We all strive for financial freedom: the day when our paycheck doesn’t evaporate the minute it’s being deposited. We’re ready to make more money and stop spending so much. Though somehow after paying our rent, utility bills, car payments, and food, we’re barely hanging on. Making more money often seems like the solution to all our financial problems – but it’s not that simple.
So, how do you reach your financial goals? How do you go from being broke and in debt, to building stability and wealth? What’s the secret to having financial freedom? Here are 3 tips:
Create – and Stick – to a Budget
When you’re struggling to make ends meet each month, it may be because you have no idea of what you’re actually spending. It’s therefore a good idea to create a budget. A budget is your plan for what you’ll do with all your money. It’s a plan for what’s coming in (income) and what’s going out (expenses). To get started, you may want to follow the 50/30/20 rule: 50% of your income goes to your needs, 30% goes to everything else you may want, and 20% goes to your savings and paying off debts.
Build an Emergency Fund
Life happens – but that doesn’t mean we can’t be prepared for any money problems coming our way. We’re talking about medical expenses, car trouble and busted toilets. When you have an emergency fund, you can rest well at night knowing that you’re able to stand up against those financial threats. Try to set aside at least $500, and work your way up to a half year’s worth of living expenses.
Get Out of Debt
Debt is good for one thing only; holding you back. And you surely don’t have time for that! Getting out of debt is something you can do yourself with the right motivation. The first thing you need to do is writing down all your debt – even if it’s really bad. Not only the total amounts, but also the interest rates, amount of the minimum payment, loan length, and so on. This’ll help you organize what you need to pay off first.