School teaches us about so many different things, from the efforts of the Wright Brothers to how to craft a well-written essay. One thing we often don’t learn in school is how to successfully handle our money, which hinders our ability to become financially independent.
This guide offers helpful financial tips so you can take control of your money for the peace of mind you deserve.
1. Set Financial Goals
Before taking any steps towards financial freedom, you should set objectives to keep you motivated. Whether you want to wipe out your student loans, stick to a budget, or build an emergency fund, keep it specific, realistic, and achievable.
Think about how much money you need to achieve these financial goals and how long it’ll take. What has to change in your life to make these objectives possible? Write down a plan and put it somewhere you’ll see it regularly.
Detailed goals will help you stay on track, working towards a single outcome rather than just “saving.” Check-in with these targets often and constantly evaluate your progress.
You should set objectives to keep you motivated.
2. Talk About Money
You may have been taught that it’s inappropriate or rude to talk about money. The “elephant in the room” approach leaves individuals feeling isolated, embarrassed, and guilty about their financial struggles. However, 63% of the American population is just getting by, living paycheck to paycheck, while others are earning over six figures.
Understanding that you can ask for help and talk about your finances with your partner, parents, or friends is essential to reach the financial goals you’ve set for yourself. With that weight off your shoulders, you’ll be more energized than ever to start moving in the right direction.
You can also find trained professionals to help you manage your money, avoid debt, or work your way out of it. Financial planning, credit card counseling services, and debt management advisors might be the support you need to take control of your money.
3. Create a Budget and Stick to It
Implementing a budget is one of the biggest steps you can take on your way to becoming financially stable. A budget will help you track where your money is going, ultimately allowing you to better manage it. When you enhance your financial visibility, you’ll feel better about paying bills, like your monthly insurance premium, and putting money away for retirement.
If budgets are so crucial to helping people feel better about their financial situation, why are they so often overlooked? Well, it takes commitment to hold off buying things you don’t need but may want — like a morning coffee from your favorite coffee shop. Plus, spending is easy nowadays. However, these smaller purchases can add up quickly and impact your future goals.
To get started with a budget, track all your spending, whether that means keeping all your receipts, using an excel spreadsheet, or even downloading a financial tracking application. The key is to find something that works for you and stick to it, no matter how challenging it gets — it will pay off in the long run.
Don’t forget, make sure to pay yourself first. It can be easy to fall into the habit of taking care of all your responsibilities just to be left with little to nothing for your savings. Make yourself a priority and put away what you can.
Smaller purchases can add up quickly and impact your future goals.
4. Understand Your Debt Situation
Student loans, credit cards, auto loans, and mortgages can be intimidating. This pressure often leads people to turn a blind eye toward their circumstances — accepting that it’s simply a way of life.
Fortunately, there are methods to pay off your debt as quickly as possible. Of course, getting rid of debt or becoming financially stable doesn’t happen overnight. It takes months, if not years, of hard work to achieve — but recognizing where you are and making changes is a huge first step.
Whether you need to pick up a few extra shifts or change some of your spending habits, one fact remains true — your debt won’t change until you do. So, list your debts on paper, ranking them from the most to the least, and start working your way through them.
5. Use Credit Cards Wisely
Many people out there will tell you that credit cards will set you up for financial disaster, while others would give their right arm for their cards — metaphorically, of course. The fact of the matter is that they’re both right.
Credit cards are vital tools that will help you build your credit and secure loans for a house or car. But if you treat them as free money, you could quickly find yourself swimming in debt. These pieces of plastic come with high-interest rates that often result in you paying even more than what they advertise.
To avoid falling victim to these rates, pay off your entire balance at the end of the month. You’ll enjoy all the perks credit cards provide, such as air miles and cash back, while establishing a super credit score at the same time!
6. Create an Emergency Fund
An emergency fund is a stash of money you’ve set aside to deal with whatever life throws your way, such as home repairs, car trouble, or medical emergencies. This fund is essential to your financial confidence.
Since you won’t regularly come in contact with this money for your day-to-day expenses, it can grow for when you really need it. Having this backup will help reduce your financial stress. You’ll feel more comfortable when times get tough, knowing you’re sitting on savings that can get you through it.
An emergency fund is essential to your financial confidence.
7. Start Saving for Retirement Early
Whether you’ve just graduated college or are about to turn 30, retirement may seem like a lifetime away. But anyone nearing retirement will tell you it’s much easier to save for retirement when you’re young because of one relentless force — time.
When you’re younger, you typically have fewer responsibilities, greater flexibility, and more time to start building up a sizable nest egg. Consider opening a savings account or a Roth IRA and take advantage of your employer-sponsored retirement plan, if you have access to one.
Accounts like these often earn compound interest, which means you can earn interest on your interest — cool, right? So, even if you don’t make that much when you’re young, you can start saving just a little, which will grow into an amount you can enjoy decades down the line when you’re ready to retire.
It’s Time to Achieve Financial Freedom
If you’re on the road to becoming financially independent, a few tweaks to your lifestyle, mindset, and economic strategies will go a long way in helping you achieve your goals. You can start taking steps to financial freedom by making smart money choices, setting you up for a comfortable, stress-free future.
Featured image courtesy of Avery Evans on Unsplash. No changes were made to this image. Image license can be found here.
Beth Rush
Beth is the Managing Editor and content manager at Body+Mind. She is a well-respected writer in the personal wellness space and shares knowledge on various topics related to mental health, nutrition, and holistic health. You can find Beth on Twitter @bodymindmag. Subscribe to Body+Mind for more posts by Beth Rush!