Expert Tips: How to achieve financial freedom

Set yourself on the path to financial freedom with these top tips from our team of experts.

What does financial freedom look like for you? For most, it means having enough income, savings or investments to live life on their own terms. But financial freedom isn’t something that can be achieved overnight. It’s a target that you need to work towards over many years, with strategic and careful planning.

1. Understand your financial situation

It’s essential to start your journey to financial independence by comprehensively understanding your financial situation and talking to a financial adviser can help you to do this.

You need to understand your assets and liabilities. Assets encompass everything you own, such as savings, investments, property, and personal items. Liabilities are your financial obligations, like loans, mortgages, and credit card debt. Knowing this information will help your adviser build a clear picture of your financial situation, help inform decisions and in turn help you to achieve your financial goals.

2. Set clear goals

The key to achieving financial freedom is to decide exactly what it means to you. Is it being debt-free, mortgage-free and being able to pay unexpected costs without worrying? Or is it more ambitious, with all the above plus being able to enjoy hobbies and pursuits such as regular holidays? Deciding what financial freedom looks like to you is important so you should give yourself time to work out what you want, and together with your adviser, you can devise a plan that reflects the outcomes you want to see.

3. Get on top of your finances

It’s crucial that you have a good oversight on how much money you have coming in, your expenses and what you’re saving. By making sure you have a holistic understanding of your finances, you can create a budget that reflects your income, expenses and savings targets. You could also identify areas where you could cut back, so funds can be reallocated to other priorities, such as savings, pensions and paying down debts.

4. Create an emergency fund

You don’t want your journey to financial freedom to be derailed by sudden and unexpected expenses, such as repairs to your home or replacing expensive household appliances. It’s therefore well worth setting aside a pot of money exactly for when disasters and unforeseen events strike, so you have a safety net in place in case the worst happens, and don’t have to dip into your all-important savings accounts. Having adequate insurance in place can also help here, especially in terms of protecting your earnings capacity as being unable to work as a result of accident or illness over the long terms can really harm your finances.

5. Pay off high interest debts first

If you have multiple debts to pay off, prioritise those with the highest interest charges, as these will ultimately be more costly in the long run. Paying these debts off first can free up more money overall, which again can be diverted towards helping you achieve your financial goals.

6. Diversify your investments

You can invest your money in many ways, including stocks, shares and various asset types but using tax efficient wrappers like pensions and ISAs can help maximise potential to help your money grow over time. Your financial adviser will be able to offer investment advice tailored to your financial goals and your tolerance for risk.

7. Cut back on impulse buying

It’s so easy to spend a few pounds here and a few pounds there on items we don’t need without really thinking about it. If you have a set financial objective in mind, it might be worth reviewing your bank statements and seeing how much money you’re spending on unnecessary impulse purchases. That might then encourage you to reevaluate your spending habits, so you’re not wasting precious funds unnecessarily, when they could instead be helping you reach your goal sooner rather than later. Pay yourself first is a good motto to help you keep on track for your savings goals.

8. Stay educated on financial issues

 Staying up to date with changes to tax law and other financial news can certainly help you stay on top of your finances, but it can sometimes be overwhelming. Our team of in-house tax and investment experts can provide you with the guidance and assurance you need to make informed decisions.

9. Seek professional financial advice

 A financial adviser can work with you to devise a financial strategy, based around your specific needs and aspirations. Working with an adviser can make a huge difference, especially when making big financial decisions like whether you can afford to retire and maintain your lifestyle. It will allow you to move forward with a degree of confidence, and give you peace of mind that you’re doing the right thing and on track to achieving your financial goals.

If you have any questions about managing your finances and setting yourself up for the future, feel free to contact your dedicated financial adviser, or our client service team who will be happy to speak with you.