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Published by Programme B
The term financial freedom is often interpreted differently, depending on which experts or advisors you ask. Some consider financial freedom to be saving enough money to retire early, and for others, it’s the ability to enjoy a comfortable lifestyle without an excessive amount of financial pressure.
No matter what your definition of financial freedom may be, there are some essential steps we recommend taking to ensure you’re on the right track.
Let’s look at three helpful tips and resources you can use to find your version of financial freedom.
Learn How to Pay Off Debt
It’s not uncommon for working professionals to accumulate debt even with a full-time job. Some are carrying student loans, while others are dealing with credit card debt or unexpected medical expenses. In any case, debt is a significant obstacle to financial freedom.
If you’re only paying the minimum balance, this is an important opportunity to pay down your debt — contributing more than the minimum balance will help you make a more impactful dent in your debt. If you can cut your variable expenses down — for example, eating out less and cooking from home instead — putting those extra funds to your outstanding payments puts you one step closer to a solid financial foundation.
There’s also the option to consolidate your debt — this involves accessing fast and easy online loans from an alternative lender to pay off your current balances or a majority of them. This means you’re now responsible for one or two payments as opposed to multiple creditors.
Automate Your Savings
If you’re putting money aside manually, it’s easy to put away less than you originally planned or justify skipping a month. Automating your savings adds accountability to your current budget strategy. When you set up a new savings plan, you can schedule your payments to come directly from your paycheck deposit. This way, the money is never in your chequing account, and you’re not tempted to spend it.
The benefit of automating your savings is you can tailor it to fit your current income and work around your fixed expenses. Any money you can put aside will help you in the long run.
Start Investing
Investing can feel overwhelming, mainly if you associate the word with the stock markets. In reality, investing can take on a spectrum of meanings depending on the individual and their financial goals.
Learning about investing is much simpler than most people anticipate because there are several options available that are low-risk but will yield significant results over time. One of the essential lessons to keep in mind is diversifying your portfolio — this means avoiding putting all of your money into one stock or fund. If something happens in the market, you could lose your entire contribution.
Instead, choose a selection of low-to-medium risk mutual funds or bonds to start with, and as you become more familiar with the process, you can make an informed decision with your money. When you begin investing, your goal should be to leave the money you’ve contributed in your desired accounts for a significant period to build capital. If you can achieve this, you’re on a path to finding financial freedom.