Financial independence – it’s a dream that a lot of us are still striving to reach, living pay cheque to pay cheque with no idea of how to reach that long sought-after height. Whatever your definition of financial independence might be, knowing how to reach a point in which you can comfortably say that you are exactly that is something that you need in order to set yourself on the right path to do so. While payday loans could provide relief in a financial emergency, gaining financial independence is something that everyone should aim for, and we’re exploring exactly how to do so below.
Avoid Consumer Debt
If you want financial independence, the first thing you really need to do is avoid consumer debt as much as you possibly can. Credit cards can be used effectively to improve your credit score, but the risks associated tend to outweigh the positives, especially when you’re on a low or irregular income. If you do have to get a card and want to build up a positive credit score, 0% interest credit cards are your best bet but make sure to pay off what you owe long before your period of 0% ends.
Pay Yourself First
Putting yourself first really is the best way to start your journey to financial independence, as much as it may seem like it could do the opposite. Paying yourself first essentially means making sure you put money into savings before you go on to pay bills, rent or even your groceries. While this might seem like a fools move, it will actually encourage you to live on a smaller budget though, of course, you have to be realistic about what you can afford to save. Employer-sponsored retirement funds are a great place to start. The money will automatically go out too, so you won’t have the chance to stop it, or spend the money before you can save it.
Be Frugal
Controlling your expenses might seem like a given, but we can’t express the importance of doing exactly that and adjusting your spending accordingly enough. Through keeping a close eye on where your money goes every month, you can make more informed decisions on where you need to save and how best to go about doing exactly that. You can also use this close tracking to measure how financially independent you are and how you could alter your spending and saving habits to help you reach this goal much more quickly.
Build A Pension
Building up a substantial pension will help you not only build independence over the years, but it’ll also ensure that you remain independent even after your retirement. Relying entirely on a state pension isn’t something that very many people can safely say they do comfortably and with the risk of cuts in the future, building up your very own fund is undoubtedly your best bet. Start with a 401k pension in which your employer will match your contributions and help you build up a substantial additional fund. From here, you can start saving in your very own retirement savings account and put in as much as you like over the years. The earlier you start, the better!
Financial independence is something that everyone can reach with time, but not everyone knows how. Whether you choose to start saving now or work out your debts first, starting on these all-important steps will have you much more financially independent in no time.