BUSINESS

You Really Can Take Charge Of Your Finances, Regardless Of What You Earn

Wednesday 18 May 2022, 6:50PM
By Premium SEO NZ
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Times are hard right now due to an unstable world economy and the ever-rising cost of living. While it may be tempting to believe that it’s impossible to gain financial freedom at this time, the reality is that it’s always possible to gain financial ground – it just might take a bit longer and require some sacrifice along the way.

There are many approaches to promoting savings and paying off debt, including limiting monthly
subscriptions, avoiding eating out at restaurants, switching service providers to get better deals on things like phone services, sticking to a budget, and consolidating credit. However, figuring out
where to start can be daunting.

That’s where following a clear plan, like the one put forward in the Barefoot Investor, can come in
handy. According to the Barefoot Investor approach, 60% of your income should go towards living
expenses – paying monthly accounts, buying food, paying off debt, etc. The remaining 40% should be spread across different accounts, with 10% of your income dedicated to savings designated for large expenses, such as holidays or buying a new car; 10% for weekly fun activities; and the remaining 20% for emergencies or larger debt payments. Whatever is left over at the end of the month from the 40% should be moved into an emergency fund, and whatever has not been used from the emergency fund at the end of the month should then be moved over into a long-term investment portfolio.

While this might seem complicated at first, with the use of a finance tracker and some basic
discipline, saving will eventually become a habit. By sticking to a clear plan, you will find yourself
paying off debt quicker, practising delayed gratification, and building up savings that can grow with time, regardless of your monthly earnings.