There has been a lot of talk about achieving financial freedom. People, especially the younger generation, don’t give much thought to it until they are caught in a dilemma like losing a job, an unexpected tragedy, or just a sudden realisation that they want something but don’t have the capacity to buy it. What most don’t realise is that even if they want to live a simple life, setting a financial goal and having a concrete plan is necessary. Here are the basic steps to being financially independent.
1. Deposit into your savings account regularly.
Decide on how much you are willing to set aside monthly for your savings. Think of this as a bill that you have to pay regularly. Only, in the future, you get a refund. Be disciplined in keeping it untouched, even if you really want new gadgets. What you can do is to set aside other funds for your own leisure such as for travel or shoes. That should come after the savings and never before.
2. Wipe your debts clean.
You can never be financially independent as long as there are pending debts. List them down, and pay first the smallest up to the largest. As for other long-term mortgages such as home loans, it doesn’t mean that you have to pay it in a lump sum. Just make sure you make your payments on time, so you don’t end up paying more.
3. Don’t get too excited upon receiving your bonus.
You will be tempted to spend your bonus right away, but the better option is to keep it for later. Perhaps put it in your emergency fund or add the money to something that you have been saving up for like a new car or a Euro trip.
4. Declutter and downsize your possessions.
Try making an inventory of your belongings, from your wardrobe to your home appliances. Sell those things that you are no longer using. It’s better to dispose of them right away because the quality might degrade and cheapen over time.
While having savings in the bank will always be the safest way to keep your money, the returns would be low. You still want to find ways to grow your money. Explore your options, but make sure that what you are getting into is legal. You can get into stocks, or you can start your own business. In fact, as early as now, you can already be an entrepreneur. For something with high returns, you can get into franchising. Check the bubble tea franchise cost as the tea business is popular these days.
Regardless of where you are in your life now, it is never too early or too late to start your journey to financial freedom. You may need to cut back on a few expenses here and there, but it is going to be worth it in the end.