If you’re determined to take control of your finances in order to be able to retire early, simply continue reading to discover five easy to follow finance tips that will change your life.
5 Finance tips that will change your life:
Check the interest rates of all of your bank accounts:
As the primary reason why you should place a portion of your disposable income into your savings accounts is to accumulate compound interest, it’s incredibly important to regularly check the interest rates of all of your bank accounts.
As if there is a rival bank who can offer you higher interest rates, particularly on your long term savings account, it may be worth shifting your money across to a new bank and a new savings account. As if you fail to save your money in a savings account which boasts a high interest rate, you may lose out of thousands of dollars of compound interest in the long run. So there’s definitely no reason to stay loyal to a bank, which fails to offer you competitive interest rates.
Keep track of your net worth:
One number that will give you a clear indication of your financial health is your net worth. Your net worth is the number which you get when you minus your debts from your assets. For some individuals this may be a negative number. One way to increase your net worth is to continually work on paying off your debts and increasing your passive income streams. So that your debts will decrease, while your assets will increase.
Avoid spending more than 30% of your income on luxury items:
Ideally you should only allocate 30% of your income towards luxury items which may include new clothes, movie tickets, takeaway coffees and nights out with your friends. The rest of your income should be spend on your savings, investments and necessities such as your rent or mortgage payments, your food, power bill and groceries.
It’s also well worth considering cutting down on the amount of money which you spend on luxuries, in order to increase the amount of money which you invest towards your financial future. As the more money you wisely invest in a diversified investment portfolio, the more likely that you will be to retire at an early age.
Don’t use credit to purchase items that aren’t necessities:
You may be surprised at how many individuals purchase expensive luxury items such as new laptops and smart phones using their credit cards. Instead of being tempted to use credit to purchase items, it’s a much smarter financial strategy to save up for luxury items. So that you’ll be able to pay for them in full, instead of increasing your debt, which will negatively affect your net worth.
Consider consolidating your loans into a single, easy to manage loan:
You may find that you’ll be able to save a significant amount of money by consolidating all of your loans into a single, easy to manage loan. As a bonus, you’ll also find it a whole lot easier to remember to pay a single loan payment each month, than having to remember to make payments on multiple different loans.
So there you have it, five finance tips that will help you take control of your finances and which will increase your chances of being able to retire early. As there’s definitely more to life than working.