As you grow older, things get so complicated that in one way or two, you need to reorganize the way you deal with all aspects of life, including finances.
Indeed, talking about financial responsibility has been a dreaded topic for many, believing that this can be managed without professional help.
Do not get this wrong. Some people can totally manage their finances on their own. But this alone requires determination and discipline. After all, spending money and budget allocation are two different things.
Now, take a break and evaluate where you at right now with your financial situation.
Do you think it is too vague? Or, perhaps, are you lost somewhere and need to start over?
Do not worry! Here are 15 proven ways towards financial freedom that do wonders.
1. Learn how to budget
Nothing can beat a person who knows how to budget.
If you want to achieve financial freedom, the simplest way is to start disciplining and controlling your finances.
With this, you have to prioritize things that are important first - necessity over wants.
Define which things are necessities and start from there. Everything that does not belong to the category should be your least priority.
Moreover, utilize a budget tracker or app to help you keep records of your transactions in one go.
2. Commit to living within your means
This is the subtle way of saying do not spend beyond what you can afford.
That is basic logic. If you are avoiding debts, practice a non-extravagant lifestyle.
Do not get this idea wrong - there is nothing wrong with those people who have luxurious lifestyles. It is something that they work hard for.
But reality strikes, and you know that this is real talk.
The path to financial freedom begins with developing a mindset to prioritize building your financial foundation.
This means having a good grasp of the concept of savings first before spending.
Hence, the best and safest way to deal with this is to evaluate your lifestyle and paycheck.
Do they match? From there, you know the answer. At the very least, aim for a comfortable lifestyle by spending less than what you earn.
3. Evaluate your current financial situation
You do not need to become an accountant to know your financial situation.
All you need to do is to stay on track with your expenses and income. This means adding up debts, calculating expected income, and identifying other financial aspects that you may currently miss, such as insurance or emergency savings.
If you find this task taxing, you can always seek professional help from your colleagues and peers, especially if you have complicated financial records.
4. Define your goals
It is always important to have some goals in mind to set your financial expenditures and expectations properly.
By having definite goals, you can plan your future and allocate your money properly.
5. Choose the best accounts
Frankly, it is hard to determine which account is the best for your money.
But, one thing is for sure: you need to have separate accounts that will help you sort and allocate your money properly.
For example, your savings, emergency funds, and retirement money should be in separate accounts. This remains true even if you already have health insurance and retirement plans in place.
At the same time, the golden rule is very crucial to emergency funds: do not fuse it with your other accounts to prevent unnecessary expenditures. If you can manage to do this, you should not have any problem at all when it comes to having some extra money to spare in case of any unfortunate events.
If you are unsure what accounts to have, talk to a professional advisor for help and immediately heed the suggestions.
6. Be mindful of scheduled deposits
Having accounts in place does not guarantee enough security if you will not add funds to them. That is basic logic.
You need to ensure that you have a constant flow of money on your accounts, especially your savings and emergency fund accounts. Hence, it would be best to make scheduled deposits regularly to make sure you do not miss anything.
7. Use your credit card wisely
There is a common misconception among card users that makes credit management difficult.
It is the idea that it is okay to just use the card anytime and anywhere, even with unnecessary big purchases.
Do not fall into the trap of splurging too much just because you have a card. The burden of paying the high-interest rate and other financial charges is way overwhelming and eventually, this will make the whole paying process taxing for you.
Again, there is nothing wrong with using your card and spending on expensive items. Just ensure that you can pay them on time.
Remember that building a good credit history is important. You need to aim for a high credit score all the time because it has very huge implications on your life, which at some point, can affect your employment and ability to get other loans like for home
8. Manage your credit expenses
This is related to the previous point, but this is more focused on tracking the expenses charged to your card.
For example, if you have a lot of recurring payments charged to your account, find time to evaluate if all of those bills are necessary or not.
This is one good way to let go of all the unnecessary bills you have, like some existing premium subscriptions that you may do not need at all now.
9. Always track your expenses
If you have huge spending every month, it is best to keep track of them. It is a good way to monitor where your money goes.
Sometimes, even if you already know that you have enough money to cover everything, it is best no to be complacent.
Learn how to utilize a spreadsheet or some budget tracking apps to ensure that you only prioritize the important things.
10. Remove unnecessary expenses
Again, if you do not need it, ditch it.
There is no good reason to keep paying for something that you do not need at all. In short, that is not a necessity but a want. Remember that there is always the best time to follow what you want, and it is always not urgent.
11. Invest for your future
Seriously, it always pays off to invest in your future.
Having your money put into some good investments help secure your future in the long run. As you put more money to grow, you get higher dividends and a chance to double the amount you initially have invested in a certain time.
However, you need to be vigilant when investing.
Many investment scammers are always on the lookout for some victims, and if you are vulnerable enough, you are on the brink of losing your money in an instant.
While there are fewer scams associated with government investments like bonds and other securities like the Philippine Stock Exchange for stocks, it is still relevant to invest in some businesses that you trust.
Honestly, stocks are promising, and they always remain a top choice for investors. So, take your time and look for the best companies to invest in.
Here are some of the businesses that are worth investing in.
- Franchised businesses
- Real Estate
- Luxury items businesses
- Start-up companies
- Vending machines
- Food businesses
To be honest, there are still several businesses you can check. Just bear in mind that doing thorough research is essential to ensure that the company you are joining is legitimate and regulated.
12. Pay your debts
Debt is always part of life.
Let us face the truth that everyone has debt to pay. It is just a matter of how well you handle your finances to pay it on time.
Whether it is a personal debt or not, it is best always to ensure that you can pay your debt on time or within the specified period.
Moreover, you need to prioritize loans that earn interest over time. Ignoring them or paying not on time will just make your life miserable and will hurt your credit history and score over time.
13. Aim for better career opportunities
Sometimes, you think that getting paid is already enough.
But, that should not be the case. You need to know your worth.
If you think the kind of job you have right now is not paying enough, you need to take some measures to ensure that your employer sees your worth.
Otherwise, look for a better career opportunity. Do not be afraid to let go of your current work. You always deserve something better, and there is a greener pasture ahead of you.
14. Take care of your health
You read that right. Health is wealth.
It always matters to be in your best shape at all times. If you can manage not to be sick, then you can save more money.
You do not need to use your money for medications or hospitalization. All you need to do is to secure some vitamins and other maintenance to keep your well-being.
15. Be the best motivator of yourself
Whenever it is too hard to resist the urge to spend on something that you do not need, try to strive hard to discipline yourself.
The change must come from you, and the best way to do this is to resist money splurging. Otherwise, you can’t achieve financial success.
In the end, financial freedom is always a two-way street. You just have to believe in yourself and strive hard to achieve this success.
Again, here are some things to bear in mind.
- Set life goals - no matter how small or big those are.
- Make a budget and track it properly.
- Pay off credit cards in full and take care of other personal debts as soon as you can.
- Set up your savings accounts and get insurance.
- Take care of yourself.
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