Over half of Millennials and Gen Z over the age of 21 rely on financial help from parents and relatives which leads to a gap in financial literacy. You can’t count on the help of others forever, so it is best to set yourself up for a financially secure future.
Unless you are planning to become self-employed, chances are that your main source of income is your salary. The goal should be to earn enough income to finance your expenses, without having to work full-time. If you have only started earning your own money, you can get started by saving and investing a portion of your income.
Financial independence does not happen overnight. It is something you work towards and consciously try to achieve. Here are 5 steps on how you can get started on a financially independent future:
Spend Less Than You Earn
We understand the thrill of having your first few pay checks. After all, you’ve worked for it and you deserve to be rewarded for your labour. However, spending less than you earn is the heart of financial independence.
Of course, you should allot a portion of your salary for your desires. Just make sure that they are reasonable, and not exorbitant enough to drive you to debt. We recommend tracking your expenses so you can see what you mostly spend your money on.
Find Good Investments
If your salary is your only source of income, then you are one work crisis away from bankruptcy. It may be investing in the stock market, which can increase in value overtime. You may also invest in income generating assets such as properties, small businesses, and the like.
Setting up good investments will be something you’ll thank yourself for in the future. You will set up a good retirement fund for yourself, as well as emergency savings should the situation call for it.
Be Flexible With Your Finances
It is important to adjust your allocation and expenditures according to the situation. You may have times when you’ll go through more financial trouble than usual. On the other hand, you may find yourself enjoying multiple streams of income. You should determine when to tighten the belt, and when to allow yourself some room for your luxuries.
Do Not Be Driven By Jealousy
One of the reasons why people go over their budget is because they want to keep up with their peers. Your colleague’s new car may have you looking at your old one, thinking if you should get a new one as well. It’s not even that your car isn’t working anymore; You just feel jealous.
Modesty is what you need for financial security. You do not need a luxurious home or car. It is not a competition as to who can buy the most expensive thing! Just ignore the peer pressure and focus on your finances.
Avoid Consumer Debt
Consumer debt will get in the way of your financial independence. It’s a huge roadblock that will eat into your salary monthly. If you own a credit card, we recommend immediately paying it off as soon as you can. Or, you can avoid credit cards and loans altogether.
Financial Independence Is Financial Freedom
It may seem like you’re penny-pinching your finances as well as your enjoyment, but you are actually just securing your future. By being strict and disciplined with your money, you won’t be digging your pockets for coins in the future, nor will you be in debt when you face an emergency.
Follow our 5 steps above to enjoy financial independence! Do you have any pieces of advice to share on achieving your own debt-free financial freedom? Let us know in the comments, on social media, or through our Contact page!