finance and future, We all know the feeling—the panic that sets into your stomach when you see the bill for an unexpected expenses. How are you going to pay for that? But what if unexpected expenses were just an inconvenience? Instead of worrying, you can afford to pay the bill without thinking twice and not affecting your financial situation. Do you feel that sense of relief? That’s what financial freedom feels like.
Financial freedom means that you get to make life decisions without being overly stressed about the financial impact because you are prepared. You control your finances instead of being controlled by them. Achieving financial freedom is a goal for many people.
Unfortunately, too many of us fail to achieve it. We are burdened with increasing debt, financial emergencies, excessive spending, and other issues that stops us from reaching our goals. When you have financial freedom, you have options. You don’t have to wonder if your bank account can handle replacing your hot water heater or buying groceries for your family.
Trouble happens to nearly everyone, but here’s how to begin your own journey to true financial freedom.
- Start Budgeting
Making a monthly household budget—and sticking to it—is the best way to guarantee that all bills are paid and savings are on track. It’s also a regular routine that reinforces your goals and bolsters resolve against the temptation to splurge.
You won’t get ahead if you don’t have a plan for your money. Instead, you’ll find yourself wondering where your money went at the end of every month.
Financial freedom is impossible if you’re living paycheck to paycheck. o start, write down your income and all your expenses, and then subtract the expenses from the income to determine your discretionary spending. If you consistently overspend or underspend in certain areas, you can always adjust the amount in each category. If you spent more than you made, fix your budget by cutting unnecessary expenses or earning more.
Budgeting is important to get your finances on the right track, but it doesn’t end there. Even when you achieve financial freedom, you are still expected to complete a unique budget every month. No matter how much money you have, you need a plan.
You won’t get to financial freedom on accident. Budgeting is the first step to having true financial freedom on purpose.
2. Pay Off Your Debt
Credit cards and similar high-interest consumer loans are toxic to wealth-building. Make it a point to pay off the full balance each month. Student loans, mortgages, and similar loans typically have much lower interest rates; paying them off is not an emergency. Paying on time is and will build a good credit rating
One of the most expensive mistakes that you can make is to carry a lot of debt, especially high-interest credit card debt. But if you want to experience true financial freedom and secure your future, you have to pay up your debt before you can start building your finance.
That means if you have debt like credit cards, student loans or car loans, it’s time to get serious about kicking it to the curb. . Make it a point to pay off the full balance each month. Why? Because when you owe money, your paychecks have someone else’s name on them
Paying off your debt helps you lay a foundation to financial freedom that will last. Make sure you have some money saved before you start tackling your debt. You don’t want an unexpected expense to hinder your progress. You can also set up a debt payment plan and adopt sound spending habits to pay off the debt as quickly as possible.
When you start budgeting it will feel like you got a raise, so that’s good news for you. Spend all of that extra cash at your smallest debt until it’s gone. Paying off debt is not easy, but there’s nothing like the feeling of actually keeping the money you earn every month!
3. Improve/ Change Your Career
Your biggest Finance-building tool is your income. So when it comes to choosing a career, there are a lot of things you need to put into consideration. There’s no reason to stay stuck at a job that pays so little or barely meet your basic needs, especially if it’s making you miserable. Finding a job you enjoy earn well and also supports your goals of financial security/freedom will help you enjoy the journey.
So, what should you look for? Here are a few things to keep in mind:
- Where do you want to be in 5-10 years? Start with the end in mind. Can your current job take you there?
- Is there possibility of Salary Increase? Even if you’re not making your dream salary from the start, make sure there’s opportunity for your income to increase as your value increases.
- Is there growth potential? Are there opportunities for you to grow personally and professionally?
- Do you enjoy the work? Don’t spend your time/career at a job you hate. Find something you’re passionate about and allows you to use your gifts and skills.
Your choice of career can have a big impact on your long-term financial plan, so take it seriously!
4. Create a Savings Plan
Like investing, saving is another passive approach to growing your finance. To take control of your finances right now, open and direct money into interest-bearing savings account on a regular basis (every week, month, or a certain time of year, for example).
If your goal is financial freedom, you need some savings for the unexpected life events that may happen, like car repairs, broken appliances and medical bills. This may be money that you save on your grocery budget each month, a tax refund, a set amount that you put aside from each paycheck, or an amount that you allocated in your budget to save each month
Having the cash on hand to cover an unexpected life event gives you peace of mind and is a critical part of your overall financial plan. Once you have that fully funded savings account, you’ll start to feel more flexibility in your budget. You’ll be able to say yes to shop with no guilt at all!
No matter which option you choose, and no matter how little you save, look for ways to increase your savings over time. Small gains will amount to big returns over the long run. With your emergency fund and a plan to cover big purchases in place, you’ll have the financial foundation to start investing.
5. Become an Investor
Financial issues sometimes stem from insufficient income as opposed to spending issues. If you are sticking to a budget, not spending money on things you don’t need, and still have issues making ends meet, you may want to look for a higher-paying job or generate more than one source of income. This is where investment comes in.
The good news is the sooner you start investing, the more time your money has to grow. Unsuccessful investment can make people question this, but historically there has been no better way to grow your money than through investing. The magic of compound interest will help it increase exponentially over time, but you need a lot of time to achieve meaningful growth.
I’m here to tell you: You don’t need to be the Wolf of Wall Street to start investing. It’s okay if you’re more of a mouse of Main Street. Even if you only have a few dollars to spare, your money will grow with compound interest.
- Get a Financial Advisor
The idea of actively making decisions about your investments may feel overwhelming. If it feels that way to you, you’re not alone.
Listen, you’ve worked hard to lay the right foundation, so don’t leave this crucial step up to chance! You need the expertise of a financial advisor to help you navigate your investment options.
A financial advisor can help you:
- Make decisions about your investment strategy
- Rebalance your funds regularly so you minimize your risk
- Create a realistic plan for what financial independence looks like for you
- Set up a withdrawal plan for your specific situation
The Bottom Line
These 6 steps won’t solve all of your money problems, but they will help you develop healthy habits that can get you on the path to true financial freedom and securing your future—whatever that means for you.
If you live like no one else, later you can live and give like no one else. It’s worth all the hard work it takes to get there. You’ve got this.