Do you want to get financial independence in 2021? A lot of people do, as the coronavirus pandemic has really illustrated how scary financial dependency can be on anything. Financial independence is definitely a desirable prospect right now.
Being able to achieve true financial independence, which is living without any debts, and being able to do so entirely of passive income streams and savings does require a little bit of effort at work. With that being said, here are five steps that you can take to reach financial independence in 2021.
If you’re going to achieve financial independence, you have to make sure that you have planned to do so. Unfortunately, financial independence is not something that you can just get up and decide to do one day just like that.
Instead, you have to go through a rigorous process of planning and preparing. What does financial independence look like to you? Is it living without any debt? Is it being able to live off your own savings? Every person will have a different picture of financial independence according to what stage of life they’re at.
The first thing that you’re going to have to do is make sure that you plan. Think about what financial independence means to you, how this is all affected by your current situation, and what you need to do to get things done properly.
Budgeting is a very important part of financial independence because you have to start saving and putting money away. You can’t do this unless you have a clear understanding of your own budget and financial situation.
Basically, this involves sitting down, looking at how much you make every month or year, and then looking at what your expenses are for that same period. You need to know exactly what you need to buy, how much it’s going to cost, and what’s available to then put away at the end of all of it.
Get Rid of Debt
If you want to be truly financially independent, then you have to make sure that you pay off any outstanding debt you might have. The problem with outstanding debt is that it becomes a massive issue and prevents you from becoming financially independent because you have to pay what you owe to people. Whether it’s student loans, credit card loans, or a purchase that you’ve made on credit, you need to make sure that you pay it off quickly.
Ultimately, however, you do need to consider that there are sometimes charges for paying back too much too early, so instead, try and find the maximum that you can pay back every month without incurring a fee for early payments.
Living cheaply doesn’t necessarily mean that you have to skip out on the nice things, or even that you have to go without things, but there is something to be said for frugality.
Ultimately, it’s all about making sure that you live a frugal lifestyle as possible because this is the fastest way to start saving money. You have to really stop and think about what you’re doing, and the way in which you intend to do things, because otherwise, you may find that you don’t necessarily get access to what you want or need.
Ultimately, you just have to stop and think about how much you spend, what this means for your overall budget, and if you could spend a little less from time to time. It means you can put more away, which means you’re one step closer to being financially independent.
Think About a Career Change
Ultimately, your plan for financial independence may require you to think about getting a career change. You may love your job or business, and you may love where you are, but you may also not be financially independent.
Changing up your business model or career may well find you looking for a job which pays more, or is going to give you assets that are laid to cut back on some of your spending.
Becoming financially independent can be quite a challenge for people. It’s not always the easiest thing to do, especially if we are living in such challenging circumstances. However, most people will have come from this entire pandemic with the resolve to become financially independent, because the idea of having to keep on living in the way that they did is no longer appealing.
There is absolutely nothing wrong with wanting to be financially independent, it’s just how you go about doing this. Obviously, you have to be safe and sensible with your finances, because you should never put your home or your career into jeopardy unnecessarily. But, there are steps that you can take to achieve financial independence in 2021.
Primarily, you have to think about what financial independence means to you. It’s important to take a look at all of the different options that are available, in order to find what works. You’ve got quite a few choices, which means you can do whatever you need to do to make it all work out in the best way possible. There are many different things to consider, multiple choices to explore, and a broad selection of other options to think about.
Ultimately, reaching for financial independence is no bad thing. It’s all about making sure that you want the very best of options, and that’s completely understandable. In the wake of the coronavirus pandemic, a lot of people are going to be reassessing their financial priorities, and you will just become one of them.
Generating sales online can be difficult. You have to make sure you have the optimum kind of sales strategy in place in order to get the best possible results. Understandably, this is quite difficult if you’re never done it before which is why you may need to get your hands on a couple of pointers.
If you’re not sure what to do for the best, then don’t worry because we’ve got you covered. Here are some of the best and most interesting sales tips that we can come up with.
Promote Your Products
Now obviously, you can’t do anything if you don’t promote stuff properly. You have to make sure that you promote all of your products to give yourself the best possible options.
Product promotion can take the form of advertisements, social media connections, telling people about it, and making sure that everyone knows that you’ve got something yourself. If you do this, then you’re going to have a much better chance of getting your products out there and increasing the number of sales you have.
