Here are some useful tips to help you get started on achieving financial freedom.
1. Understand your financial status
This is a very important starting point you shouldn’t miss. Examine how much debt and savings you have, as well as how much you need to live your desired lifestyle.
Add up your debt which includes your car loan, credit card bills, mortgage, loans, and borrowed money from friends and family.
For your savings, add up your stocks, retirement programs, and savings account, as well as other investments. All these will tell you what your current financial standing is.
2. Do not think negatively of money
Did you freak out when you added your debt?
This is understandably discouraging for many people, but always remember that money should be viewed positively. Do not feel guilty for wanting it because you use it in your everyday life.
You won’t achieve financial freedom if you look at money in a negative light because this will only sabotage your chances of managing it well.
3. Have a goal in mind
Why do you want to achieve financial freedom? Do you want to help your parents, or move to a beach house? Maybe you just want to get rid of your debt and resign from your job. Whatever the reason is, have a goal in mind.
When your journey to financial freedom is tied to a goal you feel strongly about, every milestone you achieve will be more rewarding.
4. Manage your money well
You may have a high-paying job now, but you are still far from financial freedom if you are clueless about managing your finances.
No matter how young you are, you must be knowledgeable in learning how to save and letting your savings work for you.
To do this, identify the spending that will help you grow in the long term. For instance, putting money on your business will soon increase your profits and grow your customers.
Recommended Reading: Financial Planning: How to Manage your Personal Finances
5. Check interest rates
If you have multiple loans, prioritize paying the one with the highest interest. The same goes for your savings account.
Knowing different interest rates will enable you to maximize your money, and focus on more important commitments.
6. Make a budget
At the start of the month, make a realistic budget and follow it well. This is the ultimate way to manage your bills and savings. This routine will also help you discipline yourself.
7. Be wary of unnecessary purchases
Do you often find yourself scrolling through Shopee when you’re feeling anxious or restless?
If you keep buying unnecessary things as a habit, you need to stop this unhealthy way to handle your money.
One key aspect to achieving financial freedom is self-awareness. This will enable you to stop yourself from impulse buying.
If you want to go the extra mile, keep an expense diary and write down how much you spend in a day, as well as the reason for your purchase.
8. Treat yourself every once in a while
You may be confused – we just told you to stop your unnecessary spending, and now we’re saying it’s okay to treat yourself.
The thing is, working all the time can lead to burnout so you have to do activities that make you feel better.
This can be buying make-up, or going to your favorite restaurant. Treating yourself will minimize your unnecessary splurging and allow you to enjoy your earnings at the same time.
Allot a certain percentage of your monthly earnings for this expense and make sure not to go over it.
9. Try to negotiate
A lot of Filipinos are very good at negotiating. If you haven’t tried this before, now is the best time to do it.
A lot of landlords and businesses are surprisingly open to negotiating prices especially when you are a repeat customer.
Thanks to negotiating, you can walk out the door with amazing discounts.
10. Network with people
Ask any successful entrepreneur how they achieved financial freedom, and they will tell you to not be afraid to get help.
Accept that there are people who are more experienced than you and use this to your advantage. Do not be afraid to build relationships with them and ask them for advice.
Luckily, technology has made it easier to get in touch with experts in different fields.
11. Save per month
Whenever you get your salary, deposit a specific amount of money in your bank before taking care of your bills.
This method will enable you to get closer to achieving your financial goal. This trick may seem hard to do if you’re working with limited means but it’s the most practical method you can try.
Why?
For instance, if you save Php5,000 a month, whatever is left will be used for your groceries, rent, and other expenses.
If you don’t have enough money to spend on your needs, you will be forced to have a side hustle to cover these costs.
12. Buy meaningful experiences
Your goal should not be to hoard money until your retirement. Ultimately, what will help you live better are experiences, not products.
Whenever you’re spending, assess if it could help you in the long run.
Instead of pretending you have money and living a lifestyle that you can’t afford, seek meaningful experiences instead.
This could be spending more time with your pets, finding an exercise you love, or splurging on an online class you’ve always wanted to attend.
13. Read the news
Every year, make sure you are updated with tax laws so you can maximize your finances.
Read up on different financial developments and news, especially if you’re keen on investing in the stock market.
Checking the news from time to time will also encourage you to diversify your investment portfolio.
14. Do not be contented with one income source
Achieving financial freedom is not a walk in the park. You need to sacrifice for it, and unfortunately, a single job may not cut it for many people. If you are not earning enough, look for a side hustle.
According to experts, you should have seven streams of income which you can look at in two ways: active and passive. Your active income can be your regular job, while passive income will help you earn money even when you sleep.
15. Maintain your assets & properties
If you have a car or you’re a homeowner, make sure you take good care of your property well.
Even your clothes and appliances need your attention. This way, you can immediately fix minor issues before it turns into something major and you wouldn’t have to get a replacement.
16. Do not be intimidated to invest
Let’s say you are finally debt-free and you’ve grown your savings. Then, an emergency happens. Will you be financially prepared to handle it?
Have money for rainy days to ensure you or your family won’t be burdened in the future. To do this, invest in health insurance, have a retirement plan, and set aside money for personal emergencies which should be three or six months’ worth of your living expenses.
If this seems too hard to attain at the moment, start with a simple goal, and work from there.
17. Stay healthy
Not all companies will pay you during sick days, and this loss of income can be immensely upsetting.
Ailments can also lead to more expensive insurance. Considering this, make sure you are taking care of your health and body.
18. Talk to your spouse
If you’re married, talk to your spouse about your goals because chances are, some of your expenses are shared especially when you retire.
If your partner has not been saving yet, try to see whether your finances can cover your entire family. If not, encourage your spouse to save money and invest.
19. Be patient
Unless you win the lottery, you won’t become financially free overnight. Being patient is hard especially when you’re struggling with saving, but it will be worth it.
Even if you’re only saving a small amount per month, remember that it will add up. Just make sure you are on the right track.
20. Get an advisor
Once you have a sizable amount of money, the next step is to educate yourself to make more informed decisions.
This can be achieved by getting a financial advisor to walk you through smart investments and how to manage your money well.
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