6 Tip to Help You Achieve Financial Freedom.
What is financial freedom? Financial freedom is having the liberty to make choices in life without having the stress of affordability. It is about generating enough, saving enough, and investing enough money to live comfortably. With financial freedom, you will get the feeling of control over your finances.2 Everybody’s definition of financial freedom is different because it’s personal. One person might want to have the freedom to take a trip every year, and another person might want to have to freedom to retire early. 2 That being said, here are a couple of tips to start your own journey to financial freedom:   Set your goals Make specific goals because the more specific your goals, the more likely you are going to achieve them. “Financial freedom” as a goal is too vague, so write down what the kind of lifestyle you want and how you can achieve that lifestyle1 For example, “I want to pay off your student loan debt by the age of 35”, or “I want to be earning $80,000 annually by 2023”.   Make a Budget Making a monthly budget will not only allow you to pay your bills on time but also maximize your savings.1 A budget will allow you to be aware of your expenses and eliminate unnecessary expenses. For example, if you spent $200 a month on eating out, then you could cut that down to $100 a month. Here are some budgeting methods6:
  • Line-Item Budget. It’s your “typical” budget. Open up a spreadsheet and list out your expenses. The goal of the line-item budgets is to keep track of your expenses so you don’t overspend.
  • 50/30/20 Budget. This method divides your earning into three categories: (1)Needs (2)Wants and (3)Savings. You then allocate 50% of your monthly income into needs, 30% into wants, and 20% into savings.
  • Envelope Budget. Every month you will take out a set amount of cash and divide it into budget categories. For example, you can have a “drinks” category, “movies” category, or “restaurant” category. You are then only allowed to spend the money you’ve taken out. Once an envelope is empty, then you are either done spending in that category, or you will have to take cash from another envelope.
  • Zero-Sum Budget. This means you will assign a job to each dollar you earn, leaving you with zero dollars left to spend. You will have your non-negotiable “jobs” such as rent, insurance, groceries, and student loan payments. With what is left over, you will have “jobs” such as retirement savings, emergency funds, dining out, Netflix, and Spotify. Try to be as specific as possible with the jobs so you aren’t tempted to carelessly spend.
  Learn to Save Enrolling in automatic savings, such as your employer’s retirement plan, is a good way to save. Usually, the money would be directly pulled from your paycheck and placed into a separate bank account.1 With the help of your budget and the elimination of unnecessary expenses, you can increase your savings. Once you have a healthy savings account, you’ll be able to be more flexible with your budget.2 Other ways to save are to cut down on groceries, cancel automatic subscriptions (such as Netflix and Hulu), buy generic brands, eat out less, and lowering your cell phone bill.5   Keep an Eye on Your Credit Pay off the full balance of your student loans, mortgages, credit cards, and similar expenses every month.1 Make sure you make your payments on time and don’t allow your loans to go into default or delinquency. Also, having a healthy credit score will allow you to feel more secure about your finances. Try downloading one of these apps to help you keep track of your credit score4Mint Money Manager, Credit Karma, Credit.com   Start Investing With the help of a financial advisor, you can make the most of your long-term investments. The earlier you start investing the more money you will make over time. You can also open an online brokerage account to learn about investing and how to make your money grow.1 Investopedia defines investing as “the act of committing money or capital to an endeavor with the expectation of obtaining an additional income or profit”.  Warren Buffett defines investing as “The process of laying out money now to receive more money in the future.”3 If you have the liberty to set aside some money, whether that be $1000 or $10, maybe look into investing it into a business, a project, real estate, or stocks. Here are a couple of commission-free online brokers: Robinhood, Webull, SoFi   Start a Side Hustle There are plenty of ways to earn some extra money, and you can even do it from the comfort of your own home. The best thing about starting a side hustle is that it doesn’t necessarily require a highly specialized skill-set. With a side hustle, you’re basically earning money in your spare time. Here are some examples of side hustles: 1. You can use online surveys through websites such as Survey Junkie, Swagbucks, and Vindale Research. 2.You can sell old clothes, dishes, appliances, and toys on eBay. 3.If you have a deep interest in a certain topic, such as food, fashion, or DIY, you can start blogging. You can then monetize your content with affiliate links and sponsored posts. 4.Become a virtual assistant. You can use websites such as FlexJobs, Upwork, and People Per Hour to find remote work.   Resources  2Danielsson, Matt. “These 12 Habits Will Help You Reach Financial Freedom.” Investopedia, Investopedia, 29 Jan. 2020, www.investopedia.com/articles/personal-finance/112015/these-10-habits-will-help-you-reach-financial-freedom.asp. 2Hogan, Chris. “How Do I Achieve Financial Freedom?” Daveramsey.com, Dave Ramsey, 29 Oct. 2019, www.daveramsey.com/blog/what-is-financial-freedom. 3Langager, Chad. “A Beginner's Guide to Stock Investing.” Investopedia, Investopedia, 29 Jan. 2020, www.investopedia.com/articles/basics/06/invest1000.asp. 4“Online Credit Cards, Loans & Payday Alternative for Subprime Credit 24/7.” LendUp, 17 May 2019, www.lendup.com/articles/7-credit-monitoring-apps-to-help-you-stay-on-top-of-your-credit-score. 5Ramsey Solutions. “How to Save Money: 20 Simple Tips.” Daveramsey.com, Dave Ramsey, 30 Mar. 2020, www.daveramsey.com/blog/the-secret-to-saving-money. 6SoFi. “5 Different Types of Budgeting Methods.” SoFi, SoFi, 24 Mar. 2020, www.sofi.com/learn/content/types-of-budgeting-methods/.
Diversifying Your Income: How to Make Some Extra Cash
Whether you are trying to get out of debt, or just in need of some extra cash, try looking into income diversification. When it comes to income, it’s completely normal to wish you had just a little bit more. So how do you generate more than one stream of income?   Start a Side Hustle In addition to your day job, starting a side business or a freelance service can make you a good sum of money. Some examples are logo design, coaching, web design, writing, tutoring, and babysitting. You can turn basically anything into a side hustle so try basing it off of your interests or skillsets. With a freelance job, you get to set your own hours and be your own boss, so you have to be self-disciplined and time-efficient. But be forewarned, building up a clientele and a steady income will take some time, so patience is key. You can use websites like Fiverr, Craigslist, or even make your own website to sell your services.   Get a Part-Time Job If you are trying to pay off your debt or build up your savings, you might want to look into getting a part-time job. Working at a local coffee shop, retail store, or restaurant are always good options.   Become an Uber and Lyft Driver If you have a license and a car, take advantage of that. Selling a service is a great way to make a quick buck. Try signing up for both Uber and Lyft to maximize your earnings. You can also use other apps/services such as Uber Eats, DoorDash, Wag, or Instacart.   Reselling Items Online Do you enjoy thrifting or shopping in general? You can find items for cheap in your local thrift stores, garage sales, and secondhand shops. If you have a good eye for brand-named clothing, vintage style, or antiques, you can resell the items you find and make some extra cash. You can also sell items around your house or clothing that you no longer need.   Invest in The Stock Market This is the most passive income source, though it does have its risks. You can start investing with just a couple hundred bucks. If you are interested, you can open a brokerage account. Some well-known brokerage firms are M1, ally, and TD Ameritrade.
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