If you would like to achieve financial independence as soon as possible, it is important that you focus on the long term goals in your life. You don’t just want to save money now, but also long term, and this means that you have to plan 10-30 years ahead.
Reviewing where your finances stand is a good way of getting back control and checking whether or not you are going in the right direction when it comes to saving money and having enough funds to retire. Below you will find a few tips on how to get started planning your finances long term.
Lower Interest Rates
It might be a good idea to look at your financial products every couple of years, or even every financial year, so you can find out whether or not you are getting a good deal. There are plenty of great tools online that will tell you whether or not you can switch to a better deal.
When you are looking for a refinance home loan, don’t just look at the interest rates, but also the different charges and the terms and conditions. If you are planning on getting some money from investments and inheritance later, you might want to cancel the deal and pay off your mortgage without having to pay high fees.
Creating a Debt Free Life
It is important that you start your planning with the big picture and the end result in mind. Your ultimate goal should be to create a debt-free life and ensure that you are achieving financial freedom as soon as possible.
After all, you have to think long term, and this means that your accounts have to stay in the black, with some money left over for savings and investment. A debt free life will help you do whatever you are planning on doing; travel, move and even start a business.
Energy Saving Investments
No matter how much you love your home, it might be costing you more than you can afford. Investing in energy saving home improvements, such as insulation, renewable energy, or even changing your light bulbs will pay off long term.
You can cut your heating and electricity bills by hundreds of dollars every year, and it all adds up. In a few years’ time, you can have a couple of thousand in the bank to start a business or to travel.
Budgeting
The greatest challenge of managing your money is to find the areas where you can potentially save and cut back costs. There are a few lesser known ways to save money, such as comparing prices regularly, switching your paper magazine subscriptions to an online one, and making sure that you are not paying too much for eating out or entertainment.
Some banks will provide you with a statement that tells you what you are spending the most money on, so you can cut back, and focus on the development areas.
Doing Your Own Accounting
In case you are running your own business, you will need to ensure that you are acting with the same diligence as with your personal accounts. Look through the different regular expenses and see if you can improve your budget and your balance sheet.
You can, for example, do your own accounting and save a couple of hundred dollars each month, getting the same results as if you were using a CPA. There are some great apps that will allow you to manage your invoices, follow up payments, and file your receipts, so you always see where you stand when it comes to your business finances.
Saving Clubs
There are a couple of saving clubs that will allow you to take part in various schemes. For example, if you join one at your local supermarket, you will be able to save up for the holiday season and stop getting into debt over presents. You might also get a discount on every purchase you make or collect points that you can redeem whenever you need to make a bigger purchase.
Money Saving Apps
If you are currently not taking part in a money saving scheme, you can install an app on your phone, or an extension on your browser. For example, the Honey browser extension will let you know immediately when there are discount codes available, and you can make the most out of your budget.
If online shopping and looking for bargains is something you enjoy doing, it might be a good idea to look for an app or a browser extension. You can also download apps from individual stores, so you can get notified when a sale is on, and make your budget stretch further.
Practice Self Discipline
When it comes to saving money every day, self discipline is important. Stay away from impulse buying, by thinking through your larger purchases, and discussing it with your family. Before you decide to splash out on a new car, you will have to find a way to maximize the price you get for the old one.
List the pros and cons of the larger expenses, and you can make better decisions in the future. You should never go shopping without a list and when you are hungry, as this is when most people buy things they don’t really need.
Become Debt Free
Paying for using other people’s money sounds like a silly idea. Still, it is what you do when you take out a loan. If you look at the documentation, you will see the total cost of the loan.
Add it up, and you will see that you are potentially missing out on home improvements or a holiday, as you haven’t budgeted carefully for emergencies. If your loan and other card repayments are adding up to a substantial amount, it might be time to find a way to pay them off faster.
Making the most out of your finances and saving money every day can be a challenge. Plan ahead for large purchases, and take every opportunity to cut your regular expenses.