Have you ever wondered how to achieve financial freedom? How to develop good personal finance habits? If so, this article is for you. Keep reading on as we give you simple advises to help you achieving your financial goals.
Although money is not going to make you happy, there is no doubt that financial problems can cause high levels of stress, even depression. A poll conducted by the American Psychological Association (APA) reveals that finances are one of the factors that increased levels of stress and anxiety in Americans adults. The good news is there are simple steps that you can follow to improve your financial life.
Know where you are
Before we go into the advises, it’s important to know where you are. To better understand your financial situation you should be completely aware of all your debts, knowing your credit score and your income. With this information, you will have a big picture of your situation and you will be ready to start building your financial freedom.
1. Track your income
Tracking your income and expenses is essential to improve your current financial situation. This information allows you to organize and to make decisions about the adjustments you should make.
2. Create a budget
Budgeting is going to help you to make sure you are not spending more money than you earn. Spending less money than you make is the main idea to become more aware of your actual spending.
3. Analyze your current situation
If you are spending more than you are making, it is time to make decisions and find a way to reduce your expenses. In words of the French writer Joseph Joubert, “When you go in search of honey, you must expect to be stung by bees.”.
4. Write down your goals
For whatever reasons you’re seeking financial freedom, you need to have a clear goal in mind to make it happen. Take a pen and paper and write your goals down so you can visualize them and motivate yourself to work harder on your financial situation.
5. Pay off debts
After defining your monthly expenses and how much money you can save, it’s time to safely make a plan to pay off debts. It is recommended to start paying a little extra of the minimum monthly payment of the highest interests bills. If it is not possible for instance, pay the due amount on time to avoid a bad credit score.
The snowball method and the avalanche method.
The Snowball method involves paying as much money as possible starting with the small debts;
When the smallest debt is paid off, you roll the money towards the next smallest debt.
The avalanche method involves maintaining the minimum of your small debts but paying the most money you can towards the debt with the highest interest rate.
Despite some researches revealing that the snowball method is more likely, it really comes down to your personality and possibilities.
Once you are aware of your financial situation, you created a budget, you wrote down your goals and you finally PAID OFF YOUR DEBTS !!
It’s time to take action; clear and planned actions to generate income.
What is your next step to achieve financial freedom ?
Wether you want to work from home, invest money or build your own passion business, you will need to take solid actions to make sure you can provide for you and your family depending on the lifestyle you choose to live by.
Some of our ideas for your freedom :
- Invest Money
- Build a Business
- Become a Freelancer
- Invest in Real Estate
- Start a Website
- Drop Shipping
- Sell Your Art Online
These are just some of our ideas, there are thousands of different ways to generate income while you enjoy life.
Defining Financial Freedom
Some of us might have different definition of financial freedom. The most important thing to do is to define what it means for you. Once you have that in mind, it will be easier for you to work toward your goals to finally achieve what most human on earth would like :
Living on your own terms!
Feel free to drop a comment below and tell us what financial freedom means to you.