The amount of money you make regularly can affect the quality of your life. It’ll be very challenging for you to live life to the fullest if you’re living paycheck to paycheck as you’ll often see yourself troubled on how you can manage your finances. Financial stress can eventually affect your mental health, relationships, and even behavior.
For you to avoid financial stress, it’s not enough that you’re able to find a high-paying job or start a profitable business on your own. You should also know how to manage your finances so you can eventually attain financial freedom. In its simplest sense, financial freedom allows you to make big life decisions without having to stress about money. When you have financial freedom, you can pay all of your living expenses and still have funds for luxuries.
You can gain more financial freedom by taking note of the following money hacks:
- Set Realistic Life Goals
The idea of gaining financial freedom is very broad and, in some cases, vague. Do you even know what financial freedom means? How do you plan to start your journey in financial freedom? These are just some of the question one might have as they attempt to attain financial freedom for the first time.
If you see yourself in the same dilemma, start by setting realistic life goals first. This is one of the most important phases of the process as this allows you to assess your current financial status, understand what financial freedom is, and come up with techniques that can help you move forward. Setting realistic life goals basically allows you to connect your current financial health to the financial stability you want to have in the future.
There are no rules set in stone when it comes to setting realistic life goals, but counting backward to your current age and establishing financial milestones at specific intervals can help. Make sure that your goals are specific so you can increase your chances of achieving all of them.
- Make A Budget And Stick To It
Having a stable job is not an assurance that you can eventually achieve financial freedom. Regardless of how well-paid you are, if you don’t know how to budget your salary and manage your financial responsibilities, all of your salaries can still go down the drain. Your inability to make a budget can become the reason why you’ll still experience financial stress and be covered in debt even when you have a job.
You can steer away from this direction and ensure financial freedom by making a budget and sticking to it. Here’s how you can do it:
- Gather your financial paperwork: It’ll be challenging for you to create a budget if you don’t have any access to your financial paperwork. How can you determine if your set budget is realistic if you don’t know how you stand financially? Information is key when creating a budget, so make sure to gather financial statements, such as bank statements, recent utility bills, credit card bills, and investment accounts.
- Calculate your income: The amount of money you earn every month is important when creating a budget. Do you think you can properly allocate funds if you don’t know how much you’re earning every month? How can you track your expenses if this is the case? Creating a budget without calculating your income is like going for a drive in the middle of nowhere.
When creating a budget, don’t forget to calculate your income as well. List down your take-home pay (if you have a full-time job) and include other sources of income, such as child support. If you’re earning money on the side, make sure to add the amount to your list, too.
- Create a list of monthly expenses: Even with a full-time job, some adults would still see themselves penniless days after receiving their monthly salary. Adults have a lot of things on their plate, and it’s easy for them to be overwhelmed when they receive their salaries that they tend to spend them excessively.
Make sure that this doesn’t happen to you by creating a list of monthly expenses. This list will make it easier for you to come up with a budget as you’ll now have an idea of where your money should be spent. Ideally, your list of monthly expenses should include your car payments, insurance, utilities, and groceries. Transportation costs, student loans, and savings should also be added to the list.
- Total your monthly income and expenses: An effective budget is one wherein your income is higher than your expenses. So, if you see that you’re spending more money than what you earn, you need to make drastic changes to your budget.
- Pay Off Credit Cards In Full
Credit cards can be very convenient. Properly using one allows you to build credit, earn rewards, and increase your purchasing power. Credit cards can also give you peace of mind when shopping as you’ll be less susceptible to theft and other crimes.
Although beneficial, credit cards can also take a toll on your financial health because using them regularly can result in high interest rates and debts. The longer you leave your credit card balances unpaid, the higher the interests get. Over time, this can become the reason why you’ll be covered in debt and even experience bankruptcy.
One of the easiest ways to prevent this problem from occurring is to pay off your credit cards in full. You should allocate funds from your income to pay off the full balance of your credit card every month. The same is also true when paying for your student loans, mortgages, and other types of loans.
Aside from enjoying lower interest rates, paying on time is an excellent way for you to build a good credit rating.
