Financial independence is a superb aspiration. When you are financially free, you can do what you want, when you want and live the lifestyle that you desire. Who wouldn’t want that to be their new way of life?
More and more people are striving for financial independence, but there are plenty of obstacles in the way. In this article, we take a look at five tools that may help you in your understanding of your current financial situation and how you can move forward towards financial freedom even in retirement, or if you are lucky, before your retirement years.
A salary calculator
Understanding how your salary is broken down is key to knowing your situation if you are employed, or even if you are self-employed. Everyone has a pension allowance that they can invest, and if you’re doing well, then you should be using that allowance. Currently, that is around £40,000 per annum, although very few people are using their full allowance.
The salary calculator will help you understand how much tax you are paying, what your take-home pay is, and how a salary increase through a change of job or a change of income type may impact on your disposable income and the amount you can invest.
Personal capital is a financial tool that is free to use and can help you understand and monitor your net worth through your portfolio and your retirement funds. You can develop a plan for retirement and put in assumptions and then track how you are moving towards your goals. The budgeting tool is a particular strength of the app, and there is lots of analysis and investment guidance.
MSE budget planner
This is a spreadsheet that allows you to enter your outgoings into categories. This will help you to plan your spending so that you can work out how much you can invest in your financial future. You must understand exactly where you are in terms of incomings and outgoings to factor in an acceptable lifestyle and your plans for the future.
Even though you can also use this to understand your monthly loan obligations, it is always best to use a loan calculator when planning to collect a loan so that you can know if it is something your financial situation can handle.
This is a cloud-based, secure, open banking website. You can track your spending categories and use the budget planner to understand your current financial situation across your different accounts. You can even set up off-line accounts, such as pocket money, VAT and corporation tax so that you can understand your whole financial situation in one easy interface. It is your everyday money solution for tracking your life.
This is a Robo-advisor that helps you pick investment funds that may be appropriate for your risk level. This is one of the oldest available in the market and has a broad blend of investments that can help you move towards your financial goals.
They are low-cost funds, and the advisory fees are relatively small on top of the investments. It’s essentially an investment planner adviser that can help you to move towards financial freedom without the heavy costs of expensive financial advice. There is no minimum balance, and the cost starts at just 0.25% per annum.
These applications can help you to understand your current situation, plan your investments, track your progress and move towards financial independence. All you need now is to make sure that you have an income-generating structure in place, so you have sufficient funds to invest and plan towards your future.