stages to reach the Financial Freedom
- Set Life Goals
What is financial freedom to you? Everyone has a general desire for it, but that’s too vague a goal. You need to get specific about amounts and deadlines. The more specific your goals, the higher the likelihood of achieving them.
Write down these three objectives: 1) what your lifestyle requires; 2) how much you should have in your bank account to make that possible; and 3) what age is the deadline to save that amount.
Next, count backward from your deadline age to your current age and establish financial mileposts at regular intervals between the two dates. Write all amounts and deadlines down carefully and put the goal sheet at the front of your financial binder.
- 2. Make a Monthly Budget
Making a monthly household budget and sticking to it is the best way to guarantee that all bills are paid and savings are on track. It’s also a regular routine that reinforces your goals and bolsters resolve against the temptation to splurge.
- Pay Off Credit Cards in Full
Credit cards and other high-interest consumer loans are toxic to wealth-building. Make it a point to pay off the full balance each month. Student loans, mortgages, and similar loans typically have much lower interest rates; paying them off is not an emergency. However, paying these lower-interest loans on time is still important and on-time payments will build a good credit rating.
- Create Automatic Savings
Pay yourself first. Enroll in your employer’s retirement plan and make full use of any matching contribution benefit, which is essentially free money. It’s also wise to have an automatic withdrawal into an emergency fund, which can be tapped for unexpected expenses, as well as an automatic contribution to a brokerage account or something similar.
Ideally, the money for the emergency fund and the retirement fund should be pulled out of your account the same day you receive your paycheck, so it never even touches your hands.
Keep in mind that the recommended amount to save in an emergency fund depends on your individual circumstances. Also, tax-advantaged retirement accounts come with rules that make it difficult to get your hands on your cash should you suddenly need it, so that account should not be your only emergency fund.
- Start Investing Now
Once you have secured your emergency fund and built enough capital you feel comfortable investing in, you can look at all the possible investment tools in the market.. What you invest on depends on factors like how big your capital is, your risk tolerance, and whether you prefer long-term or short-term investments.Stocks
- Treasury Bonds
- Unit Investment Trust Funds
- Mutual Funds
- Time Deposits
- Rental Properties
- Opening a Side-Business
- Negotiate for Goods and Services
Many Americans are hesitant to negotiate for goods and services, because they’re afraid that it makes them seem cheap. Conquer this fear and you could save thousands each year. Small businesses, in particular, tend to be open to negotiation, so buying in bulk or positioning yourself as a repeat customer can open the door to good discounts.
- Stay Educated on Financial Issues
Review relevant changes in tax law to ensure that all adjustments and deductions are maximized each year. Keep up with financial news and developments in the stock market and do not hesitate to adjust your investment portfolio accordingly. Knowledge is also the best defense against fraudsters who prey on unsophisticated investors to turn a quick buck.
- Maintain Your Property
Taking good care of property makes everything from cars and lawnmowers to shoes and clothes last longer. The cost of maintenance is a fraction of the cost of replacement, so it’s an investment not to be missed.
- Get a Financial Advisor
Once you’ve gotten to a point where you’ve amassed a decent amount of wealth either liquid assets (cash or anything easily converted to cash) or fixed assets (property or anything not easily converted to cash) get a financial advisor to help you stay on the right path.
- Take Care of Your Health
Investing in good health is not difficult. It means making regular visits to doctors and dentists, and following health advice about any problems you encounter. Many medical issues can be helped or even prevented with basic lifestyle changes, such as more exercise and a healthier diet.