Planning for the future: Simple tips to attaining financial freedom

Attaining financial freedom and security in retirement requires planning.

In this day and age when disposable income does not provide sufficient savings margin, taking proactive steps towards financial security and future planning will go a long way in reducing financial stress.

Below are some useful tips to planning ahead for financial freedom:

Manage finance and cash flow

  • Know your numbers
  • Understand your income
  • Understand your expenses
  • Compare the results
  • Take action

Become financially literate

People who are financially literate end up with more wealth than those who are not. Here are some ways to gaining some financial literacy

  • Don’t be intimidated by money talk. …
  • Follow broad financial topics. …
  • Research specific companies. …
  • Read finance books / literatures. …
  • Attend investment and real estate seminars. …
  • Start investing. …
  • Find a mentor. …
  • Invest for the long term.

Making money is one thing; saving it and making it grow is another. Financial management and investing are lifelong endeavors

Borrow money for investments

  • Never use borrowed money to finance a lifestyle
  • Invest borrowed money – where your gain will outrun borrowing costs
  • Can be used to further education, start a business, buy a house or regulated investment

Insurance

  • Get life insurance
  • If you are a director of a limited company, get tax efficient life cover

Pension planning

  • Contribute into a pension, if employed, contribute at least the maximum offered by employer
  • If you are financially savvy, get more control of your pension with a SIPP or SASS
  • SIPP or SASS offers investment flexibility (advise may be required).

Tax planning

  • You may be liable to inheritance tax on all investments
  • Tax charge on pension pot if you die
  • Inheritance tax is a tax on your estate (property, money and possessions)
  • No inheritance tax to pay if value of estate is below £325,000 or if left with spouse, civil partner, charity of community amateur sports club
  • If married, threshold can be transferred on death to as much as £850,000

Take action

  • Consult a tax adviser
  • Write your will – never too early but can be too late!!!