The Secret to Achieving Financial Freedom
Being able to afford the lifestyle of your choice means you have enough cash, savings, and investments or financial freedom.
Having financial independence or building wealth is a goal that many people are willing to achieve to enable them to adjust to things like retiring or pursuing a career without any financial constraints.
However, many people still need to attain financial freedom.
Poor financial habits like overspending are one of the major problems that prevent most people from achieving their goals leading to the accumulation of debts.
To be on the right side, here is what you must do to improve your financial habits.
1. Pay off Credit Cards in Full
Having credit cards and other high-interest consumer loans will hinder you from wealth building. It's therefore essential to settle the bills to avoid them from accumulating.
You should also consider paying loans with low interest — mortgage and student loans first, as they are less urgent than loans with high interest. Overall, you can still pay your loans on time (without necessarily paying in full) and improve your credit score.
2. Understand Where You’re At
Understanding your current financial position regarding how much savings and debt you have can be discouraging, but it is a big stepping stone toward your long-term financial plans.
List any debt you might have — from car loans, credit cards, student loans, mortgages, or any other type of debt. Also, remember to include any additional money you borrowed from your family members or friends.
3. Create Automatic Savings
Take a step by enrolling in any retirement program available in the workplace and utilize any matching contribution advantage you get.
Set up a bank standing order to automatically pay a specific amount to your emergency account once your salary is paid to them (the bank).
4. Watch Your Credit Score
A poor credit score reflects your poor financial habits and the inability to repay loans you take. It exposes you to higher interest rates and disapproval of most loans, which could affect your financial plans.
Check your credit report regularly to make sure it's in a good state. You can use Experian to check your credit score and learn ways to improve it.
One of the best ways to maintain good credit ratings is to avoid debts from accumulating. Ensure that you are taking a loan at a time and can only take another loan once you have cleared the other one. Cash app loan is one of our favorites — it offers loans fast to borrowers who need money urgently and can repay it on their next payday.
5. Track Your Spending
Tracking your spending is one of the main steps to gaining financial freedom. You can use tools like Mint to know what mostly consumes your money, how much you are spending, and your net after all the expenses have been deducted.
Another amazing feature of Mint is it helps you set goals within the dashboard. This feature is essential for those planning to achieve their financial goals.
6. Take Care of Your Health
Proper maintenance also includes taking exceptional care of your physical health, positively impacting your financial health.
Invest in your health by taking premium health insurance plans to counter any underlying medical conditions you may not have been aware of. You can also exercise regularly to help keep your body fit and capable of fighting diseases.
7. Live Below Your Means
You've often encountered the phrase " live below your means" several times. It has been one of the financial pieces of advice for most successful business owners.
It means spending less than your income — for example, if you earn $1,000, ensure your expenses don't exceed your earnings. Another excellent example is that you must never buy an item, such as a car or house if you can't afford it in cash.
Adopting a frugal lifestyle is not challenging — train yourself to differentiate between basic needs and things you can do without to survive.
Achieving financial freedom is easier than most make it look; you can find freedom by adopting some of the strategies discussed in this post.
Most importantly, you want to ensure that:
- Create a budget and stick to it
- Don't take out any loans if you don't know what to use them for
- Create an emergency fund account as you get your first paycheck
- Track your spending and eradicate all the poor habits
- Invest in yourself to allow you to create more income streams.