Almost everyone will experience financial difficulties at some point in their lives and the potential impact this can have on mental and physical health can’t be overstated.
But taking proactive steps to improve your financial wellbeing can help you cope throughout the years. So, what can you do?
In this article, we’ll share five ways to improve your long-term financial wellbeing.
Review your budget
Reviewing your budget will give you a better understanding of your situation and allow you to take control of your finances. Work out your monthly income and estimate your typical expenses. This will allow you to calculate your disposable income. This is how much money you have to allocate towards your financial goals, whether that’s paying down debts or investing for your future.
Build an emergency fund
It’s impossible to perfectly predict the future, so it’s likely that you’ll be hit with unexpected costs at some point. Having a safety net to fall back on could make the difference between you being able to cope or being thrown into financial turmoil. That’s why it’s so important you build yourself an rainy day fund now, before you experience a financial emergency. As a general rule of thumb, six months’ worth of expenses should allow you to weather most storms.
Improve your credit score
Having a higher credit score allows you to get better rates on future loans. This is especially important whenever you need to take out a loan, such as when buying your first house or moving home. Your loan rate effectively determines the overall cost of the loan, so building higher credit score today can make a huge difference to your financial wellbeing in the future.
Save for retirement
Many young people think that they only need to worry about retirement when they start to reach older ages, but this simply isn’t the case. Your financial wellbeing later in life truly depends on the choices you make today. The power of compound interest will help your retirement pot grow over the long term, but it needs consistent deposits and plenty of time to work its magic properly. So, the most sensible thing to do is start saving today.
Free up trapped cash
If you’re looking to improve your financial wellbeing later in life and have paid off a significant chunk of you mortgage, then a lifetime mortgage could help you unlock tax-free cash from your home. You can use the money you release to supplement your retirement income and help meet your needs later in life, all while retaining full ownership of your home. As with all financial products, there are pros and cons so be sure to speak to your financial advisor to find out if it’s the best option for you. Which of these tips could make the biggest impact on your long-term financial wellbeing?