5 simple steps towards financial freedom
We discuss many aspects of financial freedom at Personal finance freedom.
Here are the five simple but effective steps to take control of your finances.
Set Realistic Financial Goals – Its very important that the first step you take towards your financial freedom is realistic, true and correct in every term. Set realistic goals and be optimist about it. There are various calculators out there to help you figure out how much you need to save to achieve what and at what age. Figure out the amount you feel is comfortable for you at retirement depending on the lifestyle you want to lead. Then progress each month with a fixed plan to achieve it, yes its as simple as it sounds. We just have to stick to the plan thats it. Its not rocket science. Remember, emergency funds need to always be kept apart all the time for the unexpected, so make sure your savings every month or bi-weekly is that amount which you should not touch whatever the situation may arise. Also before you begin with all the planning, keep aside 3-6 months of money you need for basics like rent, mortgage, food expenses, grocery, gas and utilities in your chequing or savings account and make sure you dont spend that so that you dont have to touch your invested amount in anyways.
Track every dollar you spend – All I mean to say here is, each one of us will have that habit be it shopping, buying new tech products, travelling so on and so forth. I am not saying dont buy anything for yourself, yes we all need to be pampered every now and then or else whats life, but you need to keep a track on your spending habits. Remember that every penny saved counts towards your financial freedom at the end of the day. No body is going to give you money when you need, its you who work hard for the money you have, try not to waste it unless its really required. Try to save and invest today, it may look a small amount now but tomorrow when you see the returns you will be amazed. Just think for a sec, if you started saving from the age of 15 or 18 to whatever you are today, calculate this with the compounded returns on MF’s, stocks, ETF’s the returns will be astonishing and its true.
Always aim at being debt free – You can save more when you are debt free and have less deductions when you get your pay its as simple as that. The more you get paid the better your lifestyle gets. So debt and repayment pay an important role in our lives. Debt can be anything from mortgage, car installments, credit cards to line of credits. I know that many of us are living pay check to pay check and its not easy paying off that mortgage or credit card bills in a month or two or in a few years time. All I am saying is workout a plan to be debt free if not today then set a date and move forward toward towards achieving it. Set realistic goals and stick to it. Everything is possible its just that we need to be focused and organised. Thats it !!
Keep a track/check of your accounts – This one is really very important. We are so busy with our everyday lives that we tend to forget to keep a track on our bank accounts, charges levied on bank accounts, credit cards charges, interest charges we have and how much we use it on a daily basis. The point here is to keep a track of all the credit cards you have, does it come with an annual fee involved, if so how much, do you really need it, if not then close it. Why do you need 10 cards when you have good 2 or 3 cash back or points cards ?? Also its less burden to keep a track of the bills. The other point is sometimes interest charges are silently increasing when we dont pay our bills on time or pay half. Keep a track on this. Also if you have over draft facility in your bank account, do a check on it if you really need it or not, close it otherwise. Also keep a track on your chequing account and the minimum balance required to avoid account charges.
Think about automating your finances – Its always convenient and easy if you automate things. Its hassle free, manual errors free and keeps you focused on other important segments in life. Examples of automating stuff like as soon you get you paycheck transferring a small amount to your savings accounts, paying off that minimum monthly credit card amount, adding pre-authorized credit card to your wireless account etc. These small steps can lead to bigger things and when you turn back and see Its one step that we need to start with to see a huge benefit at some point. The interesting thing about this is that you avoid paying penalty or interest charges. Its easy and it requires some initiation and determination thats it. Invest today and just wait for 6 months to 1 year I am sure you will be inspired to invest more seeing the returns of growth and dividends. Please invest in the right methods or stream, not every stock or mutual fund/ETF is good. Read, research and invest. Also timing to invest is important.
I hope this article helps someone out there and inspires towards attaining financial freedom be it after 10 years or 15 years or 20 years from now, the corpus that one needs then to lead a comfortable lifestyle.