Everyone wants to feel comfortable enough with their finances to live life as they please without worrying about whether they’ll have a secure financial future. With financial freedom, you can achieve just that. Financial freedom involves having plenty of savings, little to no debt, and the right investments that can enable you to live without relying on the next paycheck to cover your lifestyle’s expenses. Finding financial freedom will take time but with the right habits in place you can set yourself up on the path toward success.

Set Financial Goals

When thinking about financial freedom, you’ll want to look at where your finances are currently and where you want them to be in the future. In other words, you’ll need to give yourself some financial goals to start working toward. When setting financial goals, it’s important to make them as specific as possible by creating a set dollar amount you want to save or earn and by setting a deadline.

With a specific goal in place, you can then create your plan for how to achieve that goal. If this is a long-term goal with a deadline that’s years into the future, it may also help to break it down into monthly milestones. This way it will be easier to measure your progress and determine if you’re on the right path or need to readjust your spending to reach your end-goal.

Take Care of Debt

Whether it’s student loans, a mortgage, or even a credit card payment, it’s important to take care of any debt you might be facing each month. Paying off debt is one of the most important steps to achieving financial freedom since less debt means more cash for you to save, invest, and spend. Plus, making on-time payments and clearing up debt can help boost your credit score – something we’ll touch more on in a second.

Of course, it can be nerve-wracking for some to start tackling their debt. Luckily, there are two expert-recommended methods that can help get you started: the snowball and avalanche methods. With the snowball method, you start by paying off your smallest amount of debt first and slowly working your way up. Meanwhile, the avalanche method does the opposite. With this method, you’ll start by paying off debt with the highest interest rate before working your way down the ladder.

Keep an Eye on Your Credit Score

As already mentioned, a good credit score can be key to maintaining financial freedom. With a good credit score in place, you’ll be better equipped to get great deals with lower interest rates on everything from insurance premiums and credit cards to cars and housing.

To improve your credit score, you can start by making payments on-time and by paying off any balances either in full or paying them down as quickly as you can. Additionally, you might not need to use your credit cards every day, but experts recommend using them regularly and charging no more than 30% of your credit limit each month. It’s also best to keep your accounts open when building up credit, so try to choose your accounts wisely so you aren’t tempted to close them early and damage your credit.

Pay Yourself First

When it comes to mandatory expenses such as rent, bills, utilities, and more, don’t leave out your savings! Paying yourself first means that you should focus on investing in yourself and your future before using your paycheck to handle necessities. For instance, you can pay yourself first by putting a set amount of money in savings each month before using the rest to cover day-to-day costs. It could also mean joining a retirement savings plan to make sure that a portion of your paycheck is being invested in your financial future. Plus, you can always set up automatic savings transfers for any of your savings accounts to ensure that you don’t forget to put aside money for yourself.

Learn to Live Below Your Means

Like “pay yourself first,” “live below your means,” is another popular saying when it comes to financial freedom. When you live below your means, you learn to spend less than what you earn. This way, you can have more money to put aside for the future.

To live below your means, you can start by distinguishing between your “needs” and your “wants.” You can then create a budget that allocates a portion of your paycheck to each category with money left over for savings. From here you can look for ways to reduce your spending such as cutting out expensive wants. Just remember, you can adjust your budget as you like but try to avoid the temptation to use any extra cash for impulse purchases or large expenses that will only get you into more debt.

Invest in the Future

Similarly to paying yourself first, investing in the future means putting money aside for rainy days or retirement. When it comes to financial freedom, you want to have a safety net of savings to rely on in case something goes wrong.

That’s where emergency funds come in. These are savings you almost never touch unless you need to pay for car or home accidents, trips to the hospital, or any other events you didn’t see coming. According to financial experts, you should aim to have at least six months’ worth of your salary in an emergency fund. Of course, that may not be affordable for everyone’s situation. In that case, you can start by depositing a smaller amount of money, such as $100 or so, each month and slowly increase the amount as you earn more income.

In addition to emergency funds, investing in your future also means planning ahead for retirement. To do so, you can start investing in an IRA account or, like previously mentioned, you can consider joining a retirement program if your work offers it. Opening a 401k through your workplace be an especially great option if your employers also offer to match contributions, giving you more money to put toward the future!

Work With a Financial Advisor

As we’ve discussed, financial freedom can be achieved with a solid plan of saving, investing, and budgeting. If creating this plan yourself seems intimidating, then consider meeting with a professional financial advisor. Financial advisors can analyze your current financial situation and help you make smart decisions about how to meet your needs and work toward your goals. More specifically, many financial advisors can help you develop an investment strategy, manage your debt, plan for retirement, minimize risk, and assist with saving and budgeting among other things.

Summary

Financial freedom is a goal that many of us probably have. After all, nearly everyone wants to live a life free from financial worries and have a solid foundation of wealth to rely on. As we’ve seen, financial freedom can be achieved in several ways. While it may take some time, starting these healthy financial habits now can get you set up for the financially free future you deserve.