Fire Movement: Pillar 6 – Develop Smart Financial Habits

Fire Movement: Pillar 6 – Develop Smart Financial Habits
November 18, 2019 Lauren Howells

If you want to follow the FIRE methodology, it’s time to re-think how you manage your finances. Developing smart financial habits now can help you earn and save more money for future plans.

 

From generating multiple income streams to pocketing money from your everyday spending, we show you how to shake up your financial world for the better.

 

Have multiple income streams

 

Unless you are earn a high salary or run a successful business, earning money from one source alone probably isn’t going to be enough to fulfil your FIRE goals.

 

Having multiple sources of income can also help you to achieve improved financial security, as you are not putting all of your eggs in one basket.

 

Setting up a small business on the side can be lucrative. Whether you sell something or offer a service, you can develop your business and grow your second income at a pace that suits you.

 

Think about what you’re passionate about and find a product or service that corresponds with your interests. This way, it will feel less like work. For example, if you enjoy knitting, you could start selling wool on websites like eBay.

 

If you pride yourself on the tidiness of your home, perhaps you could set up a cleaning company to clean Airbnb properties near you.

 

Do you have a skill that others would like to learn? Consider setting up a web-based course through a website such as teachable.com.

 

You could even write a book on the subject to self-publish and sell via Amazon.

 

With the internet, the potential to create multiple income streams has never been greater.

 

Get a side hustle

 

If you want a way to earn a few extra pounds for your savings pot, a side hustle may be exactly what you need. Getting a flexible job that you can work on top of your full-time job, could potentially result in hundreds of pounds more in your bank account every month.

 

If you work 9-5, you could look for a part-time job which requires you to work in the evenings, such as a local bar or restaurant.

 

Want something with more flexibility? Driving for Uber enables you to work at a time that’s convenient for you.

 

You can find out more about getting a side hustle in chapter 7.

 

Earn money from your everyday spending

 

A big part of developing smart financial habits is making sure your money works for you.

 

And it turns out that there is such a thing as “free cash”.

 

Cashback credit cards enable you to earn money on the money you spend on them. As long as you pay off the card in full every month, you shouldn’t pay any interest. And according to MoneySavingExpert, you could earn £100s per year.

 

If you are debt-free, why not look into getting a credit card with 0% interest? Use this card for your normal spending, then put the money you would have spent into a savings account. You can then use your savings to pay off the card and pocket the interest.

 

You could even earn £150 or more for switching your bank account.

 

Learn to say no

 

Getting into the routine of saying ‘no’ to unnecessary add-ons or offers which entice you to spend money you hadn’t intended to, in order to make small savings, is essential.

 

Replace bad financial habits with good ones

 

If you love getting a takeaway three times a week, cutting this out altogether, with seemingly nothing in return, can be hard.

 

Rather than making a drastic change, try to cut down to one takeaway per week and replace the other meals with something positive for your bank balance. For example, you could find an easy budget recipe online of something you’ve never tried before and designate one of your spare evenings as a ‘try new meals’ experience.

 

This replacement technique can help you to break a bad financial pattern by filling in the gap with something positive.

 

Summary: smart financial habits

 

Making smart financial habits doesn’t just mean being savvy with your spending. Earn extra cash by getting a side hustle or starting your own business.

 

Putting in the effort to change your finances now, should mean big rewards in the future.