- Create Automatic Savings
Regardless of how small your salary is, you should always set aside money for your savings. Contrary to popular belief, having savings is not a luxury, but a need that can help protect you in times of financial emergencies. Do you think you can afford hospitalization and medical bills because of an accident if you don’t have any savings? How can you get back on track after financial emergencies without having any savings? Saving money is challenging at first, but all of your efforts will be worth it in the end because saving can help you avoid debt and reduce financial stress.
There are many ways on how you can save money, but the simplest would be creating automatic savings. This program is often offered by employers to their workers. When you sign up for it, a certain amount of money will be deducted from your salary every month. Automatic savings is a great way for you to save because the money doesn’t even touch your hands, helping you avoid the temptation of overspending.
- Start Investing Now
One of the biggest misconceptions people have when it comes to investing is that only rich people are allowed to engage in this endeavor. People think that in order for them to invest, they need to have thousands or millions of dollars first. However, this isn’t always the case because investing is now becoming more diverse, making it easy for anyone to allocate their resources to a specific investment to earn more in the long run.
Depending on your preferences and money on hand, you can choose to invest in direct equity, debt mutual funds, real estate, and even equity mutual funds. Aside from having several options to choose from, you can also acquire the services of an investment advisor to help you determine the best type of investment for your needs. These pros can guide you throughout your investment journey so you can earn more and prevent losses.
As long as done properly, investing can become your ticket to staying ahead of inflation, building wealth, saving money on taxes, and meeting your short- and long-term financial goals. You can even retire early and still enjoy financial freedom when you decide to invest early!
- Try Your Best To Negotiate
You will have to pay for countless products and services for you to live comfortably. When cooking meals, for example, you have to buy fresh produce from stores so you’ll have ingredients to use.
Although uncommon for some, negotiating is actually another effective way for you to attain financial freedom. This hack can be very helpful if you’re fond of buying products and services from small businesses or mom and pop shops.
When buying products and services, muster up your confidence and do your best to negotiate. Let the other party name their price first and, then, stand your ground to offer a smaller amount. You’ll also have better chances of getting a sale from a seller if you buy products in bulk or if you become a repeat customer to a particular business.
- Take Care Of Your Health
Attaining financial freedom will not only require you to look after your finances or how you’re spending them. You should also prioritize your health during the process because this can affect your ability to save and make money. Regardless of how wealthy you become, if you have poor health, you’ll likely spend all of your savings for your hospitalization and medical bills. Over time, your efforts to make money and save from your earnings will be worthless. Do you think you can still budget properly if all of your salaries are spent for your health? How can you enjoy financial freedom if you’re always sick and admitted to the hospital?
For you to attain financial freedom and ensure that you can enjoy everything that you’ve worked hard for, never forget about taking care of your health. Making lifestyle changes is usually enough for you to keep yourself healthy and ward off illnesses and diseases. You can start by sticking to a healthier diet, visiting your doctor regularly, and adding more exercise to your daily routine.
Taking care of your health will make it very easy for you to attain financial freedom because when you’re healthy, you can do more every single day. Being healthy allows you to excel in your full-time job and still perform well on your side hustles. This can increase your earning potential. Moreover, being healthy can help you prevent chronic health conditions and save you money in paying insurance premiums.
- Get A Financial Advisor
As mentioned, attaining financial freedom is not a walk in the park. Since everyone has a unique lifestyle and spending habits, implementing generic strategies doesn’t always warrant that you can achieve financial freedom. More often than not, implementing these strategies and failing every single time can discourage you to even try again. When this happens, you’ll be back to your old routine and continue your unhealthy spending habits.
If you see yourself stuck in the process, consider hiring a financial advisor to help you out. Financial advisors have spent most of their lives learning about financial freedom and creating strategies that can help their clients achieve all of their financial goals. Sure, their services might cost money from your pocket, but you can think of the payment as a cost-effective investment. With them on board, you can increase your chances of succeeding in your attempts and avoid wasting time and money in trying out strategies that won’t work.
With the number of financial advisors operating in the globe today, make sure that you hire someone who has in-depth experience in the industry, knows how to treat their clients well, and provides excellent customer service. Looking after these traits are essential so you can end up with a financial advisor who is easy to work with.
Have Commitment And Patience
Gaining more financial freedom is an attainable goal, but keep in mind that the process doesn’t happen overnight. Aside from following the tips in this article, make sure that you stay committed and patient with your efforts. Having the right attitude will surely go a long way for you to gain more financial freedom in your life!