What would you do if money wasn’t an issue?
I’m sure you could make a list a mile long. So how do you get there? How do you get wealthy enough to tick off all the items on your bucket list?
The answer is financial freedom.
Financial freedom means that you can have the life you want without restrictions. Read this to learn how to build a better financial plan for your future.
- Set a Budget
The first step to managing your money is to set a budget — and then stick to it.
A budget allows you to keep track of your spending. And don’t be fooled, budgets are for everyone — not just those with lower incomes. Anyone, no matter how much money they make, can overspend if they aren’t careful.
- Eliminate Debt
After you set a budget, you’ll want to eliminate any debt you have. This includes student loans, credit card debt, and 2nd mortgages. They only debt that is acceptable to have is your first mortgage.
When evaluating your debt, you’ll want to pay off the highest interest rate first.
- Create Financial Calendar
When trying to stay on top of your finances, there are a lot of dates you’ll need to remember, including:
- Credit card payment due dates
- Quarterly taxes due dates
- Mortgage payment due dates
- Periodical credit reports
Stay on top of these important dates by creating a financial calendar. The last thing you want is to accrue fees because you missed a payment.
- Have an Emergency Fund
Life is full of surprises, and usually not very good ones. That’s why it’s important to have an emergency fund saved up for those rainy days.
Have a goal of $500 to start. Then gradually build your account until you could cover a few months of expenses if needed.
Emergency funds can cover anything from unemployment to FR44 Insurance. A big screen TV on sale, however, does not count as an emergency.
- Save for the Future
Have you started saving for retirement? If you haven’t, you’re not alone. Sixty-five percent of Americans have little or nothing saved up for their future.
Many financial advisers recommend saving 15 percent of your gross income into a retirement account each year. Some employers will offer to match part of your 401(k) contributions. Be sure to take advantage of that!
- Invest Early
When it comes to investing, the earlier you start, the better.
There’s this little thing called compound interest. And the longer it is working for you, the more your retirement account will grow. If you start investing in your 20s, you could have double the amount in your retirement accounts than if you started investing in your 40s.
- Check Daily
Keep tabs on all of your accounts. And by keeping tabs, we mean check on them daily. Know exactly how much you have in your checking, savings, and retirement accounts.
This daily check will keep you on track of your goals and help you avoid overspending.
- Make a Vision Board
What do you really want? What are your long-term financial goals? Is it an extra vacation house? Maybe a dream car? Perhaps it’s just getting out of debt and owning a home.
Whatever it is, post that vision where you can see it daily. Keeping your goals fresh in your mind will help keep you on track. That way, you can think of that yacht in the Carribean instead of buying items off infomercials.
Once you have a good retirement account, you can start diversifying your money. Start by looking into some real estate or rental properties.
Also look into mutual funds and annuities. If you are smart with where you put your money, it will start generating income for you.
- Track Your Net Worth
Your net worth is the difference between your assets and debt.
Looking at you net worth is looking at the big picture. This is how you can see where you stand in long run. Always make sure your assets are greater than your debt. If you’re making progress when it comes to your net worth, you’re headed in the right direction.
Create a Better Financial Plan
If you feel stuck, don’t worry, there’s still help. By following these steps, you can create a better financial plan for financial freedom.
Looking for more tips on achieving financial freedom? Check out our article on how to invest money!