Don’t wait to pursue financial freedom when you are in the midst of financial catastrophe. At this point, financial freedom will be equated to a debt-free, collection-free existence. But financial freedom is a series of practices over many year’s time. It combines daily habits with long-range planning. Here are ten ways to maintain the status of financial freedom.
1. Budget
This practice is by far one of the essential ingredients to financial freedom. Use an application such as Quicken to set up a personal budget. Stick with it. Google also offers free budget templates. Living outside your means is the quickest route to financial catastrophe. Living within your income is the direct path toward financial independence.
2. Track Daily Expenses
This is an eye-opening practice that leads to a consciousness about your financial state. Keep receipts and enter them daily in your personal accounting software program. Enter checks as you write them. Keep an eye on your balances. Never go into the red. Overwhelming debt is the number one cause of financial distress.
3. Reduce Spending
Impulse buying enriches the seller, not the buyer. Resist the urge to buy that glossy magazine while waiting at the check-out lane. Drive past the fast food shop and go to the grocery store instead. Prepare home meals and control the urge to eat out. Bring your lunch to work. Don’t buy that tenth pair of shoes because of their momentary appeal. Visit the nearly-new shop. Bargain hunt. Put a stop to the numerous cash leakages.
3. Pay Credit Card Debt in Full Each Month.
This may sound like an impossibility if you use your credit to survive. So the point is not to rely on credit cards to pay for essential expenses. Credit card use should be reserved for one-time, special purchases when your cash on hand cannot cover the expense. Use your credit card frugally. Before making that purchase, ask yourself if your income will be sufficient to pay off the debt within the next billing cycle. If the answer is “no,” then reconsider the purchase.
4. Barter, Swap, Use Coupons
These practices are valuable for creating a mentality of economy. They may seem to have minimal impact of your financial status but cost-saving measures all work together to preserve your liquid assets. Trade a service for a service – mow your neighbor’s lawn in exchange for handiwork. Cut coupons and put them to work. Each small practice of frugality is keeping money in your pocket.
5. Shop for High Interest Savings Accounts
To make best use of your saved cash, deposit it in a savings account that pays out a high interest. Shop around. Rates are posted at the financial institution’s online sites and in bank lobbies.
6. Set up a Savings Plan
Allocate a specific amount from each paycheck for deposit in savings. Use a direct deposit plan if this is available.
7. Set Achievable Goals
Depending on your status, you may want to concentrate on specific economic goals. These could include everything from savings for your children’s college education to putting aside money for home repairs. Use wisdom and common sense to guide you in your planning. Investigate prepaid college plans. Make use of a financial counselor at your financial institution.
8. Review Your Retirement Options
As part of your long-range planning, research retirement options. You have plenty of choices: 401b plans, Roth IRAs, DROP programs at your work, state pension plans. Seek out an adviser for this or do the research yourself.
9. Establish an Emergency Fund
This could be a separate account or integrated into your savings. Financial gurus advise that an emergency fund should cover three to six months of your required living expenses. Make a list now of these expenses; create your eergency fund and start making contributions to it. Do not stop until you reach your designated limit.
10. Live Meaningfully
Financial independence does not come without purposeful effort. Take control of your resources. Spend, save and earn wih eyes wide open. Changing your behavior and living meaningfully is the only way to change your financial status. Remember: No one else will do this for you.