The best things in life might be free, but money is still important. And maintaining financial independence means that you’re never left in the lurch if your situation changes. If you want to be able to stand on your own two feet, here are some of the ways you can manage your money.
- Save while you’re young. Most of us are in such a good financial position when we’re young, without even realising. When you have a job but are still living at home, you only have to pay a small amount towards board and the rest is yours. Instead of blowing the lot, use it as an opportunity to save. If you can save enough, you’ll have a strong financial buffer going into adult life. You could buy a car, or even get a mortgage so no money is being wasted on rent. Once you do move and have bills to pay, affording these things becomes much harder.
- Maintain your own separate accounts and spending in a couple. When you’re in a couple, it can make sense to share a bank account when it comes to things like joint bills. Each partner can transfer their share of the bills money, and they can all be taken by direct debit from that account which makes things easy. But lots of married couples also set up a joint bank account to share for regular spending, which can actually make things more difficult. If one person earns more money, it can make the other feel bad about spending. There’s also a lot of ‘asking permission’ involved both ways. Sharing a bank account is a great act of trust, but in many cases it’s not necessary. If you both have your own account, as long as your bills and outgoings are covered, whatever is left is your own money. If you want to spend it on a hobby, waste it or save it, it’s no one elses business other than your own. Have a chat about yours and your partner’s attitudes to money and what you both deem is acceptable. For example, if neither of you have any previous issues with debt then you might decide it’s fine to use credit cards, as long as they’re maintained properly. If you use credit cards, it can be a smart move to choose one that rewards you for your spending such as the Chase Sapphire Preferred card. If either has had serious overspending or debt issues in the past, you might agree that no store cards, credit cards or loans are taken out.
- Think about retirement. If you want to be financially independent during retirement, then it pays to start planning early. If you’re not prepared to live out your senior years on a meagre state pension then the earlier you start contributing the better. Work out how much you can comfortably put away with each paycheck, and what that will eventually add up to when you retire. If you’re in a position to invest in something like property then this can be a good way to fund your retirement. Take out a buy to let mortgage, and over a couple of decades the tenants you have in will pay off the mortgage with their rent. It’s then all profits from there, and you have good amount landing in your bank account every month (once insurances and estate agents fees are deducted). Of course, paying off your own home before retirement also makes sense, as you then have a mortgage free place to live for the rest of your years.
Note: this post contains contributed content.