- Personal Finance
Steps to Financial Freedom: A Practical Approach
1.Be honest with yourself
The first step to changing any pattern is to admit you have a problem. If you want to change your financial behavior, you must be willing to get totally honest with yourself about your habits. Look at the numbers by checking out your bank statements and bills. Start calculating your total debt and even what you have been spending on nonessentials each month. Trust me, this hard work will be well worth it when you start learning how to budget and save.
2.Be willing to learn
You can’t do it based off what you already know. If you could have, you would have. Start reading personal finance books, watching shows on the subject and even consider taking a class or talking to a certified financial planner. These all exist to help people who need it and if you are reading this, you probably need it.
3.Learn to delay gratification
Needing to buy or do something as soon as it pops into your head paves the road to financial destruction. If you want to buy or do something, write it down and then check your monthly budget and/or bank account to see if you can realistically afford it. If you can’t, develop a plan to save for it.
4.Write a budget plan…and stick to it!
Believe or not writing and keeping to a budget plan is key to developing healthy financial habits. This is how you will begin tracking your spending and making honest decisions about what you can and cannot afford. Over time, making and sticking to a budget will become second nature. Practice makes perfect!
5.Re-evaluate your values
What do your values have to do with your finances? Everything! Make a list of your core beliefs especially as they pertain to material items and success. Keep these ideas in front of you as you write your budget. If you are finding something faulty in your values, be willing to discuss them with someone. Start to reevaluate and even abandoned this false ideas. Ultimately these ideas are what may start to destroy your finances.
6.Look for creative solutions
Once you have a budget, you might find that some areas are tighter than you would like. This is totally normal. No matter how much you make, it will feel as if you barely have enough. Don’t panic, simply be creative. Start to find ways to cut back through repurposing items, selling what’s not needed and/or using alternate (and cheaper) means of transportation. Carpooling, walking, taking a bike and even riding a bus are all cheaper than paying for gas. Explore what works for you.
7.Find an extra income stream
Finding another way to bring in cash can help you tremendously. Whether it working from home, babysitting, or a part time job, find another way to bring in extra cash.
8.Save, save, save
Saving money is what will bring you a sense of security for the future. Putting a little to the side, even just $50 every pay check, will add up over time. Once you start to see your savings grow, you will be inspired to save even more. Start small and watch your account grow.
Debt is like termites to your financial house. It is the leak that won’t stop and eventually floods and destroys everything. By learning to limit your debt, you can keep a plug in the leak. Pay off your debt as quickly as you can by creating a savings plan. Once you have paid off your debt, take in the sense of freedom that is sure to come. Now, put away all credit cards and start living on cash. This will help you from unplugging your leak again.
10.Be grateful for what you have
Much of our over spending comes from feeling like we need more. When we look around us it often appears as if everyone is thriving. New clothes, cars and gadgets. The truth is, you have no clue what kind of financial life anyone else has but you know your own (now, hopefully). Be grateful for what you have and start to see the value of your lie beyond your material items. Your life is beautiful if you can simply see it as such.