The goal of achieving financial security is a noble one, albeit something that remains incredibly difficult to achieve in the current economic climate.
At the heart of this is the internal struggle between stagnant real wages and the rising cost of living, with inflation in the UK set to peak above a worrying 5% over the course of the coming months.
But what steps can you take to make you and your family more financially stable, and is it enough to simply save and live more frugally?
How to Cut Costs and Save
Let’s start with the basics; as more frugal living is central if you’re to boost your long-term financial stability. Here are some tips to get you started:
- Track Your Finances: You should start by completing and maintaining your own financial spreadsheet, which tracks both your monthly (or weekly) income and expenditure. This way, you can identify potential areas in which you regularly overspend, while also helping you to highlight excessive or overlooked payments that you may want to cancel.
- Budget, Budget and Budget: This document should also provide the foundation for your budgeting efforts, which must be accurate and applied over a weekly or monthly period of time. This will enable you to determine your precise amount of disposable income each week (or month), enabling you to identify exactly how much can be committed to savings over time.
- Live More Frugally: In instances where you do identify items on which you overspend, you can look to seek out viable alternatives or potentially eradicate such expenditure (if it’s non-essential) from your budget. This can lead to incremental monthly savings and a more frugal lifestyle, which will boost the amount that can be committed to savings over time.
Focus on Earnings
While these steps will provide a solid foundation from which to achieve security, they’re simply not enough at a time when the cost of living and inflation continues to rise at a faster rate than earnings.
So, creating a secondary income that boosts your earnings potential represents a great idea in the current climate. Here are some ideas to keep in mind:
- #1. Market Your Skills for Financing: The gig economy represents big business in the digital age, and one that has more than doubled in size since 2016. Certain skills remain in high demand in the digital economy, from copywriting and web design to SEO and web marketing. If you have one of these skills, you should consider marketing yourself as a freelancer and networking to identify some short-term, project roles.
- #2. Trade the Financial Marketplace: The financial market is also a great source of passive income streams, especially when you consider derivative assets such as forex. Currency trading is more accessible than ever before through the MT4 platform and similar entities, which also enable retail traders to seek out real-time analysis and make more informed decisions. They also allow for automated trading and the use of stop losses to help minimise account losses automatically.
- #3. Find Government Help: Sometimes, you may find it hard to optimise your earnings, especially if you’re a working single mum who struggles to work a large number of hours or balance the cost of childcare. In this case, you may be eligible for government assistance and benefits in the form of child tax credits, which can boost your income markedly and make a big difference over time.