Reach Your Financial Stability Goal in 10 Steps
A majority of us wish to reach the stage when we can finally buy the things we want and not just the things we need. Who wouldn’t want to live a worry-free life with no personal loans and piling bills to think of? Who wouldn’t want to have their emergency and retirement fund intact while having the freedom to purchase the things you want?
For some, working hard and saving money is the best way to reach the goal of financial stability. But it is not just these. There are other ways one can reach financial freedom without putting pressure on one’s self.
Here are ten steps to reaching financial stability:
Determine your current financial situation
Lay down all your cards and determine your financial status. Are you in deep debt with your credit card company? Or are you on top of your finances and have already saved up a large chunk of money at the bank? Knowing your current situation will allow you to determine the areas where you can improve on.
Invest in improving yourself
Although we are talking about saving, there is no harm in investing for yourself. You can take up a new course and learn something new. You can take up online classes for the courses you are interested in—be it copywriting, digital marketing, or even baking and cooking. Remember that investing in yourself will benefit you in the long run.
Earn more by doing what you are passionate about
The most rewarding way to financial stability is by working on the things you are passionate about. Determine what your strengths are and whether these strengths go well with your interests. We know that there are people who stick to their jobs simply because of the stability it provides despite that their hearts are not into it—as long as it pays their personal loans, monthly bills, or whatnot, they’ll chug along and work through it. But, clearly, it is more rewarding and fulfilling to do something that you love, especially if doing what you love allows you to pay the bills. So try as much as possible to earn money by doing things you love.
Learn how to budget
Determine where your income comes from. Is it from your job? Do you also get funds from some side hustle? Knowing your cash flow will keep you aware of how well you should be spending your money. From there, you can make adjustments in your saving and spending habits, and eventually determine the budget you need to be working on.
Save more, spend less
As you determine your budget, you’ll be able to determine the areas you need to improve on. Do you usually buy coffee at the nearby café? You might want to ditch this and brew your own coffee instead. Do you have a large electricity bill? You can save up by turning off the electric appliances when you go out. You can also try to eat and cook at home rather than eating out or buying takeout. You will see that as you cut these unnecessary spending, your savings will grow.
Save up for emergency
One rule in saving for an unexpected emergency is that you have at least six month’s worth of money saved up for it. Often people lose their jobs when they least expect it, and untoward incidents can occur that can unexpectedly put a dent on one’s business. You might suddenly need to pay for a loved one’s hospital expenses, say, or the water pipes in your own home might conk unexpectedly, requiring money for plumbing services. The point is that you need to have an emergency fund before saving for other material goals.
Pay all your debts
Eliminate all your debts, whether they’re debts in the form of personal loans or credit card debts. Make sure to pay all your existing loans so you can start anew and avoid the burden of rising interest rates.
Prepare for retirement
Every person’s goal of financial stability must also include the reality of retirement. One will need enough money saved up before retiring age. Having a retirement plan as early as possible is an important part of financial freedom. The earlier you invest, the higher the value of your investments become upon retirement.
Of course, your journey to financial freedom need not strain you from doing the things you love. Saving for your financial goals does not mean you should deprive yourself of the new bag you’ve been dreaming to get, or that concert ticket you’ve been eyeing for weeks. Just be disciplined in saving and exert the requisite amount of effort in practicing proper money management, but don’t forget to treat yourself from time to time for a job well done.
Stick with your goal
Once you develop the proper money-saving routines and are now able to spend less, minimize your debts, and budget, your journey won’t be over yet. You have to stick to your new habits for years, or until you reach the financial freedom you have been working hard to attain.
Material Based on SmartAsset.com
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