5 Simple Steps to Becoming Financially Free
Want to live the rest of your life without being tied down to a career you hate? You need to check out these simple steps to becoming financially free.
Do you enjoy financial freedom??
Can you afford the things you want as well as your necessities, or are you rolling in debt instead of cash?
In the third quarter of 2017, personal household debt rose up to $12.96 trillion. Does your personal financial situation contribute to this statistic?
If so, here are five easy steps for you to take to become financially free.
Keep Track Of Your Money
If at the end of each month you wonder why you’re broke again, you probably don’t keep close track of your money.
- Record every bit of money you make and spend, down to the penny.
- Every time you make any money or incur expenses, write it down.
- Log the amount you make or spend, making sure to label each expense.
- Keep track of your total assets, not including credit and investments.
Once you record your income and spending habits, It’s time to create a sustainable budget.
Create A Budget
Take a look at your spending journal: how much money do you spend compared to your income?
If you spend more than you make, you’re living above your means. Living within your means is a comfortable goal, but if you want to become financially free, your goal should be to live below your means.
Review all the services you spend money on per month, as well as all of the products you buy. Can you cut out any of them?
If you want to live below your means, find ways to trim your expenses. For instance, you don’t need that pricey cable package; a streaming TV subscription and an Internet package will do just fine.
Once you trim the fat from your budget, prioritize your necessities:
- Put some money toward your savings.
- Switch from expensive brands to store brands.
- Stop relying on your credit cards.
Stick to this new budget for several months without deviation. Keep up with your log to see if your spending habits improve.
Pay Off Debt
How much debt do you have?
Whether you owe money for school, credit card bills, or a home, debt can stop you from becoming financially free. If you can’t keep up with the minimum payments on a loan, your interest increases, causing you to spiral further into debt and farther away from financial freedom.
Create a plan to pay off all of your debt:
- Leave room in your budget to pay down each debt every month.
- Pay off one loan at a time.
- Don’t let your interest accrue
- Pay more than your monthly amount
If you can only pay off one debt at a time, start with the Highest “bad debt” you have, which is your highest credit card debt or personal loan. Though you may have a mortgage or car loan, this is considered “good debt” because it improves your financial standing and allows you to gain valuable assets.
Learn How To Invest
Investing in stocks can put you on the fast track to financial freedom. You need to understand the basics of investment, however, or you may put yourself at risk of bankruptcy with bad stocks.
If you have significant savings, consider working with a financial investor who can make investment decisions on your behalf.
Create Additional Income Streams
Do you make money outside of your regular job?
A surefire way to become financially free is to make money on top of your regular salary. Thanks to smartphone app’s that power peer-to-peer services like Uber and Task Rabbit, you can make a good chunk of money on the side.
You don’t have to go out of your way to make time for lucrative side hustles; simply find a task you enjoy and perform a service for others.
How To Become Financially Free
Remember to take control of your finances by always tracking what you spend, making a budget, and paying off bad debts.
Do you want to learn how to make informed financial decisions?
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