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.