Follow These 8 Steps to Achieve Financial Freedom
Have you heard about the F.I.R.E. movement? This acronym stands for Financial Independence, Retire Early. It's a way of life that many younger people are adopting so they can sock away as much money as possible to be able to retire early and live off their savings. But even if you don't aspire to retire when you're in your 30s or 40s, maybe you just want to gain control of your finances. You want to pay off your bills and enjoy some extra money to splurge on a trip or shopping spree.It is possible to achieve financial freedom, but you do need to put in some effort to make it a reality. Here are eight steps you can take to become financially independent.
1. Eliminate Debt
Most people have debt, whether it's credit card debt, student loans, a car payment, or mortgage. The problem with most debts is that they accumulate interest and this adds to the total amount you must pay back.
Your first step towards achieving financial freedom is to get rid of as much outstanding debt as possible. This means paying more than the minimum monthly amount on your credit card bill. Make a list of all of your debts and focus on paying off the ones with the highest interest rates first.
In some cases, taking out a loan to pay off credit card debt with high interest may be cheaper than paying the credit card company directly. Check this out to learn more about online installment loans that you can use to pay up the debt.
Pay for items in cash as much as possible to avoid racking up further credit card debt. If you can't afford to pay for something using cash, consider putting off the purchase until the money becomes available.
2. Save As Much As You Can
After your debts have been cleared, you want to focus on saving as much of your take-home pay as possible. Open up a savings account—many online will give you a higher interest rate than opening up one at a physical bank branch—and take advantage of direct deposit to ensure a certain amount is funneled into it every pay day.
You may need to cut out certain luxuries (goodbye daily lattes; hello free office coffee) and live below your means for a while to sock as much extra money away as possible. Instead of buying new clothing, see what you can re-purpose from your closet. It'll be worth it once you start seeing your savings grow.
3. Look For Bargains
When it comes to clothing and other necessities, seek out ways to save on these items. This may include signing up for online coupons or only shopping at a favorite store when a sale is taking place. Don't be shy about perusing discount stores or resale websites for a good bargain.
You can also sign up for cash back reward sites such as Rakuten that allow you to earn money back through purchases at major retail stores. These discount sites will also show you coupons and special deals to help you save money on necessary items.
4. Sell Off Your Own Unwanted Items
Chances are you have unworn or gently used clothing and other items in your closet. Raise some extra cash by holding a garage sale, or posting them online using Facebook Marketplace, eBay, Craigslist, Poshmark, and other sites. Take the money earned and place it directly into your savings account where it can continue to earn interest.
5. Start a Retirement Savings Account
Everyone should start retirement savings account such as a Roth IRA early in their career because it's never too soon to start saving for the post-work years. If your company offers a matching contribution, by all means, take advantage of it. Otherwise, you're throwing free money away that could be going towards your retirement.
6. Get a Part-Time Job or Side Hustle
If your full-time job isn't giving you the raise you hoped for, consider picking up a part-time job or work-from-home gig on the side. You can find several openings on Flexjobs and Craigslist, including one-day-only projects where you might be able to earn a few extra bucks.
If you have an entrepreneurial streak, consider posting handmade items on Etsy or starting your own business. You may just discover your passion turns out to be more lucrative than any full-time office position can ever be.
7. Earn Passive Income
Passive income is money you earn without doing direct work for it. You may be able to obtain passive income by starting a blog and running ads on it (when people click on ads you'll earn money, whether you post to your blog every day or not.) You may also want to consider investing in real estate online or publishing your own book and allowing people to download it for a fee.
CDs and high yield savings accounts can also bring you passive income. You may need to get creative with this step, but passive income can help you build extra wealth.
8. Keep Learning About Money
Knowledge is power when it comes to amassing financial freedom, so attend financial seminars, read money books and blogs, and learn as much as you can about money. If the stock market is like a foreign language to you, take a class or go online to get acquainted with the basics of investing. The more you learn, the smarter you'll be about money.
Achieve Financial Freedom by Following These Steps
It takes work to achieve financial freedom and peace of mind about money but it is possible at any age, whether you're starting your first job out of college or making a middle-aged career change.
Check out our lifestyle posts to learn more tips about making the most of your money and finances.