Financial Freedom - 7 Successful Steps

Financial Freedom

In order to achieve financial freedom, you need to, first of all, find out your current situation. When you are in debt especially credit card debts you need to settle those debts before you can start saving because the interest from the savings is very much less than the interest charged to your credit card's outstanding balance. Let’s look at the steps to be taken to gain financial independence: 

 1. The root of the problem: You can start paying off your debts especially your credit card debts but if you continue to adopt a lavish spending lifestyle, there will be no end to it. Find out if you are spending on what you need or what you want. Stop buying unnecessary items and be happy with what you have. You are one step nearer to reach your money goals when the problems are identified and you put a stop to them. If you are unable to give up your impulsive spending habit by using credit cards, the best thing to do is to cancel all the credit cards. 

 2. Allocate an amount for essential items every month to cover food, petrol, children's education, housing loan, and utility bills. Stop spending any more on what you want. 

 3. Debt settlement arrangement: Look at all the credit card outstanding amount and other debts and use whatever money that is left to reduce your debts. Start by settling the debt with the highest interest rate. Select to settle a smaller outstanding amount from your debts. By doing so it gives you relief that you have settled one of your debts and give you the motivation to settle the rest. 

 4. Add new sources of income: You can do it right at home like I do. I write articles and I collect earnings from AdSense, though the amount is small. Two points to note here. With the additional income, you can pay off your debts faster and you can set aside an amount for emergency from the extra cash. 

 5. Pay yourself first: When you are out of debt you can now put aside an amount every month. If you can’t do it all by yourself then you take up an investment-linked insurance policy to force yourself to save. 

 6. Time is an important factor in savings: The wonder of compound interest will help you to make your savings grow. The more you can save and the sooner you start the easier it is to reach your saving goals.  

7. Invest your savings: When you have accumulated a substantial amount you can start looking for investment channels. This is an area that you need to be careful or else your precious savings will vanish in the air. Traditionally, you can invest in blue chips, unit trusts, and properties in selected locations. 

 Summary

 First of all, you need to identify your financial problems and put a stop to them. Is it unnecessary spending on your credit cards or is it your gambling habits? Spending on what you want will lead to more debts. Always set aside an amount to cover monthly expenses and pay off your debts with the balance. At this juncture, you can't start saving yet. The interest from your debt is very much higher than the interest you can earn from your savings. Pay the highest interest debt first but chose a debt with a smaller amount. You will get a little relief when one of the debts is settled. Try to supplement your income to reduce your debts faster and start earlier to save. When you are unable to discipline yourself to save, arrange with the bank for a standing order to pay monthly for, say, an investment-link insurance policy, When you have substantial savings you can look for investment avenues to give you a better ROI (return on investment). You gain financial freedom by taking these steps diligently.

Image source: https://www.goalsontrack.com/blog/2020/09/09/these-12-habits-will-help-you-reach-financial-freedom/