Your financial freedom is just around the corner. You just have to choose the path that doesn’t hold you back. While money can certainly buy you plenty of things, it can offer you something far more valuable than material things. The more money you acquire and properly pour into channels that can support you now and into the future. When you do this the more freedom you have to make choices based on desire and not financial obligation or necessity.
Know your cash flow
Money management can seem complicated and, in some respects, it is. One of the most important steps to taking control of your finances is actually quite simple. Begin mapping out and understanding your cash flow. Without this, you’ll never be able to formulate a stable financial plan.
The goal here is to consistently have ‘extra’ money at the end of the month. You can put this toward your goals of saving, traveling, investing, or whatever helps paying down debt.
Treat your savings like a bill
If you’ve ever been told to pay yourself first and been puzzled at the prospect. This means contributing to your short term and your long term savings goals just as you would any other bill.
Treating your savings as a holding ground for monthly leftover funds means your discretionary spending will likely be far higher than it should be and your savings rate far lower than it could be. By removing the money your are wanting to save from your spending account on a specific day each month ensures your impulse spending doesn’t take the place of your savings.
Take a big-picture view
There’s a reason fad diets don’t lend themselves to sustainable weight loss. When extreme action plans are take they require more willpower than most of us have. Lifestyle changes with a big-picture view are more likely to result in lasting change and better overall results.
If you don’t put in the time or work to change your habits gradually, you are constantly fighting your willpower to maintain the lofty goals you set for yourself. It’s better to start small when it comes to habit change.
Seek financial knowledge
The personal finance world is complex and filled with lots of opinions. Unfortunately, most of us weren’t schooled on how to get a mortgage or how to create a sustainable budget. These are things we must learn, either through expensive trial and error or by seeking out information on our own. If you aren’t a regular knowledge seeker, it’s easy to resort to inaction or act in a way that is harmful to your finances in the long run.
By having a basis of financial knowledge and a clear understanding of your goals, you’ll be able to navigate through all the noise and choose the advice and knowledge that works best for your situation.
Set Your Financial Goals
You probably wouldn’t jump in a cab without knowing your desired destination. Establishing a financial plan without goals in mind is the same thing. It’s amazing how writing down specific financial goals can act like a compass for the actions you take. By saving a certain amount per month towards a target down payment is a great example. Try not to get disappointed if you do not achieve the goal by the date you set. Keep in mind you will be further along the path to financial freedom if you take the time to create the goals in the first place.