If you want to try and promote the products that you have, you have to make sure to network. Networking is so important because it gives you the opportunity to connect with your audience in a brand and exciting way.
Go to sales conventions, join social media, do what you need to do, but the important thing is that you talk to people. You build relationships, your network well, and it means that when you want to get something sorted, you can do so easily.
Networking is a pretty vital skill, and definitely, one that you need to have in your arsenal, so you should get the hang of what it’s all about.
Experimentation can often be a big part of getting something right. There are a lot of instances where you’re going to have to experiment to find out exactly what it is that you want to do.
Don’t be afraid to experiment with a lot of options to figure out what’s for you. Eventually, you will hit on the ideal action to take that will promote your product in the way that you want it.
Experimentation can often take time, but it’s definitely worth it in the long run, which means you need to stop and explore all of the different options in order to find what works for you.
In conclusion, improving sales online often takes time and effort. However, the results can be definitely worth it if you take the time to examine all of the options that you have. It’s definitely a case of making sure that you experiment with what’s on offer in order to find the ideal combination of details and ideas to work for your specific business. There is no guaranteed blueprint for any business that wants to promote their products and improve their sales, it just takes a lot of figuring out what works for you, because you have to run with your own unique angle
Why health, wealth and longevity are the three factors putting women
at a disadvantage in later life
Having been a working mother (my children have all flown the nest now), I know how strong our focus can be on the contributions that we need to make to our families. From ensuring they have the latest football kit to saving for our children’s university education – we often place our family’s needs before our own. Yet, there’s a very big reason we should be looking more closely at the contributions we need to make to ourselves to protect our long-term financial future. Women typically live longer than men and may have a smaller pension pot, therefore we need to plan accordingly to make our money last.
While longevity sounds like a blessing, we wouldn’t want to be unwell and struggling financially during our later-life years or become a burden on our children who we had prioritised earlier in our lives. But many of us run the risk that this will be our future. A 40-year-old woman has a one in four chance of living to age 96, and a one in ten chance of living to 1001. Better healthcare and positive lifestyle changes have helped to raise life expectancies across the board, but as women, we are still likely to live longer than men. And with several studies finding that more men than women have died from COVID-19, the life expectancy gap could widen further from here.
The gender pension gulf
With this in mind, we not only need our pensions to last longer, we also generally have smaller pension pots which is a bad combination. We already know that women typically retire with one-fifth of the pension wealth of men2. New analysis from the Centre for Economics and Business Research found that, when life expectancy is taken into account, the gender pensions gap could be as much as £108,130 for single women, and £186,120 for women who are married or in a relationship3.
Because we tend to live longer, women are also more likely to end up in single-person households later in life. This could add further to our financial pressures because it can be much more expensive to run a household of one, covering all bills alone.
Will you be healthy enough to work longer?
Adding to this, the State Pension age is rising, which means many people who will rely on this government payment will have to work longer before they can claim it. With this, there’s no guarantee your health will support you working into your later years.
For example, some women may have taken their first job at 16. If you’re planning on working until your late 60s or early 70s, that’s a lot of years in the workforce – you might well be feeling burnt out or struggling with health issues. As early as your mid-40s or early 50s, you could be suffering from symptoms of the menopause, such as ‘brain fog’, which can make it tough for some women to continue working at the pace they once did.
You may want to drop to part-time hours or get a job with less responsibility to take some of the pressure off, even if it just for a few years. But will you be able to afford this flexibility?
Same-sex couples face triple whammy
For women in same-sex relationships, you may think that your joint longevity will give you a long and happy retirement together. But in fact, you could actually face a triple whammy of challenges. For example, if you both take a period of maternity leave, this could impact your earning power and pension contributions. You may actually need to work longer and face the risk of health conditions spread over a longer length of time.
Luckily, there are things that we can all do to increase our chances of a financially secure life, however long you live. If you do nothing else, have a think about what you want your future to look like. Do an appraisal of all your long-term savings plans, rounding up any small savings pots you may have forgotten about over time. Sit down and have a chat with a financial adviser to see how things are actually looking for your retirement years. Taking into account the money you’ve already saved, and your capacity to save over the coming years – an adviser can model a likely outcome.
