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Finding Financial Freedom
As we celebrate Independence Day, it’s the perfect time to reflect on our finances. We’ve just passed the midpoint of the year and we can look back over the past six months to take stock of where our financial goals are for 2023. Plus, we can ruminate on our economic freedom, on what that means and why it is important.
What is Financial Independence?
For some folks finding financial independence means living debt-free. For others it’s saving for a rainy day. And for others it’s having enough money to travel now and again. This list could go on and on in fact, because each person’s monetary wants, needs and goals are different. But one thing remains the same. We all want the funds we need to thrive and enjoy life. This means that we have enough to feel relatively stable and secure, so that we can do the things we appreciate. Let’s take a look at some ways you can accomplish financial independence no matter what your goals are.
Identify Obstacles That Stand in Your Way
The first step towards financial freedom is understanding what’s holding you back. For many, that means identifying their spending habits and finding ways to cut unnecessary costs. Other people face the challenge of credit card debt and wonder how they will ever pay it off. There are also plenty of folks living paycheck to paycheck, worried about just making it through the month, much less saving up for a rainy day. Whatever your situation is, however, there is a solution. And it usually begins with financial education and knowledge. The more you learn and become financially literate, the better you will become at managing your money and the more economic liberation you will find. Many local libraries have free classes in money management. There are also free resources on money management offered online. Just be cautious that you find a credible course, provided either by an educational institution or a financial institution. When you dedicate yourself to learning more about the problem, you can find long-lasting solutions which you can use for the rest of your life.
Set Up a Budget
A budget is a simple yet powerful tool for anyone who wants to achieve financial freedom. A budget creates opportunities for you to keep track of your expenses, understand your monetary habits and make necessary adjustments to your spending. The easiest way to set up a budget is through a budgeting app you can use on your phone or access online. These apps will allow you to connect to bank accounts, credit cards and loans so you can always have an up-to-date view on your finances. By keeping a budget, you’ll be able to avoid unnecessary spending and find ways to save money for your goals, such as a rainy day fund or that trip you’ve been dreaming of.
Tackle Your Debt
Debt is certainly an obstacle that keeps many people from realizing financial independence. Most people have multiple types of debt, from student loans to car payments. But if you’re carrying high-interest debt, such as from a credit card, it’s crucial to prioritize paying it off. So, when it comes to focusing on your debt, start on the account with the highest interest rate and work your way down. You might also consider consolidating credit card debt through a personal loan so you can secure a lower interest rate. You can also set up autopay to avoid missing a payment. Plus, stick to your budget so you don’t overspend and end up drowning in debt again.
Establish a Rainy Day Fund
With careful financial planning, budgeting, and taking care of your debt, you might be pleasantly surprised to find you have some spare change lying around at the end of each month. Use this extra money you have to begin a rainy day fund. This fund is for unexpected events you can’t control, such as your car breaking down or an emergency vet visit. These events can be costly, but having a cushion prevents them from becoming a financial emergency. Ideally your nest egg should have three to six months’ worth of living expenses, but even $500 saved for an unanticipated vet bill will definitely be useful. Just focus on saving what you can and soon enough you’ll have a robust rainy day fund that will help give you the financial independence you seek.
Financial Liberation Awaits
While we honor our American Independence with fireworks and friendly gatherings, take a moment to consider your own financial independence and how you can achieve it. Reaching economic liberation isn’t just a one-time event. It’s a journey with many steps along the way. Each step will carry you closer to your financial freedom, no matter how that goal expresses itself for you. Gaining financial literacy, budgeting, paying down debt and starting a rainy day fund are just a few steps on the path to financial liberation. At the end of this journey you can hopefully discover not only the enjoyment you seek, but also the stability and security that makes financial independence possible.