What does it mean to be wealthy? Many imagine wealth as luxurious cars, all-white houses, expensive vacations, and designer brands. More realistically, to be wealthy can mean to be financially fit, and achieve financial freedom.
Financial freedom means having enough savings, financial investments, and cash on hand to afford the kind of lifestyle you desire. Financial freedom is about taking control of your finances and using money to fuel the type of life you want.
It’s a lifestyle that anyone can achieve through planning and dedication. With the following steps, you can be well on your way to achieving financial freedom!
Budgeting
Budgets are the first step for anyone wanting to be financially free. Why is a budget important? Budgets are more than tracking expenses or income or cutting out things you enjoy. When done correctly budgets are a plan for all your money.
Don’t have a budget? You’re not alone. More than 55% of Americans do not use a budget according to a recent survey by The Penny Hoarder. A similar 56% of survey respondents said they didn’t know how much money they spent last month.
For anyone who is looking to learn more about money and how to use it, budgets are a must- have. With a budget, you can create financial plans to boost your savings, pay off your debts, invest and plan for your retirement. You can even budget for things you enjoy, like nice dinners, birthday gifts, and even luxurious vacations!
Tips For Creating A Budget:
1. Have A Clear Reason: Is it to have more spending money, retire early, or even just have better savings for some spur-of-moment road trips? Having a reason for your budget will help get you inspired to make it work and start saving today!
2. Monthly Earnings: One way that budgets can go wrong is not knowing exactly how much you are getting paid. Your take-home pay can vary depending on your insurance, taxes, and other factors. Before you start budgeting make sure you know exactly how much you earn in a month, and when!
3. Automate and Pay Expenses First: Late payment fees and missing payments can kill your credit, and your budget. When you first create your budget, start by collecting all your expenses and automating payments when possible. This makes it easier to budget for other expenses.
4. Have A Thorough Plan: Throwing back to our #1, no matter your reason for your budget – make a plan with your finances to make it happen. Small monthly steps to your next goal make it easy to accomplish your budgeting goal. Whether it is boosting your retirement or even planning a trip, dedicate an auto payment to that reason.
5. Budget For Fun: One mistake that people make when budgeting the first time is not leaving any wiggle room for lifestyle. Whether it’s pizza with friends or a birthday gift for your mom, it’s important to budget for real life.
There are many tools for budget calculators to help you get started. So there is no reason to drag your feet. Budgeting allows you to create a spending plan for your money, it ensures that you will always have enough money for the things you need and the things that are important to you.
Get Out Of Debt
We have all heard of a get out of jail free card, and while this is helpful in monopoly, it might not be helpful to those in the real world. The next best thing for those looking for financial freedom – get out of debt, and fast.
As most know, interest can be a budget killer. Tack on late fees and you can be in a messy financial situation quickly. Thankfully getting out of debt can be done, with a first-rate financial plan.
Tips To Get Out Of Debt Fast:
● Prioritize Your Debt Repayment Plan: While it may seem daunting, in order to pay off your debt you need a full understanding of your current debt situation. Create a debt repayment plan by prioritizing your debts. You can do this by sorting your debt by total owed, interest rates, and due dates.
● Have A Budget: Once you know how to prioritize your debt, you can start to budget for your repayment plans. It’s critical to always pay more than the minimum amounts owed, as this will only increase the interest and amounts owed over time. You may find that you can cut back on other non-necessitates and put that money towards your debt for faster payment.
● Autopayments: Use autopayments to avoid late fees, and if possible set your auto payments for higher amounts than the minimum due. This will make repaying your bills easier as it will be done automatically.
Financial freedom is all about controlling your money, not letting your money control you. If you have high debt or high-interest payments you can’t fully utilize your money to its full effect. The sooner you get out of debt the closer you are to being financially free.
Planning For Your Future
One of the most important parts of financial freedom is about planning for your future. While paying off debt and enjoying the money you earned is important, future planning is one of the pillars of financial freedom.
Those that start planning for their future now can use interest to their benefit. No matter your future goal, planning with your money is one of the top ways to practice financial freedom.
Top Ways You Can Plan For Your Future
● Have An Emergency Fund: An Emergency fund is simply money saved away in case something goes wrong to avoid taking out a high interest loan or overcharge a credit card. It could be unexpected car issues, home repairs, or even a job loss. Having enough money saved away to cover 2-3 months of expenses is a great way to ensure your family is covered.
● Planning For Retirement: Take advantage of compound interest today and start saving for your future. Whether it is a 401k, IRA, or other forms of retirement savings, designate auto payments for your future plans so you don’t get caught off guard in the future. Your future self will thank you!
● Investing: Investments are the long game but offer risks. Some of the top reasons you should start investing today are compound interest, time for earnings, and that the best time to start investing is now. By starting small with investments today you can build an investment portfolio to fuel your future.
Future planning is one of the top ways to take control of your finances and invest in your future. No matter if you are investing in mortgage notes, real estate, stocks, or retirement, saving for your future is essential for financial freedom.
By preparing for your future today you can remove the stress and anxiety of the future and enjoy the money you earn today later in your life!
Summary
If you are sick of living paycheck to paycheck, financial freedom is the lifestyle for you. Financial freedom is available to anyone that is willing to put in the work and wants to take control of their life.
3 Steps To Gain Financial Freedom:
1. Budgeting
2. Get Out Of Debt
3. Planning For Your Future
Financial freedom requires discipline and patience but those that are willing to do the work can live comfortably within their means and not have to chase paychecks. Are you ready to be financially free?
Catherine Way is the Marketing Manager at Prime Plus Mortgages: Private Mortgage Note Buyers. She has created content for the following industries: Real Estate, Mortgage, Finance, Business, Real Estate Investing, and many more.
