Living from salary to salary is a taxing everyday reality for the vast majority of people. Is there a way to change your financial situation and create an emergency fund, pay off your mortgage and other loans, and meet all of your short- and long-term money goals?
Here are the key habits that will help you achieve much-coveted financial freedom and security.
1. Set up a budget
Often associated with frugal spending, budgeting is a practice that is often misunderstood. Budgeting shouldn’t be equated with tightening the belt; instead, it’s a process that allows you to evaluate your net income (basically, your monthly income less taxes), set priorities, meet short- and long-term financial goals, and be more conscious about your spending.
2. Pay off your debts
It comes as no surprise that paying off your loans on time is incredibly important. Lower-interest loans — like mortgages and student debts — allow for more lenience and have a longer repayment frame, while high-interest loans — like payday and personal loans offered by different companies like Payday Depot — require a more vigilant approach. Not paying on time will lead to a debt cycle and a low credit score, which will result in higher interest rates and limited loan options.
3. Pay yourself a salary
Paying yourself first is a great practice that allows you to allocate a fixed amount of money every month to a savings or investment account before making any other payments. Sure, sometimes, it might require you to reduce your current expenses but keep in mind that doing so will help you get closer to your long-term objectives.
4. Find a side hustle
Multiple streams of income will help you reach your financial goals in a faster way. Walking a dog, babysitting, or getting an additional job is an active side hustle that requires a lot of time and effort. If you already have a 9 to 5 job, you might think about turning your hobby into a passive source of income by making an audio course, producing digital content, or opening an online store and selling your work.
You can also freelance without experience or without relevant experience. It helps in some additional money and helps your learning curve.
5. Advance your career
If you’re already working or are self-employed, advancing your career will help you increase your income. There are plenty of free courses on Coursera and other online educational platforms that will help you expand your knowledge, develop new valuable skills, and, in the end, make your resume stand out. There are a lot of useful resources here. Just use the search box to look for career tips you might be seeking.
6. Start investing
Investing is usually associated with having a lot of money. The truth is that you don’t have to be a millionaire to begin investing. By starting early, your income will compound, and your money will start growing exponentially. Prior to creating an online brokerage account, it’s wise to read tips and advice on how to invest and create a manageable portfolio.
Reaching financial independence is a long process that will not happen in a fortnight. Learning about personal finances and integrating the above-mentioned habits into your life will help you build a debt-free, financially secure future.