Achieving financial freedom is a goal for many people. It generally means having enough savings, investments, and cash on hand to afford the lifestyle you want for yourself and your family — and a growing nest egg that will allow you to retire peacefully.
Setting goals can be a huge motivator for getting your finances in order. And the great thing about it is that even if you’ve never tried it before, you can start at any time.
If you’re ready to start living a richer life and achieve financial freedom, here are 7 smart ways that can help you get there!
1. Make a Budget and stick to it
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 protects you against the temptation to splurge.
PRO TIP: The 50/30/20 rule of thumb is a guideline for allocating your budget accordingly: 50% to “needs,” 30% to “wants,” and 20% to your “financial goals”.
2. Review Your Spending
It’s not just about how much money you make — but about what and where you are spending. Take the last three months’ expenses and average those together. Figure out how much you’re spending on necessities, such as bills, rent or mortgage, etc., then all other spendings, such as groceries, gas, fun money, etc. Then decide where you can reduce spending, and where you can make cuts.
3. Evaluate Bills, Payments, and Subscriptions
After you review where all your money has been going — it’s time to make some changes for where the future money will go. Do you have a handful of monthly subscriptions that you are not using or don’t need? For example, clothing subscriptions, magazines, dog box subscriptions, meal subscriptions, or any of the sort? Are you spending money on a membership you’re not using? Have you been paying for the gym and barely frequent? Review these commitments you’ve made, and make cuts when possible.
4. Automate Necessities
For payments that are a frequent occurrence, set up auto-pay (if possible). This will not only save time, but it will also ensure that you’re up to date and paying bills on time. That way when you create your budget, you know what date your bill is due — and are prepared to pay it.
5. Throw All Extra Money to Debt
What do you do with gift money, money from selling objects in the household, or overtime money? You guessed it — debt. Any additional money that comes your way — can speed up that process. It may be frustrating to put that money towards debt and not buy yourself say, that new desk. But once you’re out of debt — you can budget and save for any of those purchases more easily in the future.
6. Go on A Spending Freeze
If you decide that you want to speed up the process even further, you can follow what is called a “Spending Freeze”. A Spending Freeze is a period of time where you cut any spending. When you leave the house, you don’t bring your wallet — and you make no purchases. Whether it be for the weekend or 7-days, some people even try to do a full month (with the obvious necessities, groceries, gas, etc.), and then whatever money is saved from that spending freeze — throw to debt.
7. Delay Gratification
In more ways than one. For non-essential spending — give yourself time to save up for them. Let’s say you want to buy something that is $100 that is a want but not necessarily a need. If you save $10/week for 10 weeks — at week 10 you can buy that said item. By then you can decide the priority of that item. This will also reduce the chances of impulse buying. If you wait to buy things you don’t need — you have time to evaluate if it’s worth the spending.
Managing money well is nothing short of amazing. It takes time to learn and develop the healthy financial habits that are necessary to win with money. These 7 steps won’t only solve all of your money problems, but they will help you develop healthy habits that can get you on the path to financial freedom.