Financial freedom or independence implies that you have enough room to wiggle and do what you want to in life without straining yourself or accruing debts. It requires a lot of discipline and planning.
Many people today barely have enough to survive the month. This is mostly due to some errors and mistakes on their part, some lack of planning, and improper discipline when it comes to their finances.
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It is possible to boost your finances and gain that freedom you have always wanted. Do you know how to manage your money and gain financial freedom?
Step 1
First of all, you need to determine exactly what you want to achieve in life. In other words, what is it really that you equate to financial freedom. Your dreams and plans determine how much you can safely say that you are financially free.
There is no definite figure for financial freedom. It is up to the individual to determine what that figure is. To start, sit down and determine what it is really you want to achieve in life: own a home or car, take vacations twice a year, or pay off your student loans. This will give you an idea of how much you need to work on your finances.
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Step 2
After you decide on what you want to achieve, you must sit down, crunch the numbers and work on your budget. I cannot stress enough the importance of making a budget. Making a budget will help you focus on what is important. Here’s one of the printables in my financial planning set. A monthly budget sheet that includes fixed and variable expenses and a savings section.
Sometimes sacrifices must be made. Do you really need that extra tall latte from Dunkin Donuts every morning on your way to work? Do you want to drop $50 just to go see a movie and eat popcorn? Where are you spending most of your money?
Make a financial plan to start saving money and track your expenses. Make a summary of all your savings and expenses. This will give you an idea of where you are right now and a firm foundation to start from.
Step 3
Next, you need to work on paying off your debts. Be it credit cards or a car loan, work on clearing them all to start on a new financial page. Start by paying more than the required monthly amount. The quicker you pay off your debt, the less interest you will pay.
Step 4
You need to start saving a part of your earnings each month. Settle on a comfortable percentage that allows you to survive the month without accruing debt or starving yourself. This means you have to cut back on some wants and focus on your needs.
Do not be pressured into a life of pleasing friends or neighbors, a life of appearances. Focus on your goals and your own life. This will free you from the clutches of peer pressure and facades. You really have to be patient and disciplined in order to avoid digging up your savings and spending them on useless things. Leave a life of instant gratification.
Step 5
Sometimes, you have to start investing. This is something you do not go into lightly. You need to have informed knowledge of the field and to make good choices about your investment. Depending on the area, you might want to venture into stock markets or real estate. This helps with the slow accumulation of your wealth over the years. Read up on it before you commit and make sure what you are investing in is legit enough. Investing is more of a long term game that requires patience, but it is a worthy venture.
Step 6
It is advisable to create alternative sources of income too. This requires a lot of diligence on your part. Some become freelance writers or other jobs that still allow them to do their other tasks. This does not mean that you have to work all the time. Be flexible and find time for leisure too. Always remember that life has to be lived fully.
Step 7
When you have done all this, always sit down to evaluate and improvise. Make necessary changes where they are required. Pay attention to your finances, keep track of your earnings, and always look for opportunities to boost your earnings and savings.
Sometimes it might mean that you have to change careers. Do not let fear hold you back. Seek to always improve yourself and your skills. Make yourself marketable.
In conclusion, improving your finances and gaining that much-needed freedom is something that takes some time and effort. Â Remember that financial freedom depends mostly on what you want to achieve. The grander your dreams, the more effort you need to put forth. Financial wellness is a part of our overall health.