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By Good Nelly,
Special to the Financial Independence Hub
Are you dreaming about a financially independent (aka “findependent”) life free of debt?
What do you mean by “Financial Independence?” Before you start working towards achieving “Findependence,” ask yourself: What does this mean to you? Do you dream of a life in which you can spend your time as you want? Does it mean a rich and varied lifestyle you wish to have? In short, you need a vision, depending on which you can plan your action.
Here are seven tips to achieve a financially independent life:
1.) Make yourself disciplined
To achieve financial independence, first of all, you need to be disciplined regarding all money matters. You need to stop indulging in momentary splurges and plan your expenses properly.
2.) Try to do what you love to do
To be successful in your goal, you need to start controlling your time and start doing the things you want to do. Regardless of what, you shouldn’t allow your job to take over your life completely. Instead, focus on becoming the person you want to be and act accordingly to your way to achieving financial freedom. Doing so, it’ll drive you towards attaining your dreams and being successful.
3.) Be a planner instead of only a saver
Once you can envisage your dream, it’s time to calculate how much money you need to fulfill it. Based on that, create your plan of action. Research shows that if you become a planner instead of being a saver, there’s a greater chance of achieving your dream. Be goal oriented; that is, set a time limit within which you want to attain your goal. Another piece of advice: plan your short-term goals. Attaining your short-term goals will help you achieve your long-term goals automatically.
4.) Save more
According to financial experts, you should spend much less than what you earn. So, try to widen the gap between your income and expenses. The more you’re able to do so, the closer you’ll be towards achieving your dream. Therefore, you should:
• Stop keeping up with the lifestyle of your friends and neighbors
• Track your expenses and plan a suitable budget which you can follow
• Be flexible and try to adjust your spending during financially difficult times
• If possible, try to earn more every month
• Try to embrace good financial habits for saving and spending
• Avoid incurring debt that you cannot manage
5.) Pay off existing debts
You need to repay your outstanding debts in order to build a financially independent life.
Follow these tips:
• Understand the difference between credit and debt. Using a credit card to buy items and paying back the amount will help you improve your score. But not being able to pay off the outstanding balances at every billing cycle will lead you to experience debt problems.
• Pay off your existing debts as soon as possible. Select a suitable debt payment strategy to repay existing bills.
• Repay your student loans. Check whether you qualify for an income-based repayment plan or hardship referral program if you’re having difficulty paingy off your student loan(s).
• Negotiate with your service providers. If you think you’re paying relatively more on your utility bills (such as internet access, electricity, etc.), talk to your service providers and negotiate for better rates.
• Avoid incurring additional debt. Stop taking on additional debts before you repay your existing ones. Also, make sure you can manage and comfortably afford the monthly payments on unavoidable large loans like a mortgage.
6.) Make good investments
Are you worried about the word ‘Investment’ and think investing in the financial markets is a risky affair? If yes, then take calculated risks. You have to invest in something in order for your money to grow. One of the best ways to do so is buying a rental property, since these should appreciate in value in the long run. If required, get professional help to make your decisions regarding saving and investing your hard-earned money.
7.) Have proper insurance coverage
It is a pre-requirement to have proper insurance when you want to be financially independent. By doing so, you can be stress free about any financial emergency that may arise. It is advisable to have auto insurance, life insurance, home insurance, health insurance, etc. along with adequate liability coverage. Discuss with your insurance agent.
If you struggle to stay motivated towards achieving your goals, surround yourself with like-minded people. If you’re married, talk to your spouse and set your financial dreams together, so both of you can work towards achieving them. If unmarried, discuss with a partner or a friend who can help you stay motivated.
What are you waiting for? Start realizing your dreams and begin working towards it today!
You need to understand what financial independence means to you. Only then can you plan your course of action to live a stress-free and debt-free lifestyle. You need to follow some basic tips, such as setting goals, saving money, spending less, and investing properly, in order to achieve your short-term financial goals. It will help you achieve your long-term goals of attaining financial independence, or to use this site’s contraction for the same term: Findependence!
Good Nelly is a financial blogger based in Milwaukee, Wisconsin and writes for sites like debtconsolidationcare.com. Her articles help others manage their finances and solve their money problems. Follow her on Twitter here.
