Financial freedom in the UK

Aqua experts reveal how to get on the path to financial freedom.

Written by Team Aqua

Published: 26/04/23Published on April 26th, 2023

Last reviewed: 14/08/23Last reviewed on August 14th, 2023

6 mins read

What do you think when you hear ‘financial freedom’? Perhaps it's travelling the world and visiting exotic destinations, or maybe it's spending more time with friends and family. It can mean different things to different people but it’s typically considered to be having the financial resources to live the life you want without worrying about money.

Whilst complete financial freedom might sound like an impossible goal in today’s financial climate, working towards it is a goal we can all aim for by taking small, achievable steps. Regardless of how you set out to do this, whether it be through income via investments, building your own business or diligently saving for early retirement, looking at your disposable income is a great first step.

Disposable income is the money you have left after paying taxes and covering your overheads, such as rent or mortgage. Essentially, it’s the amount of money that you can choose how it’s spent.

Although each individual will have a different financial situation, some cities could help you reduce costs and make your money go further. We’ve explored which cities in the UK are better suited for those working towards this goal.

The most financially free cities in the UK

To determine the best cities in the UK for working towards financial freedom, we set out to find the average disposable income in each city. This was calculated by comparing the average cost of rent and utilities to the average salary. We also looked into other factors that could impact financial freedom. This includes a cost of living score that takes into account the cost of essentials such as groceries, transport and utilities, as well as purchasing power, which represents the number of goods and services that can be purchased with a unit of currency.

Preston, Lancashire was found to have the most financial freedom in the UK. Residents have an average disposable income of £2,741 per month and a cost of living score of just 57.01 out of 120 (the lower the better). This is followed by Coventry and Milton Keynes taking second and third place, with residents seeing an average disposable income of £1,775 and £1,828 respectively, and cost of living scores of 58.31 and 61.36.

The least financially free cities in the UK

At the other end of the spectrum, when it comes to the cities where residents could face more difficulties in becoming financially free, we discovered that London takes the top spot with people having around £738 disposable income each month and a high cost of living score of 75.21.

This is followed by Plymouth residents having around £535 of disposable income and a cost of living score of 62.26, and Liverpool residents having approximately £924 disposable income with a cost of living score of 63.24.

How we can work towards financial freedom

Whilst complete financial freedom might feel out of reach right now, working towards it is a goal everyone can have.

Sharvan Selvam, Commercial Director at Aqua, commented: “It’s important to plan for the future and whatever your goal may be, there are small, achievable steps you can take towards achieving better financial freedom. For example, if buying your own home is part of this vision, building a strong credit score will help you secure a mortgage one day. Checking your credit score for the first time could be your first step towards building better credit and future financial freedom. Set achievable goals and don’t forget to celebrate every success along the way.”

Top tips for starting your journey towards financial freedom

1. Understand your finances - Understanding your finances is the first step towards any kind of financial goal. It’s important that you’re aware of how much money comes into your bank account each month, and how much leaves to have a better handle on all your outgoings and truly understand your disposable income.
2. Have a set goal - It’s important to know what financial goal you are working towards so you can hold yourself accountable. Having smaller milestones as part of this means you can check that you’re on track and are clear on how you’re going to reach the ultimate goal. Choosing an easy method to track your progress, for example downloading an app to help you automatically save, can help.
3. Make a meaningful budget - Creating a budget is another great step in taking control of your finances. However, make sure the budgets you set are realistic. If you create a budget that you think you’ll struggle to stick to, it’s likely you’ll fail to meet your goals.
4. Know your credit score - Checking your credit score is a helpful way to better understand your financial situation and future possibilities. It allows you to view your financial circumstances from the perspective of a lender, and can help you see where you need to make improvements.
5. Seek advice - Taking control of your finances can feel complicated and confusing. Seeking help and guidance from a charity, such as Citizens Advice, to learn the options available to you can be a good first step. Alternatively, an independent financial advisor (IFA) is considered the gold standard for financial advice. They can recommend specific products to suit your personal financial circumstance, although this does come at a cost.

It can sometimes feel difficult to see past the end of the month let alone envision a future where money is not a worry, and some people will face personal obstacles which make this harder to achieve. If you’re feeling overwhelmed financially, there are free resources you can turn to for help.

• Citizens Advice offer confidential advice over the phone and in person on a range of areas including housing, debt and money, work, and benefits
• Charity Mind provide and support for anyone experiencing mental health problems that could be related to financial issues
• StepChange are a designated debt charity who can help support you in your goal of becoming debt free

Sources and methodology:

Based on the cost of basic outgoings such as rent and utilities versus salaries, we've determined which cities have the highest disposable income. Alongside metrics such as purchasing power for different cities across the UK, we’ve used this to define cities with high indicators of financial freedom.

• Cost of living score: https://www.numbeo.com/quality-of-life/
• Purchasing power score: https://www.numbeo.com/quality-of-life/
• Average salary: https://www.numbeo.com/cost-of-living/
• Average cost of utilities: https://www.numbeo.com/cost-of-living/
• Average rent: https://www.numbeo.com/cost-of-living

Contributors

Team Aqua

Aqua’s contributors are experts in their field, from a range of backgrounds including banking and lending.