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Financial independence is something for which everyone strives. But most of us never get to a stage of financial independence by choice and we reach this stage when we are very old and can no longer work anymore. And although it is not easy to achieve financial independence (aka “Findependence,”) it can be done if you know how to manage your money effectively.
1.) Develop a budget
The first thing that you need to do when you are trying to save money is to develop a budget. To develop a budget, you need to start by figuring out how much money you need to live on each month and then giving yourself an appropriate amount of money to use over the course of the month.
2.) Get a financial planner
If you have had trouble managing your finances in the past, you should consult a financial planner so that you can get the most out of your money. He or she can help you to plan out what you need to spend, so you will be able to figure out how much money you need to save in order to get where you want to be financially.
3.) Create financial goals
Setting financial goals ensures success, because it helps you to get a sense of what you want to achieve and where you want to go on your financial journey. Giving yourself short term and long term goals is usually the most effective way to achieve financial goals, because it allows you to plan and amend your plans as you go.
4.) Pay off your debts
If you have a lot of debt looming over your head, you should make sure that you pay it off before you start actively trying to save. Start by paying off your smaller debts that have the highest interest rate first, so that you won’t have to pay so much later on when the debt has increased.
5.) Get rid of student loans
When most people think of paying off their debts, they forget about paying off their student loans because they are a different kind of debt to your standard credit card debt or loan repayment. There are a few different options when it comes to repaying your student loan, from paying a fixed amount each week, to contributing a percentage of your average income every pay-day.
6.) Look into insurance
Insurance may be expensive, but it can help you save a lot of money in the long run if something goes wrong. I.e. health insurance covers you for when you go to hospital or need emergency surgery you will only have to pay the excess and not the entire cost for their services.
7.) Build up your credit score
Building up your credit score will make it easier for you to rent an apartment or take out a home or personal loan in the future, because you can be trusted to make quick and full repayments on money loaned. If you want to get a good credit score quickly, you can apply for a small and quick loan like those from CashnGo that you can repay over a short period of time. Of course, you should only borrow what you need or can afford, but paying back a small loan very fast can raise your credit score very quickly.
8.) Track expenses
Tracking your expenses helps you to find out where your money is being wasted and how you can cut back on your spending in order to save. Wasteful expenses are the last thing you need when you are trying to save, but you can also pick up on billing errors by tracking your monthly expenses. There are a lot of times where companies make billing errors that no one will ever picks up. Catching these errors can help you to save money that can be put towards your savings.
9.) Generate extra income
If you want to save money quickly so you can reach financial independence, you need to look at generating more income. Getting a second job or finding another way to make money is a good start. Things like becoming a professional driver, renting out some of your old clothes or even becoming a pet sitter are all great ways to make money that require minimal effort and time, so you can save money quicker with two jobs.
10.) Calculate your financial freedom number
In order to truly prepare yourself for financial independence, you need to calculate the amount of money that you will need to financially free. If you can work out your monthly expenses and your safe withdrawal rate per month, you will find that you can figure out how much money you will need to live each month once your reach financial independence.
It can be hard to save enough money to become financially independent. The key is to start managing and making financial plans as early as you can, so that you will have as much time as you need to save your money. If you can save a lot of money and be free of any debts that you may have had in the past, you can definitely reach financial independence. And once you reach this stage, you will feel good about your finances and not have to worry about them as much as you would have in the past.
