5 Steps to Financial Freedom in 2019
What Financial Freedom Means
There are a few simple steps that can be followed to achieve financial freedom in 2019.
Financial freedom, as the name implies, is freedom from worry and other burdens associated with finance. In the consumer driven climate that many of us live in, it can be easy to become trapped in a cycle of spending, overspending, owing, and repaying. Fortunately, there are a few ways that this cycle can be avoided entirely and, perhaps more important, escaped.
Financial freedom, as the name implies, is freedom from worry and other burdens associated with finance. In the consumer driven climate that many of us live in, it can be easy to become trapped in a cycle of spending, overspending, owing, and repaying. Fortunately, there are a few ways that this cycle can be avoided entirely and, perhaps more important, escaped.
Five Steps to Financial Freedom
Analyze financial situation – What is your current financial situation? Most people don't know. Most people are afraid to look. If a person doesn't look, it follows that they will never know. Given that information: take an honest appraisal of where you are with regard to finance. This is going to include income to debt ratios, all loans or credit card debts, and all income sources.
Analyze spending – Get out those bank statements and start going through them. Add up expenses and figure out exactly where your money is going each month.
Set a budget – Setting a budget is one of the most important steps in getting finances in order. It is extremely important to set a logical budget using the information that you gathered in steps one and two. A budget doesn't have to be extremely complicated, but it should definitely include all possible bills and expenses. This is going to include rent, utilities, cell phone bills, groceries, etc. The budget is also a good time to cut down on extraneous expenses that you may not want or need anymore.
Create an emergency fund – A good emergency fund will do two things: provide a source of money for three to six months of no income and provide a source of money for emergency repairs or other unforeseen issues. A good emergency fund is the equivalent of three to six months of income. Obviously this isn't something that can be built up overnight, but it is important to have nonetheless.
Stick to the plan – The best laid plans are useless if a person doesn't follow them. When you analyze your finances and set your budget, stick to it regardless of circumstance. It will do no good to set up a plan and either put of implementation of that plan or quit following it after a month or two. The ultimate goal in the process of getting finances in order is to achieve that financial freedom for life. Thus, it makes sense that any budgets should be stuck to (with adjustments, of course) for a very long period of time.
Set a budget – Setting a budget is one of the most important steps in getting finances in order. It is extremely important to set a logical budget using the information that you gathered in steps one and two. A budget doesn't have to be extremely complicated, but it should definitely include all possible bills and expenses. This is going to include rent, utilities, cell phone bills, groceries, etc. The budget is also a good time to cut down on extraneous expenses that you may not want or need anymore.
Create an emergency fund – A good emergency fund will do two things: provide a source of money for three to six months of no income and provide a source of money for emergency repairs or other unforeseen issues. A good emergency fund is the equivalent of three to six months of income. Obviously this isn't something that can be built up overnight, but it is important to have nonetheless.
Stick to the plan – The best laid plans are useless if a person doesn't follow them. When you analyze your finances and set your budget, stick to it regardless of circumstance. It will do no good to set up a plan and either put of implementation of that plan or quit following it after a month or two. The ultimate goal in the process of getting finances in order is to achieve that financial freedom for life. Thus, it makes sense that any budgets should be stuck to (with adjustments, of course) for a very long period of time.
Forget Money Problems
Financial independence can be achieved easily, regardless of how dire your situation appears. Following the steps outlined above and elsewhere on this site, there is simply no reason why a person cannot become fiscally responsible and financially secure. Achieving financial freedom in 2019 shouldn't be a dream, it should be your reality. The first step? Don't stress about money problems, do something about them.
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