For more information or advice on planning retirement, please visit https://www.sjp.co.uk/products-and-services/retirement
1 ONS life expectancy calculator, accessed 7 September 2020
2 Securing the Financial Future of the Next Generation, Insuring Women’s Futures and Chartered Insurance Institute, 2018
3 Centre for Economics and Business Research, September 2020
About the author
Sharon Bonfield, Commercial Research Specialist, St James’s Place Wealth Management (https://www.sjp.co.uk/)
When you invest with St. James’s Place you pay for our advice and the products we recommend. These charges can be accessed on these pages. You will receive a personalised illustration which sets out how these charges apply to your specific investment from your St. James’s Place Partner prior to you making an investment and incurring any of these charges.
Making enough money to sustain your family and your business is hard. No way around it; it’s a simple fact of life. In today’s ever-fragile economy, practically nobody is safe from the effects of coronavirus on the world economy, and jobs are more at risk than they have been since the 2008 financial crash. Due to this fact, many business owners are paring down and becoming more careful, more frugal, and playing it safe. While playing it safe is sometimes necessary to achieve your goals and stay financially risk-free, making your money work for you takes guts, and isn’t for the safe-players.
What Does ‘Make Your Money Work For You’ Mean?
Making your money work for you means investing it. Money invested in assets means it can expand as the asset accumulates value. Take your home, for example. When you bought your home, it was worth what you paid for it. In ten years’ time, with good maintenance and the occasional renovation, it will probably be worth more. You have invested money in an asset which has then grown in value, and therefore the money you earn from selling the house will turn a profit. This is called return on investment or ROI. Your wealth has built up over time, simply by being invested in a valuable asset.
How Do I Invest If I’ve Never Done It?
Your home is only one example of a plethora of investment opportunities out there. Investment in assets doesn’t stop at homeownership; assets can also include land, cars, jewellery, or shares in a company. Many people own shares in the company they work for or have strategically invested in small businesses which are on the rise. Take Netflix, for example: if you had invested $990 in Netflix shares when it went public in 2002, you would now be sitting on $340,956. You didn’t go out and graft for that money, it simply increased over time, as the value of the company it is tied up in began to rise.
Of course, it’s not usually that simple. Buying shares or investing in cryptocurrency such as bitcoin, for example, is a risk. You are not guaranteed to get any return on investment, and if the business fails, you will lose money. That is why those new to the business should take advice from companies who use safe channels, such as Forex Trading, to invest. As well as this, it is important to start small, building up your investments once you gain experience and knowledge in your field of investment.
How Do I Get Paid From Investments?
This depends on the type of investment you have made. If your home is your investment, you will be paid either by selling it or letting it out to a tenant. If you buy shares in a company, you will be paid each year in dividends. Stock and cryptocurrency investments fluctuate, and depend on the channel you invest through.
Making your money work for you is an incredible way to sustain your income and help you achieve your financial goals!
So, you’re a business owner looking to make some smart choices with your money.
Don’t worry too much about it. We’re all in this position. Running a business can be challenging when you’re not being sensible with how you manage your money.
To make the right decisions, you need some good tips. Luckily, we’ve got just the ones for you. Let’s take a look at some of the best options out there.
Make a Business Budget
The very first trick is just to budget. This may seem quite simple, it may even seem quite obvious, but the number of people that do not budget when they need to is astronomical.
At a very fundamental level, you need to have a business budget. This is a budget where you plan the business expenses, not just the cost of living. It’s probably a good idea to treat your business as a completely separate entity to your other finances because there will be different rules and regulations in place.
Assess Needs and Wants
When looking at how best to spend money, it is probably important to sit down and look at your needs and your wants.
See, every purchase can be broken up into two different categories – a need and a want. It’s all about not getting the two mixed up and giving yourself the breathing room that you need. It’s important to make sure that you start to get the best possible options, and decide if you need or want something – it’ll make a big difference in the long run.
Find the Creative Solution to Problems
It’s pretty important to make sure that you try and find a creative solution to problems where you can. It can be pretty difficult sometimes to try and justify making a big purchase or spending a lot of money.
This is where it really does pay to try and find a creative solution to some of your problems. It’s all about how you can come up with the ideas and options which are going to be cost-effective and solve the issue.
For example, fixing a computer might be as simple as going to get a component repaired instead of buying a new one outright. It’s this kind of sensible thinking which will give you the best kind of options for the future. Get creative!
