5 Steps To Achieve Financial Freedom

Financial freedom is within your reach! Image: Ironshield.ca

Financial freedom doesn’t come easily. It comes with hard-work, discipline and the determination to break free from the trappings of materialism. Most of us are dissatisfied with our income and want to earn more.

Sure, there’s nothing wrong with working hard to earn more. But truth is, most of the time, it’s not our income that’s the problem. It’s how we actually spend it! And if we don’t know how to properly manage the money we have, then we can expect to tread the path of financial stress.

Whether you’re earning a five or six-figure sum in one month, if your lifestyle inflates together with your paycheck, you’re still in serious trouble! The key is changing the mindset.

How? You can start with these simple steps:

1. Change your attitude towards debts and credit cards

If you’re already heavily in debt, don’t spend your money on useless stuffs. Pay your debts first. A lot of people love to have credit cards because it’s so convenient. It only takes a swipe to buy what they want. But the biggest downside is that you don’t keep track on how much you spend. Which makes us realize #2.

2. Never spend more than what you earn.

Believe me. This may sound too passé already but it really works. When payday comes and you think you need to splurge on this or that, you’ll find out that you have actually spent all your month’s worth of income! Always learn to budget things and to buy only what you need—not what you want.

3. Save a portion of your income.

Pay yourself first. Save a fixed portion  of your income. Start small, let’s say, 5 percent? Then, do your best to increase this amount. Next year for example, you might decide to save 10 percent of your income and increase than future until you feel comfortable saving 20 or 30 percent of your income. Any windfall that comes your way—say bonuses—should be saved for a rainy day.

4. Plan your expenses

When you start accounting the money you spend for buying your day-to-day necessities, like food, household supplies, and for paying the usual services (electricity, water, phone, etc), you will be surprised to find out that your actual needs are actually less than what you spend on your coffee stop-overs, luxury shopping trips and unnecessary daily trips to the fast food! When you budget your expenses, you begin to value the money you’ve been working hard for. And that makes you want to be a wise, savvy shopper.

5. Invest your savings

Don’t just let your money sit in your non-interest bearing account. Invest it somewhere else that will yield considerable returns. Opt for mutual funds, bonds, or stock market investments for long-term growth. Check with your bank to see if there are any easy investment instruments that you can enroll with to make sure you’re getting the most out from your hard-earned savings.

It’s not easy task to tread the road to financial wellness. There will always be bills to pay, debts to settle, emergency situations to address, and temptations that will stand between you and your financial goals. That’s why we have financial planning as the key to financial wellness.

Think long term. Where do you see yourself 10, 20 or 30 years from now? Do you still see yourself coping up with your credit card payments month after month? Of do you think you’re already on a semi-retired status—enjoying a simple yet blissful and financially-worry-free life with kids already high earning (and just like you, financially-savvy) professionals while you and your loved one enjoying the blessings of years of savings and wise investments?

Think of what you want to be in your life then act upon it now. A simple step of saving a small portion of your income could mean so much to your future financial success.