We all have dreams of owning a home, driving a fancy car, traveling to the best places, and going on incredible adventures. These things don’t have to be a dream, and you just need to plan accordingly and begin taking the necessary steps towards a secure financial future. For some of us, this might seem nearly impossible for a variety of reasons – maybe you’re not capable of saving, want to enjoy life’s pleasures now, or you don’t believe you make enough money to ever be able to find that type of freedom. That isn’t true. No matter how much you make, you’ll be able to begin building your savings and growing your retirement fund without lacking anything.
Most of us focus on planning for retirement, which is a great thing. You want to be able to continue living without sacrificing your way of life when you retire. But you also need to plan for now so that you can establish financial freedom to start obtaining all of your dreams. Ca,n you imagine taking that amazing trip to Italy or purchasing the car of your dreams without worrying about it financially?
It’s possible and here’s how you can begin properly planning for your financial freedom. Here are the necessary steps that you’ll want to start taking,
Determining How Much Money You Need Saved
We all have a different number in mind that would allow us to be financially free and give us the ability to pursue our passions. You can determine what that is by understanding your everyday living expenses – rent/mortgage, monthly bills, gas, food, etc. Then determine how much money that you need to put into savings accounts for unexpected emergencies such as car repairs, being out of work.
Having at least 6 months of your living expenses saved just in case something were to happen to you will eliminate financial stress. Keep in mind that, more than likely, the amount of money you’ll need to save will be large. It might seem overwhelming, but you’ll need to begin doing some analysis of your earnings to determine how you can save that amount of money.
You should have a portion of your paycheck go directly into your savings account so that you don’t have to physically do this.
Creating Short-Term Strategies To Building Your Savings
Building that savings account isn’t going to happen overnight, and let’s face it, putting money away isn’t at the top of our list of excitement. By setting short-term goals, you’ll find a confidence boost each time you hit your goal. Start with a goal of $500 or $1,000. Creating a realistic budget and short-term goals will help you to build your six-month emergency fund. This doesn’t mean you can no longer enjoy dinner out with friends or going to the movies. You should enjoy life. But you may need to reconsider your lunch break and start meal prepping rather than eating out every day.
Building Good Credit to Obtain The Lowest Interest Rates
It’s no secret that having credit is an essential aspect of your financial future. Not only does it give you the ability to purchase a house, buy a new car or obtain the necessary funds to start your own business, but good credit score will also reduce the amount of money you spend on interest. You’ll save thousands of dollars each year on interest. You can start with a credit builder loan if you don’t have credit. It’s important that you understand that you’re not looking to create debt by establishing your credit. It’s simply to ensure that you can get the best rates so that you save money on your large purchases to maintain financial freedom.
Financial freedom isn’t about being rich; it’s about obtaining your dreams without going into debt to achieve them and living your life without relying on a paycheck. This requires you to actively manage your finances, save money, and establish and maintain a good credit score. It’s always a good idea to start investing early on to help build additional savings, protect your money from inflation, and plan for your retirement. There are plenty of options when it comes to investing and it’s always best to diversify your portfolio.