To pave your way towards a life characterized by financial freedom, you need to first figure out what the phrase really means for you. Is it paying off your student loans? Saving enough to move abroad? Buying a house? Supporting your family? Or just living a debt free life? Whatever aims and goals you have will require a certain amount of discipline and perhaps some temporary, difficult choices on your part. Here are five basic pointers you will want to consider on your journey to financial freedom.
Figure Out Your Current Situation
Obtain exact figures for the amount of debt, savings, and income you have. If you have several sources of debt, create categories for all of them. Do the same for your sources of income. From here on, set yourself some measurable money goals that you can realistically stick to. This could be anything from paying off your student loans to saving up for a house or making a certain level of income. Having a numerical figure in your head will clear up a lot of mental disclarity that might have existed before.
Track Your Spending
Every person who is “good with money” is considered good because they know when and how much money is leaving (and coming into) their account. Once again, categorize your spending to understand which area of life you might be overspending on. You only need a spreadsheet to track this, there is no need to buy a software service.
Spend Within Your Means
It has become too common for people to overspend each month and finding themselves in need of loans to keep up with basic expenses in the next. You don’t necessarily have to cut out small expenses that bring you joy for this. Rather, look into whether there are any bigger changes you can introduce into your life (driving a less expensive car, moving into less expensive lodgings, etc.) to achieve lower living expenses.
Pay Off Your Debts As Quickly As Possible
Take an informed and decisive step towards paying off your debts sooner than the time you are alloted. Instead of sticking to the minimum payment per month, aim to pay off as much as your income and lifestyle allows. Such an approach allows you to be debt-free in a surprisingly short period of time as compared to when you only meet the minimum monthly requirements.
You might want to start off by paying the smallest debt that you owe since it often lends a feeling of motivation and accomplishment, allowing you to tackle the bigger payments with a more confident mindset. It is absolutely worth parting with a significant chunk of your income each month because once you speed up the debt payments, your bank account will no longer show the dreary, negative red digits.
Find Additional Income Streams
The only way to bring in more money outside of your full-time job is giving up more of your time for other work.
Now it is entirely possible to create passive sources of income, but those require you to set up a basic foundation for the income to start coming in. For example, if you are intrigued by investing in the stock market, you might have to spend a decent amount of time actually understanding its how it works, how shares and companies are valued, and how much risk or returns you would have to deal with.
Similarly, you may want to go the route of social media what with platforms like Instagram and Youtube now being a moneymaker for an ever-growing number of people; but it would still require a lot of time and commitment on your part to build a presence that will be followed by a sizeable amount of people and hence generate monthly income.
For more traditional jobs, the choices are many, though some of the more common ones include blogging and freelancing on platforms like Upwork and Fiverr. If you are willing to work on a day off, working as an Uber driver or doing small jobs on Craigslist are also plausible sources of additional income.
In any case, financial freedom demands a very disciplined and focused attitude about money. Any unnecessary extravagance or failure to tackle your debts head on will prevent you from truly attaining a sense of freedom with regards to money. On the other hand, simplistic lifestyles and smart money management will see your bank account out of troubled waters and grant you the peace of mind that you deserve.