Are you tired of living paycheck to paycheck? Do you dream of financial freedom but think it needs to be within reach?
With a few simple steps, you can take control of your money, reduce expenses, and reach your goals. There is no need for a higher-paying job or a sudden windfall. It’s time to take action and transform your financial future.
Here are six steps to get you started on your path to financial freedom!
1. Create a realistic budget.
Another important tip when trying to budget is to ensure your budget is realistic and easy to follow. It would be best to consider your regular spending habits and take-home pay to do this.
You want to create a flexible budget that causes only moderate changes to your personal lives, such as reducing the frequency of restaurant meals if that’s already a habit. The goal is to create a budget that fits your lifestyle and spending patterns. This approach encourages you to stick to your budget rather than setting unrealistic expectations that are difficult to maintain.
Another easy way to create a realistic budget is to adopt popular budgeting rules such as the 50/30/20 rule. In this case, you spend 50% of your earnings on needs and 30% on wants and save the remaining 20%.
2. Save, Save, and Save
Saving money is one of the ways you can improve your financial stability, which in turn gives you peace of mind.
To prepare for unexpected events, you can create an emergency fund that you can use to cover any unexpected expenses. This fund can help you avoid defaulting on loans or facing the risk of being unable to pay your bills.
Also, building an emergency fund to increase your financial security if you lose your job is a good idea. A good rule of thumb is to have at least three to six months’ worth of your monthly expenses saved up for emergencies.
The good news is that saving doesn’t have to be that hard. You can develop the habit of keeping by setting up automatic payments into your savings account. Doing so can strengthen your savings habits and protect you from financial hardships.
3. Pay your bills on time.
To better manage your finances and improve your financial health, paying your bills on time is crucial. Doing this can help you lower borrowing costs, avoid late fees, and build a strong credit history. You’ll save a lot of money since you won’t have to pay fines for defaulting on bills.
To ensure timely payment of bills, create a list of your bills with their due dates. Whenever possible, arrange for automatic payments and register for reminders.
Finally, this step can be an opportunity to examine your monthly bills and cut down on unnecessary payments.
4. Cut Back on Recurring Charges
People often need to remember the monthly charges from streaming services and mobile apps they don’t use, resulting in significant budget impacts.
Reviewing monthly expenses and canceling unnecessary subscriptions can save a lot of money. It’s crucial to go through bank statements and credit card bills to identify such subscriptions.
Canceling gym memberships, magazine subscriptions, cable TV channels, or apps you rarely use can help cut expenses. This way, you can use monthly money to pay off debt, increase savings, or invest in your future.
5. Save up cash to afford big purchases.
Paying in cash instead of a loan or accumulating debt is more cost-effective and secure. It provides financial control and allows better planning for future expenses.
Another reason why you should be using cash for big purchases is that it gives you more bargaining power and the ability to negotiate a better price. Doing this allows you to save money in the long run and prevents overspending. It also helps develop better financial habits and priorities.
Some retailers offer discounts or cashback for paying in cash, which helps save even more money. Cashback credit cards can also earn rewards and build credit scores without accumulating debt.
6. Start an investment strategy.
Even if you’re working with a tight budget, there are ways to use your salary to increase your income.
One option is to make small deposits into investment accounts. You should also check if your employer offers 401(k) matching, essentially free money. However, if you don’t have a retirement or investment account, open one to start building wealth.
When investing, you must do some self-introspection to discover your risk tolerance. This knowledge would help you choose the investment strategy that suits you best. Keep your investment options open to the ones listed above. Always do your research and only invest your hard-earned money in things you understand.
Changing your money habits is a great start to improving your money management skills and attaining financial freedom. Although some of these changes may be more challenging than others, if you remain persistent, you can acquire valuable skills that will benefit you throughout your life.
Josh is a financial expert with over 15 years of experience on Wall Street as a senior market strategist and trader. His career has spanned from working on the New York Stock Exchange floor to investment management and portfolio trading at Citibank, Chicago Trading Company, and Flow Traders.
Josh graduated from Cornell University with a degree from the Dyson School of Applied Economics & Management at the SC Johnson College of Business. He has held multiple professional licenses during his career, including FINRA Series 3, 7, 24, 55, Nasdaq OMX, Xetra & Eurex (German), and SIX (Swiss) trading licenses. Josh served as a senior trader and strategist, business partner, and head of futures in his former roles on Wall Street.
Josh's work and authoritative advice have appeared in major publications like Nasdaq, Forbes, The Sun, Yahoo! Finance, CBS News, Fortune, The Street, MSN Money, and Go Banking Rates. Josh currently holds areas of expertise in investing, wealth management, capital markets, taxes, real estate, cryptocurrencies, and personal finance.
Josh currently runs a wealth management business and investment firm. Additionally, he is the founder and CEO of Top Dollar, where he teaches others how to build 6-figure passive income with smart money strategies that he uses professionally.