In conclusion, there’s a lot of different things that you can do to make sure that you manage your money a little better as a business owner. Our first instinct is often to spend, which is crazy. If you’re going to be sensible and pragmatic about things, then it’s easy to get yourself the type of experience that you need. If you’re clever about things, then you can probably come up with the best options possible. If you think before you make a purchase, and budget right, it’s possible to manage your money a lot better as a business. Not every problem can be solved in the most efficient way by simply throwing cash at it!
Keeping a close eye on costs is essential to keep your business healthy. Spiralling costs are sometimes out of your control, as they can be dependent on external factors. However, taking charge of the expenses that you can control is vital for the long term success of your company.
Many businesses get into financial difficulty because their outgoings have not been monitored. Taking a proactive approach will ensure that every penny is accounted for and that you have a clear idea of how further savings could be made.
Are you getting the best deals from your suppliers? If not, it may be time to renegotiate your agreements with them or adapt your orders to make them more cost-effective. Don’t compromise on quality in your quest to save money; it is essential to achieve a balance between quality and value to maintain the quality of your products. It is helpful to use suppliers that specialise in a specific product, as they often offer both quality and value. companies such as Gas Oil Drums specialise in gas oil which means that your business can benefit from their professional service, quality, and value.
It is beneficial to nurture relationships with your suppliers. Make sure that you pay supplier invoices on time to maintain your relationship, and also prevent your business from incurring late payment penalties.
Re-Evaluate Your Premises
The cost of renting and maintaining business premises is one of the most significant expenses faced by companies. Make sure that your building provides everything that you need to keep your business running as it should. There is no point in paying a significant amount of money each month for a building that no longer works for you.
If you have lots of space in the building that you do not use, then it may be worth moving to smaller premises. Paying for square footage that you don’t use is a drain on your business, as you will be paying more in rent, heating, and other running costs.
Re-locating your business can sometimes be a useful way to cut costs. Moving to a building that is closer to main transport routes can lessen fuel costs and reduce the mileage travelled by company vehicles.
Reducing waste in your business is not only good for the environment, but it also makes good business sense too. Encouraging staff to only print when they need to is excellent for reducing the amount of paper, ink, and toner used by your business.
Re-examining your manufacturing processes can also help you to spot areas where waste can be reduced. Are your employees getting the most out of the materials provided? Is the equipment being turned off when it is not in use to save electricity?
There’s no need to wait until cash flow issues hit your business before you start to look at ways of reducing waste and cutting costs. Making cost assessments a regular activity will help to save you far more in the long term.
If you are someone who dreads looking at the online banking balance or your bank statement, then chances are it is largely due to the fact that you don’t feel as though you have the tightest control over money.
You’re probably not alone though, because many people also worry about their income and outgoings constantly, and often it seems that cash flow is always moving in the wrong direction.
There are simple ways that you can fix your financial situation, and very often, with a bit of work you can start to see the back of nagging money worries. If you have debts too, eventually, you may also see the light at the end of the tunnel for these by putting some simple practices in place.
Go Through Your Finances
Often, when we ignore our finances, we end out paying for things that we don’t even need. Because we are not paying attention to our money, we don’t notice regular bills going up, and we miss out on cancelling services we no longer need.
Go through your bank statement on online banking with a fine-tooth comb. Work out what you have to pay out, and look for things that are not essential.
Some services such as insurance products, or energy and phone bills may be cheaper elsewhere if you switch to a different provider. Start looking at contracts for services that you are using, and see if there is anything that can be cancelled.
Often, by switching to a new supplier on everything that you possibly can, you will free up quite a bit of money.
Consolidate Your Debts
If you have multiple loans and credit cards, you may find that your debt never really goes down. Sometimes payments will only cover the interest, and the overall balance never drops.
By consolidating your debts into one loan, you will only have one set of interest to pay and one loan. This will make things easier to manage, save you money, and set a definite end date for you to have cleared your debt by.
If you have a poor financial history, you may want to look at guarantor loans for bad credit as a way of managing your debt.
Be Strict On Spending
By creating a budget based on what you have to spend each month after bills, rent, mortgage, and loan repayments have all gone will mean that you can be stricter with yourself in terms of spending money.
