Financial freedom pertains to intentionality and an intense commitment to drastically change one’s financial habits. It is a journey worth pursuing if indeed you are serious about achieving your dream life.
Financial freedom will never be a reality for many, mainly because we are yet to unlearn what we know about money thus far. We keep on approaching and dealing with money the same old way and consistently fail miserably. You can win with money, when you set out to study how money works.
People go around all year wondering why they cannot balance their personal needs budget. The four tips I provide below may sound cliché and too familiar that you may dismiss them, however, they are time-tested solutions against case flow problems. Here are four tips to elevate your financial game in 2022:
1. Increase Your Income Streams
There are multiple ways to increase streams of income. Realistically, one paycheck may never be enough, especially with a ballooning list of bills and responsibilities that crop up with adulting. If you are well-positioned for this, negotiating for a pay raise at your workplace should be an excellent place to start. If this doesn’t work, or you are not lined up for this option, then you need to take stock of your ability and skills so that you can begin to trade up for income in the marketplace of freelancing.
What are your skills? Which skills seem under-utilized in your life right now? Leverage such a skill to make a bit more and create an extra income stream. Additionally, remember you don’t have to necessarily engage in freelancing. Simply getting a second job for any number of hours you can spare may just help.
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Earning more enables you to cover your bills conveniently. Furthermore, this means you can save, invest and ultimately attain your financial goals.
2. Pay and Avoid Debt
Many will cast stones because of this stand. Avoid debt by all means. If you are in debt already, make a plan to pay it quickly. Financial freedom cannot be a reality with debt. There is a level of financial shrewdness that uses debts to make money. This is what is usually referred to as ‘using other people’s money’. The problem is if you don’t have a certain level of training and skill to leverage using debt to make enough gains, don’t try it. You’d only mount up more debt.
Debt might be due to a serious and time-sensitive financial need, or just financial indiscipline. Consider paying debt quickly if you are indeed serious about your financial goals. Having a lot of debt makes saving hard for you. Living paycheck to paycheck will be the norm when no money remains at the end of the month.
Use the following techniques to pay your debt and eventually stay out of debt completely:
a. Monthly Budgeting
The rule of money is simple: tell your money where to go. Commanding your money starts with having a solid plan. A monthly budget helps you track your expenses while keeping you grounded on how you spend your hard-earned cash. Set some money aside to pay off your debts monthly. Paying off debt makes it easier to save and eventually experience a fun and rewarding life without any dues.
b. Living Within Your Means
Debt means borrowing against future earnings. Having a monthly budget is essential to guide you to live within your means so you don’t have to bet on the income you are yet to make. Debt comes into existence because we acquire items that our current income cannot accommodate.
Ask yourself, if I do not buy this item, will my life function normally? Can it wait for a little longer? If the answer is yes, and often it is, then there is no need to go to a greater length of accumulating bad debt. Ever been stressed out of a credit card debt before? It’s no joke! So again, always frame the disciplinary thought in your mind as a question. For example, just before you make a final decision on making that purchase, ask yourself, “does the stress I’m about to put myself into worth the “joy” I’ll feel buying this item? If your answer is “no”, or you “kind off,” close your eyes, and walk away.
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3. Emergency Fund! Emergency Fund!
An emergency fund is the high performers’ zone. Making more money and subsequently paying off your debts enables you to save. Getting to this tip 3 begins with successfully implementing the first two tops above. Once you make more money, pay off your debts, and then set aside some money for the rainy day.
Emergency funds should cover up to 6 months of living expenses should you lose your source of income. Please note that an emergency fund means some money on the side for an unexpected situation. Avoid financial stress by building a solid and reliable emergency fund.
A strong level of financial discipline is necessary to build an emergency fund. One might save for their emergency fund and access their funds recklessly. To have an emergency fund requires you to elevate your financial discipline game to another level. It requires a mindset upgrade.
4. Save More and Invest
Financial freedom demands more than just having to work for money. It requires you to build a substantial model with the ability to generate an enormous amount of wealth. There is one way to do this: saving more and learning the technique of investing wisely.
The following savings are different and separate from the emergency fund. A long-term savings plan is the key to fueling your investment ambitions. However, once you have a good amount of money saved up, please do a detailed research on businesses and investment portfolios you could be comfortable to invest. Any investing involves a certain level of risk. Returns may not come quickly, or you may lose your money.
It is prudent to invest in fields and businesses you are well-versed in. Start small with investing and grow as you get more confident with your investing knowledge. There is more to life, which is possible when you save and find ways to multiply your money.
Bottom Line
Financial freedom demands that you relinquish your old habits and way of living. Start by living like no one else so that eventually you can live and give abundantly.
Make more money, pay off your debt, build an emergency fund and eventually save and invest. However, financial freedom is a step-by-step process, and it is possible for those who commit to seeing it through. How is your money game? Which step are you currently executing? Please let us know below.
