How to be Financially Independent
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Becoming financially independent is a rewarding process, yet the road to financial independence can be long and challenging.
Do you find yourself wondering, ‘how can I become financially independent?’, or thinking, ‘I need to be financially independent, but don’t know where to start?’ If this is the case, this article is for you.
The following tips will show you how to start being financially independent, no matter how old you are. Some of you may want to know how to be financially independent at 20; for others, you might be struggling with debts well into your 50’s.
There is no age limit on taking control of your finances and improving your quality of life.
So, without further ado, let’s look at some tips to help you to be financially independent.
Tips on How to be Financially Independent
1. Start Small and Don’t Be Afraid
If you’re new to financial planning and budgeting, don’t be afraid to start slow. Don’t put undue pressure on yourself. Start by choosing an attainable goal. Nobody expects you to start saving half of your monthly paycheck immediately. As such, start with a small amount. $50 per paycheck is a good starting point.
2. Create Mini-Steps to Aid Progress
Being financially independent doesn’t revolve around a single goal. Instead, you’ll need a series of subgoals to represent the many facets that make up your financial life. One of the best ways to become financially independent is to establish goals in various part of your financial life, including:
- Taking control of your spending habits
- Increasing your income
- Paying off your debts.
- Studying your savings patterns
- Continually working to improve your financial situation.
3. Learn to Live Beneath Your Means
This step is essential as it will help you accomplish most of the other steps in this post; living beneath your means of one of the most critical aspects of attaining financial independence.
4. Surround Yourself With Positive Financial Role Models
Like it or not, other people’s behaviors can profoundly influence the way we act as individuals. Therefore, we recommend surrounding yourself with financial role models instead of people who fritter away their earnings and build up debt.
5. Try to Keep Your Career Moving Forward
Learning how to be financially independent means striving to better yourself in all areas of your life. Keep your career moving forward by re-training and educating yourself as part of continuous professional development. This makes you more valuable to your employer and keeps you open to new opportunities.
6. Promise Yourself to Always Save Money
There is no better time to start saving than now. Don’t be one of those people who keeps putting off savings until next month. When your next paycheck clears, use a financial application to auto-save some of your income into a side pot. If you do this every month, you’ll have saved a small fortune in no time.
If you can’t afford to start saving now, lower your expenses, increase your income, or try both methods to be on your way to a debt-free life.
7. Create a ‘Safety Net’ for Short-Term Financial Security
If you’ve been surviving paycheck-to-paycheck, your primary savings goal should be to create a safety net. This can be achieved by creating an emergency fund. This fund should be held in a secure account such as a savings account, short term certificate of deposit, or money market account.
First, plan to accumulate enough cash to cover a month’s worth of living expenses. Once you’ve hit this target, add another month’s work of living expenses, and so on. The months will soon turn into years. Soon, you’ll find yourself in an excellent financial position.
8. Begin to Invest
Now that your emergency fund is well-stocked, you can start thinking about investing your income. Investing is vital because it allows you to use your money to make more money. The broader and more significant your investment portfolio, the closer you get to financial independence.
Ideally, you’ll increase your efforts to save money and siphon this income directly into your investment accounts. This activity should be easier to complete once you have a couple of years of emergency funding under your belt.
9. Continue to Invest
Try to invest, no matter how the market is behaving. If you feel like it’s the wrong time to invest, cut back on how much money you invest in inequities. However, continue accumulating fixed income and cash investments in your portfolio. This way you’ll have income for buying more equities when the market is more favorable.
10. Evaluate and Continue
In many cases, the road to financial independence is long and arduous. However, if you follow the steps provided in this post, you stand a good chance of achieving financial freedom.
Tower Loan Can Help
If you are struggling to budget or clear debts there are many ways you can decrease your debt over time and start walking the path to financial freedom.