Work out a budget for important areas such as food and transport first. Try and keep your weekly food shop within that budget. Avoid expensive branded foods and eating takeout, and focus on homecooked meals that are more cost-effective.
If you have any additional money left each month, make sure that you only spend within this limit. If you cannot afford to buy something, be strict with yourself and save up for it. Avoid impulse buys that push you back into unmanageable financial situations.
The best things in life are free, of course, but there are moments when life, cannot be free! Kids are expensive, from the moment they are born, they cost you money. Here’s the thing: children are pricey, and they will cost you money right up until your own death. That’s not a bad thing; it just means that preparation is key from day one. It’s only when you decide to have children that you decide to look a bit deeper into the future and figure out what you can offer. Not only will putting money to one side give them a chance to plan their future, but you’re also going to provide them with the right support along the way.
There are many ways that you can give your children the best possible future, and that starts with sitting with companies like Keoghs Solicitors. They will be able to take you through estate planning and writing a will, which is a must when you have children. Below, we’ve got five ways you can look after your children in the future ahead.
Setting Up Bank Accounts
Children may not use their bank accounts in the same way that you do, but opening an account for them is so important. Doing it when they’re young will give time for interest to build and as they get older, they’ll be able to take over the account. You can develop good savings and strictly speaking, there will be no tax to pay on those accounts.
A Junior ISA enables your child to take over the account at the age of 16, though there are restrictions on money withdrawal until 18. They are a tax-free savings account and they’re specifically designed for under-18s. You can get a cash ISA set up straight away, and when money is invested, tax is not paid on capital growth. If you’re worried that your child will take control of this account and end up splurging the money, then you can still keep tabs on it with limits of withdrawal.
Writing A Will
Writing a will with Keoghs Solicitors is so much more than jotting down who gets the children in the event that you die prematurely. It’s about detailing where you want your money and your estate to be. You can also talk about who is going to be in charge of ensuring that your wishes are adhered to. A will can secure your children’s future, as you haven’t left it up to the government to decide what happens with their childhood home and all of your money and bonds. It’s a good investment, and it gives you peace of mind, too.
By having a life insurance policy in place, you cover an amount to keep your children secure and solvent, paying off the mortgage and their education at the same time. Life insurance is going to give you peace of mind that you have looked after your children even when you’re not here and it’s going to be a smart move in securing their future. Life insurance is going to secure your own future as well as your children’s, so it’s a smart decision either way.
An Education Fund
Wherever you are in the world, education costs money. Some universities won’t charge massive fees for tuition, but your children still need help with living costs. The best thing that you can do is set up an education fund. Some people may use this for tuition, but others can pay for their children to live comfortably and have all of the equipment that they need for success. Education is going to cost, and if you can alleviate the pressure on your teenager getting their own job, then it makes sense to take it easy on them as much as possible. Your child can then grow into an adult with options and choices when it comes to their education, and this is one of the best gifts you can give them.
You want to give your kids the best possible future, and putting aside even a small amount of money can make a big difference to them. Over time, this will build up and be something to boast about knowing that you secured their future from the moment they were born. Children need support, and you can ensure that the support that you give lives on long after you do when you go through these five tips and get them into action as soon as possible.
Running a business can be stressful, and one area that often causes us anxiety and sleepless nights is the financial side. Entrepreneurs have the freedom that comes with not being employed, but there is no financial security of a payslip each month, paid holiday and time off when sick. Here are four ways to put that stress monster to sleep and avoid business money worries.
This is the basic one; most people have some form of indemnity insurance in case a customer raises a serious complaint, but what about you? Loss of earnings from sickness can be really unbalanced, and you need to be mitigated against this happening. Life insurance and critical illness is one thing, but what if you have a smaller medical issue that stops you working? Look into the different policies and if needs be seek advice from a financial advisor. There are ways to replace monthly income if the worst happens and you need to stop working for a while.
Book recommendation You Are a Badass at Making Money: Master the Mindset of Wealth
Know Your Books
An accountant is great and worth their weight in gold, but you need to understand what is going on. Knowing your cash flow as it comes and goes will help you feel more in control of your financial status. So, don’t just blindly hand things over, ask for monthly reports, understand when money arrives and what invoices you have to pay. This gives you the opportunity to plan for drier spells and make arrangements with creditors if needed, which in turn can help you save penalties if you need to make a payment late occasionally. People prefer and open dialogue to staunch silence and no money coming in, so make sure you act as you would wish to be treated.
