Achieving financial freedom is a goal for many people.
Financial freedom generally means having enough savings, investments, and cash on hand to afford the lifestyle we want for ourselves, our families and a growing nest of eggs that will allow us to retire or pursue the career we want without being driven by earning a certain amount each year.
Too many of us fail to reach that goal because we are burdened with increasing debt, financial emergencies, profligate spending, and other issues that thwart us from reaching our goals.
The Right Path for Financial Freedom.
Financial freedom varies from one to another but there are some general habits that lead to the right path:
1. Set Life Goals
A general desire for “financial freedom” is too vague of a goal.
What does financial freedom mean to you specifically?
Write down how much you should have in your bank account, what lifestyle you desire and at what age this should be achieved.
The more specific your goals, the higher the likelihood of achieving them.
2. Make a Budget
Making a monthly household budget, and sticking to it, is the best way to guarantee all bills are paid and savings are on track.
It is also a monthly routine that reinforces your goals and may protect against the temptation to splurge.
3. Pay Off Credit Cards in Full
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, making them less of an emergency to pay off.
4. Create Automatic Savings
Pay yourself first
Enroll in your employer’s retirement plan and make full use of any matching contribution benefit. It is also wise to have automatic withdrawal for an emergency fund that can be tapped for unexpected expenses and an automatic contribution to a brokerage account or similar account.
Ideally, the money should be pulled the same day you receive your paycheck, so it never even touches your hands, to avoid temptation entirely.
However, keep in mind that the recommended amount to save is highly debatable; it all depends on your income and expenses.
5. Start Investing Now, if You Haven’t Already
There is no better or tried and true way to grow your money than through investing.
The Magic of compound interest will help your money grow exponentially over time, but you need a lot of time to achieve meaningful growth.
Many People are hesitant to negotiate for goods and services, worrying it makes them seem cheap. Overcome this cultural handicap and you could save thousands each year.
Small businesses tend to be open to negotiation, where buying in bulk or repeat business can open the door to good discounts.
7. Continuous Education
Review all applicable changes in the tax laws each year to ensure all adjustments and deductions are maximized.
Keep up with financial news and developments in the stock market, and do not hesitate to adjust your investment portfolio accordingly.
Taking good care of property makes everything from cars, lawn mowers to shoes, and clothes last longer. Since the cost of maintenance is a fraction of the cost of replacement, it is an investment not to be missed.
9. Live Below Your Means
Mastering a lifestyle by having a mindset of living life to the fullest with less is not so hard.
In fact, many wealthy individuals developed a habit of living below their means before rising to affluence.
10. Take Care of Your Health
The principle of proper maintenance also applies to the body.
Companies have limited sick days, making it a notable loss of income once those days are used up. Obesity and ailments make insurance premiums skyrocket, and poor health may force earlier retirement with lower monthly income.
These won’t solve all your money problems, but they will help you develop helpful habits that can get you on the path to financial freedom – whatever that means for you.