To most people, financial freedom seems like an unreachable dream. The problem with this mindset is that it focuses on the negative aspects of being poor, rather than the benefits of achieving financial freedom. Financial freedom is not only possible but also necessary for living a life of happiness and fulfillment.
Financial freedom is a long-term goal
Pursuing financial freedom is a long-term goal because it requires constant effort and diligence. The road towards freedom can be too bumpy, so you should develop financial freedom habits to turn your finances around. This is based on the fact that financial freedom is not only about money, but it’s also your state of mind. You can apply these habits in your daily routine and change things up to reach financial freedom faster.
Start an emergency fund.
If you don’t already have an emergency fund, start one. Putting 3 to 6 months of expenses away will give you a lot of peace of mind. Emergencies come in all shapes and sizes. Life does not turn out the way you expect. The emergency fund will help cushion the blow when a crisis comes. You don’t have to save 3 to 6 months all at once. You can start with smaller amounts and work your way up. And you don’t have to put all your extra change in an emergency fund. You can put your spare change in a savings account.
Live below your means.
If there is one thing that almost everyone tends to do, it is to spend more than they make. This tendency can be so strong that people who try to stick to a budget often wind up spending even more than they planned. The best way to avoid spending more than you make is to live below your means. To live below your means is to pay yourself first. If you pay yourself first, you pay your bills second. By paying yourself first (save), you automatically have enough money to pay your bills.
Turn your savings into investments.
Use your savings account to invest in things that have a predictable return. You can invest in everything from stocks to bonds to real estate. You can also make your investments work harder by diversifying. Instead of putting all your money into one mutual fund or stock, spread it around by investing in several mutual funds or stocks. That way, if one fund does badly, the others may help make up for it. One more way to make your investments work harder is to invest for the long term. The longer you hold an investment, the better your return is likely to be.
Make better decisions about your spending.
You have to expect that you will sometimes make bad choices, and you have to not let yourself make them. You can get better at it, but it takes practice. Spending money is a matter of choice. First, look at the way you spend your money. How much money do you spend, and what do you spend it on? Then look at what you want. What do you want? If you pay attention, you will probably find that what you want and what you are spending your money on are not always the same thing. By discovering this, you can choose what you want to spend on and make better decisions.
Set realistic timelines for your goals
The first rule for setting goals is to set them realistically. One of the most useful tools for setting realistic goals is to think about a big goal you want to achieve and then break it into small steps. For example, if you want to lose weight and get started, you might write down something like, “I will jog a mile every day for two weeks.” It sounds simple, but breaking a big goal down into small pieces makes it feel more manageable. Keeping tabs on your progress can also help you see patterns. After a while, you’ll probably notice that if you skip a day, your weight usually goes up. Or that if you don’t eat any vegetables, your weight goes up. Keeping track of your progress also helps you see what’s working.
Financial freedom is possible; take the first step today. You can’t crush it if you don’t start.