Book recommendation Profit First Transform Your Business from a Cash-Eating Monster to a Money-Making Machine
Does your business really need an external premise? Many people save thousands by working from home. If you have a virtual presence and rarely meet your clients in person having an office space could well be a waste. Coffee shop meetings are perfectly normal, and no one will question your reasons. Working from home also saves on the temptation to go and buy lunch or expensive takeaway coffees which can soon rack up the spend. It may only be little, but everything you can save will help. Consider making your own website or trading services with a web designer to get a better deal. The only limit to saving money is your imagination and creativity.
Consider a Side Gig
There are lots of ways to bring in a little more cash in a passive way, or even in an active way, and we call these side gigs. With an entrepreneurial brain, you are likely to be able to turn your hand to more than one thing. Passive solutions include renting your driveway as parking, pet sitting or selling on eBay. There are plenty of others, so you are bound to be able to find something that appeals, and it can be useful to have a change and focus on something different for a while.
Running a small business can be a hectic time with many variables to think about from products to sales to marketing, and if you are doing your own accounting on top of that, it can be all too easy for mistakes to be made.
Those who are new to business might think they can save money by doing all of their own financial management but accounting is a skill in itself and trying to take on too much when you don’t know what you are doing, can cause all kinds of problems.
Some mistakes can be small; others can be the difference between your business succeeding or failing. Ongoing mistaken accounting practices can skew your figures and create significant issues for your company.
Here are some of the most common accounting mistakes which small businesses make so you can avoid making them as well:
Making assumptions about cash flow
Just because you’ve landed a new client, you can’t make assumptions that the money you have planned will actually come in on time. They might be late payers, or the project might go on longer than first thought.
It’s good to have an idea of what’s coming in and what’s going out in your business, but you shouldn’t assume what your cash flow is going to be based on proposed projects and potential new work.
As well as knowing what money is coming in from clients, you need to know what is going out, and the best way to do this is to set budgets in place. Have a budget for advertising and marketing and have a budget for all project costs.
That way you will know exactly what money is due to go out of your business account every month and why, and you won’t be tempted to spend ad-hoc on special offers for advertising or one-off project costs. Setting budgets helps to keep you on track.
Leaving book keeping to the last minute
It’s vital to keep accurate records of all the money coming into and leaving your business account, and the only way to do this is to keep on top of your book keeping. You need to record every business transaction accurately.
If you leave it all to the last minute you might find receipts missing, transactions recorded in the wrong category and your books will be a mess. The key to business success is making sure all of the financial records are up-to-date and correct.
Not understanding employees vs contractors
You need to understand the difference between employing people in your business as employees and using contractors. There are different taxes and financial requirements so make sure you are very clear on the law and very clear on what kind of contracts you are offering.
Trying to do all of your finances yourself
While it’s true that you will have to pay for an accountant to support your business finances, trying to do all of the accounting by yourself is one of the most common mistakes small business owners make.
Even if your business is small and the finance is simple, as you grow and expand it will become more complicated and more time-consuming to manage all of the finances by yourself. You don’t want to be up into the early hours balancing the books so let someone else do it for you. Accounting services offered by companies like Crunch allows small businesses to simplify their accounting needs through their unique approach.
Using cash to buy a set of stamps to post out invoices is still a business transaction, no matter how small and you need to make sure you record every single transaction accurately. It’s all too easy to forget some of these smaller transactions and overlook them.
But if you forget a number of smaller transactions in your books, it will all add up, and your business accounts will quickly be affected and become inaccurate and potentially misleading records of how much money you are actually spending.
Not making sure your books match your bank account
While it’s important to keep records of all of your income and outgoings, it’s also vital to check your records against what is actually on your bank statement. It’s all too easy to overlook small expenses that you might forget about.
You need to make sure your accounting records match with every transaction that shows up on your business bank account so that you have a very clear and accurate picture of your actual real-time business finance.
If you employ a book keeper to help you then you need to tell them everything that goes on within your business and you need to keep records of all transactions and copies of all receipts to give to them at least every month to make sure all the transactions reconcile, so your books always match your bank account.
Cheryl Davis Freelance Writer