarily mean you’re rich. It means that you are free from financial worries, that you are able to do what you want when you want. Let’s look at how you can achieve financial freedom in the UK.
For most of my life, I didn’t have a clue about personal finance. I bought almost everything on credit, and generally had no plan for my finances. When I hit 25, I decided it was time to take control of my money. It took me five months of hard work to get out of the £3.5k worth of credit card debt I had, but now I’m free of the shackles of interest payments and every day is a new opportunity.
Now I’m on my own personal journey to Financial Freedom and aim to become Work Optional by 45!
But what if it doesn’t work out? Well, in that case, my worst-case scenario is most people’s average life.. working until 65…
Start saving early
Start saving as early as possible to create a solid financial foundation. You may be rolling your eyes, thinking I’m talking to the wrong person. I’m not. I can’t change what you’ve done. But I can influence and guide you right now and in the future. If you’re young enough, you still have time to create a solid financial foundation that will allow you to retire freely and live comfortably throughout your golden years.
You’ll also benefit from the effects of compound interest. Compound interest is a phenomenon that can change your financial life forever. Most people have never heard of it because it just isn’t taught in schools. I wish that I knew about compound interest when I was younger. It could have done wonders for me financially. This is one of the key features of how to achieve financial freedom in the UK.
Compound interest is the idea of earning interest on your interest. Thanks to compound interest, small investments can increase dramatically in value over time. Let’s have an example: If today I invest £5,000 into the S&P 500 (which has an average annual return of 8%) in a Stocks & Shares ISA, and every month I invest a further £500. In 35 years, I will be 60, and I now have £1,228,403.99 in that account! Yep, I will be a millionaire… But how? I’ve only actually invested £215,000.00… £1,013,403.99 has come from earning interest on my interest. Smaller-scale? Okay, I put £500 into a savings account with a 1% APR and the interest is paid monthly, that’s 0.08% interest every month. After the first month, I have £500.40. Now in month two, I earn that 0.08% on £500.40, not just the £500. On a larger scale, you can see how this all adds up!
Click here to visit a Compound Interest Calculator and see how fast you can achieve financial freedom in the UK.
Create a budget
The path to riches may be paved with good intentions, but it’s paved even better with good spreadsheets. If you don’t know how to create a budget, you need to learn how to do it today. You can’t afford not to! A budget will help you control your finances and help you stick to your goals.
A budget is a plan for your money to do the most good. It gives you something to work with when the unexpected comes up. It helps you see where you are spending your money now so you can make changes if necessary. A budget also helps you save for important things, like a vacation or college.
Sometimes, the hardest part of creating a budget is getting started. You might not know where to begin. You may be struggling with how to create a budget that makes sense for you. Maybe you’ve created budgets in the past that you were able to stick to for a short time, but you eventually fell off track.
It’s important to note that sticking to a budget isn’t just for businesses or those who are struggling financially. Budgets are simply a plan for your money, and when wanting toachieve financial freedom in the UK we need to keep track of where all our money is going, and having a budget is key to this.
Make your money work for you
Do you know how to make your money work for you? Investing is one of the best ways to grow your wealth over time while minimizing risk, and there are a lot of ways to do so. From saving for retirement to saving for a down payment on a house, investing can help you achieve some of your biggest goals. The steps to take when starting with investing may seem a little daunting at first, but don’t worry.
Investing is the best way to make money work for you over time, and there are many different ways to invest depending on your goals and timeline.
The best way to make your money work for you is to start investing in yourself. Find a skill, learn a trade, or buy a good business. A good business can have a life of its own and compound your money for you.
One of the most important concepts to learn is that money can make more money. We spoke about this earlier with compound interest. But start to think about it in your everyday life now.
I spoke recently about how I’ve made £15k income from side hustles in 2021, and most importantly how, in order to do this, although I started with £0, I re-invested around £7,000. By investing some of my earnings, I’ve been able to bring in more money.
This works in a number of ways. Let’s look at a few:
- Investing in courses and books to learn new skills that can either help you get a higher paying job, or sell or teach your new skills to others.
- Investing in investment properties to sell for a profit, or rent out covering running costs and then some.
- Investing in a mentor or coach who can teach and / or guide you towards your income goals.
- Investing in the stock market to earn from dividends and capital gains.
- Investing in better software or equipment for your business which makes better quality products, or helps you market your services better.
Keep it simple
Overconfidence is probably the most common of all investment bubbles. Investors get too confident in their abilities and make bad choices of timing, overstaying their investments, or committing more capital to a failing venture. As more of these schemes pop up offering “guaranteed” high returns, investors are often blinded by the possibility of getting rich quickly. One word of caution: If it sounds too good to be true, it probably is.
When you’re first starting out, it’s tempting to try out all the latest money-making schemes you find online. The trouble with this is that many of them are designed to take advantage of people who are new at business. They might seem tempting, but they are rarely effective.
Go back to the basics of investing in traditional income-generating assets, while keeping your liabilities (debt) low.
Stay positive
There are many reasons that people give up on their dreams. Some of the most common reasons I hear from people that I mentor, consult, or work within some capacity is that they quit due to a lack of belief in themselves and lack of belief in their ability to achieve financial freedom in the UK. They also quit because they don’t want to put in the time and effort required to achieve their dreams.
Too often we focus on the hard times and what we can’t do. We do this at the expense of what we can do. By concentrating on the best of what we can do, we give ourselves a tremendous advantage. This allows us to focus on the positive and continue to progress at a higher rate than most people.
Work with a Money Coach
Enlisting the services of a money coach can be a strategic and empowering choice when the goal is to achieve financial freedom. A money coach serves as a knowledgeable and supportive ally in guiding individuals towards their financial aspirations. They can assess your current financial situation, identify areas for improvement, and help create a personalized roadmap to financial freedom. Money coaches excel in breaking down complex financial concepts, fostering better understanding, and assisting with the development of effective money management strategies. Whether it’s creating a budget, eliminating debt, or optimizing investment strategies, a money coach provides tailored advice that aligns with your specific goals. Their role extends beyond mere financial planning, often delving into behavioral aspects of money management, addressing emotional barriers, and instilling positive financial habits. Working with a money coach provides a structured and accountable approach to achieving financial freedom, offering ongoing support and guidance throughout the journey toward economic independence. Learn more about my offer.
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