While everyone hopes to achieve the financial freedom to live their lives how they wish, everyone’s final goal on the path to financial freedom will look different.
Do you want to live a life of comfort and luxury? Perhaps you have some deep passion or cause that you wish to pursue? Maybe for you financial freedom simply means being able to do what you want when you want to do it?
Whatever the end goal of financial freedom looks like for you, there are a few key first steps that everyone must take to get there.
These first 5 steps on the path to financial freedom are all simple actions that you can start today. All you need to do is decide that you are ready to take these simple steps to transforming your life for the better, and you will be well on your way to living the life of your dreams.
Pay Down Credit Card Debt
For many people credit card debt is a lifetime trap that they never escape. Unless you are paying down your monthly balance before any interest is due, credit cards will wreck your finances and keep you from moving on to the next steps on your road to financial freedom.
There are many great refinancing plans out there that will offer you a much more manageable interest rate on your credit card debt and help you to get it all paid down as quickly as possible.
The first step on the road to financial freedom could not be any simpler or more effective: if you have any credit card debt, pay it down and then never have a balance owing at the end of the month.
Automatically Invest 10% or More of Your Income
Everyone knows that they should be investing a portion of their income, and that the sooner they start the better off they will be. The hard part is actually doing it.
Financial advisors recognize how hard it can be to ensure that you have some income left at the end of a pay period to put away for investments, which is why they all now recommend that you use an automatic withdrawal that will invest a set portion of your income when you get paid. This way you do not need to struggle and stress to save enough money to invest.
You simply invest what you can afford automatically, and then use the rest for entertainment without feeling guilty or anxious.
Be sure that you take advantage of any tax-free savings programs available to you and maximize any employer contributions to retirement accounts.
Build an Emergency Fund
An emergency fund is such an important step on the road to financial freedom because it can save you so much money in the long run.
The problem with emergency expenses is that they are always unexpected. When you do not have the cash on hand to meet an emergency, it ends up costing you a lot more than if you were prepared with a small fund to see you through the tough times.
Whether it is taking out emergency loans at punishing rates or missed income due to injury and illness, being unprepared for life’s inevitable emergencies can be a major detour on your road to financial freedom.
A small emergency fund will ensure that you can quickly and effectively navigate life’s inevitable nasty surprises, and get yourself back on the path to financial freedom as soon as possible.
Wait to Buy a Home
Home ownership is a rite of passage and a major source of pride for many people, but buying your home too early can severely limit your plans to achieve financial freedom.
The smaller the down payment on your home, the more that you will end up paying in interest over the long run. It is better to save and wait to buy your home than it is to buy your home early and pay interest instead.
Wait until you have at least a 20% down payment before buying your home. The bigger your initial down payment, the more that you will save.
Live Within Your Means
This step on the road to financial freedom is the simplest yet the one that people have the most trouble with.
Our world is full of temptations, and it can be hard to try to live within your means and have enough left over to put away for investing. However, it is important to remember that nothing you can buy will make you feel better than you will once you have achieved financial freedom.
Think of living within your means as you ‘buying’ financial freedom for yourself, and the amazing sense of happiness and security that comes with it.
You may not be able to transform your entire lifestyle in one day, but you can certainly get started right now.
Do not wait another day to start yourself down the path to your version of financial freedom.