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Many people want to be financially free, which means having enough savings, investments, and cash available to live the way they want to with their families. It also means building up a nest egg that will let you retire or work in any field you want without having to make a certain amount of money every year.
Too many individuals fall far short of financial freedom, which is a shame. Even if they don’t have any unexpected bills to pay, their growing debt from overspending is a constant burden that keeps them from reaching their goals. When a big problem, like a hurricane, earthquake, or pandemic, throws off all plans, more holes in safety nets become clear.
Almost everyone has problems, but if you do these 12 things, you’ll be on the right track.
1. Have Clear Life Goals
What does “freedom from money” mean to you? Everyone wants it, but that’s not a good enough goal. You need to be clear about how much and when. The more specific your goals are, the more likely it is that you will reach them.
Write these three goals down:
- What your lifestyle necessitates
- How much money you need in your bank account to be able to do that
- How long do you have to save that much?
Next, count backward from your goal age to your current age and set financial goals at regular times between your goal age and your current age. Carefully write down all of the amounts and dates, and put the goal sheet at the front of your financial binder.
2. Create A Monthly Budget
The best way to make sure all bills are paid and savings are on track is to make a monthly budget and stick to it. It’s also a regular habit that helps you stay focused on your goals and resist the urge to splurge.
3. Pay Credit Cards In Full Every Month
Credit cards and other consumer loans with high-interest rates are bad for building wealth. Try to pay off the whole balance every month. Most student loans, mortgages, and other similar loans have much lower interest rates, so it’s not an emergency to pay them off. But it’s still important to pay back these loans on time, and doing so will help build a good credit score.
4. Automatically Save
First, pay yourself. Join your employer’s retirement plan and take advantage of any matching contributions, which are basically free money. It’s also a good idea to have an automatic withdrawal into an emergency fund that can be used for unplanned costs, as well as an automatic deposit into a brokerage account or something similar.
The money for your emergency fund and your retirement fund should ideally be taken out of your account on the same day you get paid, so you never see it.
Remember that the amount you should save in an emergency fund depends on your own situation. Also, tax-advantaged retirement accounts have rules that make it hard to get your money if you need it quickly. Because of this, you shouldn’t put all of your emergency money in one account.
5. Start Investing Now
When the stock market goes down, this is called a “bear market,” and it can make people wonder if investing is a good idea. However, there has never been a better way to make your money grow. Your money will grow quickly just because of the magic of compound interest, but it will take a long time to grow enough to be useful.
But keep in mind that unless you are a professional investor, it would be a mistake to try to pick stocks the way Warren Buffett and other billionaires do. Instead, open an online brokerage account that makes it easy to learn how to invest, build a portfolio you can handle, and automatically add to it every week or month. ESG Investing could be a good place to start.
It can be hard to get out of debt, have cash emergencies, pay for medical bills, and stop overspending, but it is possible with discipline and careful planning.
6. Keep An Eye On Your Credit Score
Your credit score is a very accurate statistic that affects the interest rate you get when you buy a new car or refinance your home.
It also affects how much you pay for other important things, like car insurance and life insurance.
People give credit scores so much weight because they think that someone with risky financial habits is also likely to be risky in other parts of their lives, like not taking care of their health or driving after drinking.
This is why it’s important to check your credit report often to make sure there aren’t any mistakes that could hurt your reputation. To keep your information safe, you might also want to look into a good credit monitoring service.
7. Always Question And Negotiate Prices
People in the U.S. are often afraid to bargain for goods and services because they think it makes them look cheap. If you can get over this fear, you could save a lot of money each year. Small businesses are more likely to be willing to negotiate, so buying in bulk or showing that you are a loyal customer can help you get good deals.
8. Stay Informed About Finances
Review any changes to tax laws that affect you to make sure that you are getting the most out of all adjustments and deductions each year. Keep up with financial news and changes on the stock market, and don’t be afraid to make changes to your investments as needed. Knowledge is also the best way to protect yourself from con artists who take advantage of investors who aren’t very smart to make a quick buck.
9. Look After Your Property
Taking good care of cars, lawnmowers, shoes, and clothes all makes them last longer. Maintenance is a good investment because it costs a small fraction of what it would cost to replace something.
Figure out how to tell the difference between what you want and what you need.
10. Spend Less Than You Make
Mastering a frugal lifestyle means having a mindset on how to live well with less, which is easier than you might think. In fact, many wealthy people were used to living below their means before they became wealthy.
Changing to a minimalist lifestyle is not hard. It just means learning to tell the difference between things you need and things you want and then making small changes that have big effects on your finances.
11. Look After Your Health
Proper maintenance also applies to your body, and taking great care of your physical health has a big positive effect on your financial health as well.
It’s not hard to put money into your health. It means going to the doctor and dentist regularly and taking their advice about any health problems you have. Simple changes to your lifestyle, like getting more exercise and eating healthier, can help or even stop a lot of health problems.
On the other hand, not taking care of your health can hurt your financial goals right away and over time. Some companies have a limited number of sick days, which means that when paid days are used up, employees lose money. Insurance rates go through the roof if you are overweight or have other dietary illnesses, and if you aren’t in good health, you may have to retire early and have a lower monthly income for the rest of your life.
In Conclusion
These steps won’t solve all of your money problems, but they will help you build the good habits that will put you on the path to financial freedom. Just making a plan with specific amounts and dates helps you stick to your goal and resist the urge to spend more than you need to. Once you start making real progress, the constant pressure of growing debt and the promise of a nest egg for retirement become strong motivators, and you can see that financial freedom is in sight.
