Are you worried about how to get your finances in order this New Year? Do you really wish to achieve financial freedom but don’t know how to go about it yet? Then this is meant for you.
It doesn’t matter the kind of financial mess you’re currently wallowing in. With the right information, it is possible for anyone to achieve financial freedom. Listed below are ten smart money-saving tips to help you become financially independent in 2019.
What is Financial Freedom?
Before diving into the money saving tips, let’s briefly discuss financial freedom.
Financial freedom is the ability to make money related decisions without being bothered about the financial impact. You are not bothered because you are prepared and you control your finances, not the other way round.
When you are financially free, you have a dependable cash flow which gives you the ability to live the life you want.
It is mostly about planning. You plan for your long-term financial situation: you save actively for a rainy day or for retirement.
10 Smart Money Saving Tips for Financial Freedom
1. Understand you starting point
The first step to achieving financial freedom is to take stock of your present situation. This is not an easy task as looking at your little savings, the amount of debt you owe and the amount of money you need can be really disheartening. However, it is important that you take this step.
Write out a list of all your debts–money you borrowed from family and friends, mortgage, credit cards and all other debts that you are in, then add up all the numbers. If it is a small number, well done. If it is a big number, there is no cause for alarm. There are two methods of paying off debts which will be discussed later on.
The next step is to take a look at the money you have saved up by drawing a list of all your savings, that is savings account, retirement plan, et cetera. Now add it to your monthly payments, that is recurring monthly payments like salary and so on. As we move on to the next tip, keep the number in mind.
2. Positive look at money
No matter the discouragement having debts might pose, try to have a positive view of money. If you desire to achieve financial freedom, look at money positively. Look at money as a tool, not just any tool but one that can help you achieve your dreams and live a stress-free life. Looking at money negatively will make you subconsciously sabotage your plans of making it and keeping it.
3. Your goals
Know your goals, write them down. Know what you need money for. A month might be too small to accomplish everything but you can make progress on your goals in a year, as a year is long enough. Your goals should be tied to a specific number that you want to hit. Though you may not reach that number, this will help you start working towards that objective.
4. Pay yourself first
Paying yourself first means that before paying anything else such as bills, you put a specific amount in your savings account. This act has helped people get closer into achieving financial freedom.
Paying yourself first guarantees that you are investing in yourself by putting money aside always. You may decide to pay yourself a particular amount at a fixed period of time and then use the money left for bills. If it happens that the remainder can’t cover your bills, it may be wise to pick a side income.
5. Monitor your spending
Try to keep track of your spending. Know how much you are spending, where you have overspent, how much debts you have and how much money you have in all your accounts.
You can use tools that can help you keep track of your spending and to see where your money goes from month to month.
6. Spend less
Don’t spend more than you need to and don’t spend money that you don’t have.
Buying less stuff can help you get richer as spending less helps you save more money that you can put aside for your financial freedom. As you practice this, you will get to learn that you need a lot less stuff to survive.
7. Pay your debt
Paying off might not be as glamorous as having money in the bank yet it brings you closer to financial freedom. Most people feel relieved after paying off their debts. If you’re doing a lot of borrowing, then you should consider using a low interest rates credit card.
You can pay off your debts through these two methods: snowball and avalanche. The snowball method is paying off the smallest debts first while avalanche is paying off the debts with the highest interest rates.
You should decide which method works best for you. You lift off massive burdens off your shoulders by paying off debt and then you see your money rise in the bank.
8. Go for experience, not things
You are allowed to enjoy life as life is not about hoarding your cash. The experience that you have will help you live a more fulfilled life, not the things you own.
Moments are what make up life. Quality time spent with friends and family are where the best times or memories come from. Most products don’t add much while some help bring you closer to your family.
So, don’t spend money just to show off. In a bid to pretend you have money, you may fall into the trap of spending money you don’t actually have.
9. Additional sources of income
If your current earning is not enough, try looking for money outside your current job.
If you are serious about financial freedom, you have to be ready to compromise and make sacrifices that will involve your sweat and time.
10. Think of your future
It is important to invest in your future. You should set aside money for rainy days and retirement. Getting an ideal insurance cover while at it may well be your best decision ever as insurance ensures that you, your family and your property don’t go under at the strike of an unfortunate event.
All these steps can take you out of your current financial situation if you do your best to live by them.