3 Ways To Help Improve Your Financial Situation

Hi everyone, thank you for coming back to my blog. I hope you found my last blog interesting and useful, where I covered ‘3 ‘Money Management’ New Year’s Resolutions For 2021'.

In today’s blog, I am going to cover the ways you can improve your financial situation, so even if you have a financial situation that is ‘good’, this blog post should make that position, even better and get you closer to financial freedom.

Here are the ways that will make this happen:

1. Educate your financial genius

Financial intelligence makes money and money without financial intelligence won’t stay.

The latter part of that statement is seen time and time again. Take former athletes or musicians for example, they run of out money and go broke even though they earned more in a short period of time, than most people will earn in their lifetimes. Simply put, they spent what they earned and did not think about the future. Don’t be like these people!

They lack perspective in two things:

1) Financial risk awareness

These people have above-average incomes and often take higher risks. You must be aware of this risk and must critically look at your financial status quo. Economic crises (or global pandemics) could also affect all of us at some point too.

2) Opportunity to manage and invest their own money

In some cases, long-term investments are even planned, but the consumption needs are satisfied first. Later, it may turn out that the finances are not looking so good after all. This often happens to people who entrust their money management to another person or company. It is better to take a look at your own finances yourself, that should be a must.

These two perspectives will help you become financially smarter. However, it’s not enough to simply make a plan once, lifelong learning is the best way to keep your financial intelligence up to date. You can educate yourselves on new investment opportunities and by following political/economic changes helps us to discover new trends.

2. Pay yourself first

The positive effect of setting goals is proven. Goals are logical and helps you check where you currently stand; it clarifies how much needs to be done. Goals are also critical financially, this applies not only to entrepreneurs but also to private individuals. For example, you can set a goal of how much money you want to save or invest each month, and you should do so.

But one financial goal that is a must, is Pay yourself first. By this, I mean that you should first pay yourself out of your income and then pay your bills and expenses with what is left after, so that you are not wasting your income. It’s about having a clear ambition of what you want to achieve with your money. This can mean saving it, choosing an investment of your choice, or investing it in yourself.

3. Never underestimate how money can work for you

For many people who strive for financial freedom, passive income is the holy grail. This is income from, either companies that they have built up or from other work forms that they have done.

That money earned can really be made to work by investing it. Financial freedom through Index Funds, Cryptocurrency, Gold or Property, is as desirable as it is difficult to achieve. It requires a lot of money to be invested and for this very reason, many people give up on the dream of making their money work for them. It is simply too much capital that one would have to raise, so many give up much too early.

But they underestimate 3 things:

1) Their human capital

Many even young people have already given up on the idea of financial freedom. They realise that they can hardly earn hundreds of thousands of pounds on an average income and then invest it. But they often underestimate that they still have many years to live, they have a high level of human capital.

2) The compounding effect

This will help you achieve financial freedom quicker, because the compounding effect will accelerate the accumulation of assets massively if you reinvest any returns from your assets.

3) The partial financial freedom

You should consider it a desirable goal to build up wealth, regardless of the dream of complete financial freedom because income from assets always offers freedom. Even if you have to work on the side, investments can bear your fixed costs after a short time or serve as increased reserves. Everything is probably more sensible than simply leaving the money in a savings account, or spending it senselessly.

Until next time, stay safe and please share this blog with anyone who might find it useful. Thank you.