Put simply, financial freedom is being able to live the life you want without worrying about money.
All too often, money is the driver behind our decisions, from which job to take to the meals we eat. This is expected in our younger years when we’re building up our wealth and perhaps providing for a family. However, at the point of retirement you’ll want to be able to afford your preferred lifestyle without worrying about finances. After decades of working hard, you’ll deserve it!
With the right planning and money maintenance, it’s definitely possible to achieve financial freedom in retirement. Follow this guide to make sure you’re prepared well ahead of your last day on the job.
Make a plan – and stick to it
The first step is to make a plan – and stick to it. This plan should reflect your life goals, such as where you want to travel and the type of property you want to live in, set against your available funds.
If you’re far from retirement, you might think it’s too soon to start planning your financial future. However, being organised with your money from a young age and considering day-to-day spending decisions will help you to avoid overspending and give you peace of mind that you’re in the black.
Build your savings
Next, focus on building your savings. Get into the habit of putting aside a certain amount of money each month: you’ll be surprised how quickly this grows into a significant nest egg. Consistent saving also gives you a cushion in the event of an unexpected or emergency bill.
You should carefully consider where to save. There are several types of bank account to choose from, some of which are deliberately designed to help you make the most of your savings. Accounts where you cannot access your money for a set period of time, such as ISAs, often have higher interest rates.
Improve your credit score
Credit scores indicate your history of handling money, reflecting any late payments and debt. This score determines the interest rate you’re offered on big essential purchases such as homeware and cars, and the mortgage on a house.
It is important to take steps to improve your credit score if you are aiming for financial freedom. A good credit score means spending less on essentials, leaving you with more to put towards the future. You can improve your score simply by settling bills on time on joining the electoral register.
The secret to achieving financial freedom in retirement is to start preparing as early as possible. Saving regularly, managing your money well, and following a monthly budget is a slow and steady way to ensure healthy finances to fund your later years.