19 Oct 2020
Getting to a stage where you can easily spend and manage your finances without worrying about your bills is financial freedom. Well, it is never easy. Achieving financial freedom can be a real struggle and is a dream for many.
Today, a significant proportion of people are burdened with debt, financial emergencies and bills that acts as a burden to achieve goals and pursue dreams. If there is a situation like Covid-19 pandemic and you don’t have a financial backup, then things can turn really messy.
“ When you understand that your self-worth is not determined by your net-worth, then you'll have financial freedom.” (Suze Orman)
Here are 12 ways that you can adopt to get financial freedom.
Firstly making a budget and then sticking to it is a really tough job and most of the people lack this habit of making a budget and sticking to it, which ultimately stops them from being financially independent. Note down all your earning of a month and calculate your basic expenditure.
Make a list of unnecessary things and cut them from your expenditure. Also, place the extra amount in the savings. Now stick to the budget and start saving.
Debts and other consumer loans are really toxic for financial freedom. If you are under the umbrella of debt, get yourself out of it. Utilize all your savings in paying off your debts that include student loans, mortgage, credit cards etc. Also, pay off full credit cards every month that can also get you a good credit rating.
To achieve financial freedom in your life, you need to take care of your setbacks and worries. To cater to all your worries that can disturb your finances in an emergency, you need to have an emergency or backup fund. By having three months’ worth of expenses for emergency funds, you can easily get out of any emergency that jumps in.
As you have paid all your debts and you have a sufficient emergency backup, now is the time to create sufficient savings. Enrol in some saving plans or something similar to start building your capital. Create saving plans for yourself and strictly adhere to them; after a few months, you will witness your money-saving habits and capital building.
Contribute just enough to the employer match for your 401(k). When your $1,000 emergency fund is appropriately protected in a safe spot, change your 401(k) payment at work and make the most of all the extra money that the employer provides.
We spend a lot of money on things that can be bought at lower prices too. For instance, we get most of the products and services at full prices and neglect them when they are at discounted prices or on sale.
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After creating sufficient savings, the most difficult and rewarding experience is investing. There is no better way to increase your capital than through investment. Start looking for opportunities and invest as per your capacity. Firstly jump into small investments and then move towards bigger opportunities.
The biggest capital building asset is your income. If your career is as per your interests and goals, you can easily grow in that field and reach a point where you can cash your skills out efficiently. When you cash out your skills in the best possible way, they turn out to be your biggest asset and capital builder.
An important yet neglected factor is building your credit scores. Credit scores control the interest rate that will be offered to you on buying a new car or refinancing your home, insurance plans etc. The build-up of your credit score projects your optimistic and trustworthy personality. These scores are bars on which financial institutions check your reliability.
One of the biggest hurdles to achieve financial freedom is spending more than earning. If you are earning a suitable income and you are saving as well as investing, you still need to live below your means.
You need to have a down to earth lifestyle to manage your finances efficiently. All you need to do is evaluate your lifestyle and eradicate all the extravagant commodities and needs. This will give a boost to your capital.
A significant portion of finances is used in getting rid of older products and buy new ones. When earlier products are not maintained properly and taken care of, they start to get less efficient, and the quality deteriorates.
For example, you have a car, and you don’t maintain it properly, it will start to break down then you move towards the idea of getting a new car which costs a lot of money. If you maintained it properly, you wouldn’t need to get it replaced and undoubtedly, maintenance cost is way less than replacing cost.
The principle of financial freedom is directly linked to your physical and psychological well-being. You need to take good care of your health so that firstly you can avoid getting into health complications and expenses. Secondly, if you are mentally and physically stable, you can efficiently manage funds and work for your financial freedom.
If you have efficiently implemented all of the above financial freedom hacks and you need to get a financial planner or advisor who educates you and helps you make decisions, once you have acquired a decent amount of wealth – be it liquid savings or tangible assets. A financial advisor can turn your assets and income streams into multiplications that will definitely make you experience financial freedom.
Start these hacks from today and get into the journey of becoming a billionaire.
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