For many, the thought of planning for retirement is daunting. How much money will I need to be able to retire? How much do I have to save each month or year? Will it be enough?
What if we changed the goal to achieving financial freedom?
First, you have to determine what “financial freedom” means to you. Perhaps it’s being debt free… no mortgage, loan or credit card debt. That’s a pretty impressive goal. Or, it could mean having the ability to fund your lifestyle without relying on a regular salary.
Whatever your goals for financial freedom, write them down and post them where you can see them. Here are few tips to help you get started.
1) Start Small but Start Now
Small, well-informed decisions you make today can have a significant, positive difference down the line. When you set long-term ‘retirement’ goals, it is easy to procrastinate.
Start with smaller, attainable goals such as: curbing credit card spending for a month so that paying off the entire balance is doable. Or, setting aside $150/month until you have enough to buy a new iPad or take a vacation.
2) Develop Smart Money Management Habits
Everyone should take an in-depth and honest look at their finances. Track the ins-and-outs of your money for three months so you know where your cash goes. Review and determine where you can cut back… there are always savings opportunities!
Consider spending holidays where you don’t buy new clothes for three months or no spending on lunches for a month (forcing you to bring healthier choices to work). If you do activities like this for an extended period of time, they can become a habit and be much easier to do.
3) Avoid Bad Debts
We all know this but how many of us actually work to achieve it? If you succeed, you’ve gone a long way to achieving #2 above. Set aside a portion of your monthly income to apply to your student loans.
Avoid incurring credit card debt as the interest is very high. Most importantly, try not to charge more than you can pay off each month. The dreaded circle of minimum payments against interest charges means you will have that debt for far longer than you should.
4) Generate Multiple Sources of Income
Achieving Financial Freedom can be as easy as either spending less or making more. So far, we’ve talked about spending less. But, what about making more? In today’s job world, solely relying on your income with the constant threat of layoffs and reorganizations is not prudent.
There are many online resources available to give you ideas about additional sources of income. Here are just a few:
- invest in real estate;
- start blogging, build a following and become an “influencer” on a specific topic (what’s your passion?);
- take your passion and develop an online course;
- become a speaker at conferences. Start off doing it for free and work up to being a sought-after, paid keynote speaker.
There’s no magic here. Achieving financial freedom involves planning, not procrastinating and being patient. All you have to do now is get started!