From traveling the world and spending more time with family and friends to picking up a new hobby, having a stress-free retirement, or providing for your community, imagine what achieving financial freedom can mean for you.
So what is holding you back? Often, the answer is debt.
The idea of financial freedom can mean different things to different people, but the common thread in achieving it often involves taking some key steps to master your money and take control of your debt.
Regardless of your view of financial freedom—before or after retirement—following these six steps can help you reach your personal financial goals.
1. Establish an emergency fund.
No one wants to plan for a car to break down or for a child to injure themself during a ball game. But, unfortunately, these things sometimes happen.
However, those who prepare for these unexpected events—and the costs associated with them—can lessen the inevitable impact on their financial planning, savings, and retirement goals.
Although it can be tempting to put more money toward your debt, increase your savings rate, or put money toward paying off your mortgage, first make sure you have an emergency fund in place with a comfortable balance.
2. Track your spending and live within your means.
One key shift in mindset that is required to find financial freedom is understanding that you need to control your money—not the other way around.
To do so, you need to make a budget, track your spending, and stick with your spending and savings goals. Sound intimidating? It doesn’t have to be.
After creating your own personal financial plan, simply record your expenses. Every day.
If you don’t keep up with how much you spend and ensure that you are living within your means and making progress toward your goals, you will quickly find yourself stalling on your journey toward financial freedom.
3. Find your number.
With your emergency fund in place and your budget set, it is time to actually define what financial freedom means to you and your family.
Whether it is how much debt you need to pay off, the value that your accounts need to reach, generous gifts you want to give, or experiences you want to be a part of, you need to have a goal in mind to work toward. Knowing this number will help you stay motivated when the going gets tough.
4. Use the right financial tools to “pay yourself first.”
Financial freedom doesn’t just come from one source. It will be the result of comprehensive planning that includes health insurance, a retirement plan, an established emergency fund, and, for some, college savings accounts.
Whatever your budgeting priorities, use tools such as the following to accelerate your progress:
- Automated transfers from your paychecks to your savings accounts
- Employer-matched contributions to your retirement funds
- Retirement and investment accounts with low management fees
- Tax-exempt 529 college savings plans
5. Consider a side hustle or find additional sources of income.
The internet makes it so much easier than it was before to connect with others. Take advantage of this wide reach to sell unused items around your house; offer products or services that showcase your skills; or find seasonal, one-time (e.g., Fiverr), or part-time jobs relating to your hobby. Every extra dollar can mean a boost toward reaching your goal.
6. Considering speaking with a financial advisor.
Finally, whether you're a master with your money or just starting out, it is important to know that you do not have to go on this financial journey alone. Financial advisors are a great resource to help you find new or different ways to achieve your goals, save money, or even just confirm that you are on the right track. Working with such a professional can give you the confidence to keep moving forward.
Take the next step.
The road to financial freedom is marked with potholes, twists and turns, detours, and plenty of ups and downs, but the end goal is well worth the effort.
If you want to focus on living life to the fullest, take the necessary steps to be ready for retirement, and truly enjoy the moments that matter with those you care about, the team at Harvest Wealth Group would love to get to know you.
In the meantime, we encourage you to check out our free resource, 10 Things A Smart Investor Should Consider In an Economic Downturn.
About the Author
Garrett German* founded Harvest Wealth Group with the aim to create a meaningful experience that will impact his clients, in a significant way, both personally and financially. After your first meeting with our team, you’ll be on your way to financial clarity and confidence.