Unfortunately, dreaming of financial freedom is not a real solution to your money issues and it means much more than just being debt-free. True financial freedom is to be without debt, of course, but it’s also about living comfortably, saving money each month, being able to actually afford those new shoes or that weekend away with the girls.
True financial freedom is a true joy to behold but first, you need rules, a strategy and a plan to get there. Here are 5 tips to reaching financial freedom quicker:
1. Always Pay Yourself First
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The moment you get paid you should pay yourself, even before debt. As soon as your salary hits your bank account, 10-15% should go straight back out into a savings account. More importantly, you should start planning and budgeting for only 85-90% of your salary. Live within your means as cliche as that might sound.
Once the money is in your savings, don’t touch it! This saving rule completed religiously over the years will allow for a gradual nest egg to build in the background unnoticed. One day, you will look in that savings account and be amazed at how much you managed to put away.
2. Don’t Spend What You Don’t Have
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This is a big one! If you can’t afford it then simply don’t buy it. Easier said than done but absolutely essential for reaching financial freedom. Credit card debt is no joke and you will find yourself in trouble if you keep paying for things with credit. Stopping serious spending habits with your credit card is necessary to protect your personal assets and maintain a good credit score that benefits you in the long-run.
3. Learn to Budget
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Creating a budget is easy, maintaining a budget is the hard part. The most important thing when creating a budget is to be honest with yourself and keep it realistic. A fairytale budget that get’s blown after one week will have you feeling sorry for yourself and avoiding any future budgeting for a while. Try to get it right the first time.
4. Need Vs. Want
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A great way to stop wasting money is to build a list of all your outgoings for the last month and see which items are completely unnecessary. Direct debits are serial bank balance killers and often we forget they are even still active. Look out for lingering monthly payments for magazine subscriptions and online services that you no longer use. For everything else, ask yourself “did I really need that?” and “could I have got through last month without it?”.
5. Quality, Not Quantity
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You probably don’t need six winter jackets, you probably need one or two at most. The jackets you do buy should be quality so that they last and you can keep wearing them for years to come. This principle should be applied to all your buying. Not only will this save you a small fortune in the long run but you will be helping decrease your part in fast consumerism too.