Financial freedom may be one of your dreams but you have no idea how to reach it. It’s unlikely you’ll win the lottery or get money from a rich relative’s will. You can find financial freedom but you’ll need to make a plan and follow it conscientiously.
You won’t become financially free if you don’t first make some plans. The primary key to setting financial goals is to make them concrete and personal. You’ll find it more difficult to reach financial freedom if your goal is to make a lot of money. Instead, set a goal to save a specific amount of money each month to take a special trip, save for a down payment for a home or build your child’s college savings account.
Get out of debt
You can’t become financially free if you have debt hanging over your head. The stress of debt eats at your confidence and costs you plenty in extra interest and fees. Your first goal should be to eliminate debt, whether it’s due to credit cards, student loan or car loans. You’ll need to streamline your budget to find every extra penny possible; don’t discount the possibility of taking on a second job to bring in more money. Some experts recommend paying off debt with the highest interest rate first, while others claim eliminating your debt from smallest to largest is more encouraging.
Develop a budget
Becoming financially free is a habit you have to learn. One of the best ways to do this is to develop a budget that you commit to following as closely as possible. You should plan to track every penny you spend. This will help you identify areas where you spend more money than you can realistically afford, such as expensive lattes, unnecessary restaurant meals or even gym memberships. A budget takes into account weekly and monthly expenses, but don’t forget to include annual or quarterly expenses like trash collection or insurance premiums. Your budget should also include some savings for emergencies like car breakdowns or unexpected doctor bills. However, even though you’ve put yourself on a strict spending plan, include a treat or two in your monthly budget.
Planning for financial freedom includes investing your money wisely now so that you’ll have enough to live on once you retire. Most employers offer 401(k) savings plans. You should also seriously consider funding a Roth IRA (individual retirement account) yourself. This type of IRA provides tax-free income after you retire. Annuities are also valuable investment tools that accumulate interest every month until you retire. You can then collect money on a monthly basis from the annuity to help fund your retirement. Compare annuities to IRA accounts before you decide which investment vehicle you are going to pursue.
Finding financial freedom isn’t impossible or even difficult. It simply requires planning of your budget, researching annuity investments, 401k plans and the determination to stick to your goals. You’ll be very glad you’ve taken these steps when you reach your retirement years and can enjoy them with little or no worry about finances.