These 10 Habits Will Help You Reach Financial Freedom
Achieving financial freedom is a dream for most people, but few make
the dream become reality. The following are 10 key habits that help pave
the way.
Set Life Goals
A general desire for "financial freedom" is too vague of a goal. What
does it mean to you? Write down how much you should have in your bank
account, what the lifestyle entails and at what age this should be
achieved. The more specific your goals, the higher the likelihood of
achieving them. Then, count backward to the current situation and
establish financial mileposts at regular intervals. Write it all down
neatly, and put the goal sheet at the very beginning of your financial
binder.
Make a Budget
Making a monthly household budget,
and sticking to it, is the best way to ensure all bills are paid and
savings are on track. It is also a monthly routine that reinforces your
goals and bolsters resolve against the temptation to splurge.
Pay Credit Cards in Full
Credit cards and similar high-interest consumer loans are toxic to
wealth-building. Make it a point to pay off the full balance each month,
and cancel any cards save for one or two. Student loans, mortgages and similar loans typically have much lower interest rates, making them less of an emergency to pay off.
Create Automatic Savings
Pay yourself first. Enroll in your employer's retirement plan and
make full use of any matching-contribution benefit. It is also wise to
have an automatic withdrawal for an emergency fund, with at least two to
three months' living expenses, that can be tapped for unexpected
expenses and an automatic contribution to a brokerage account or similar
account. Ideally, the money should be pulled the same day you receive
your paycheck so it never even touches your hands, avoiding temptation
entirely.
Ignore the Joneses
A braggart neighbor showing off a new car or his latest smartphone is
no reason to do the same. Smile politely, nod, and take comfort knowing
your reward is coming tenfold in the future.
Watch the Credit
A person's credit score
determines what rate is offered when buying a new car or refinancing a
home. It also impacts seemingly unrelated things, such as car insurance
and life insurance premiums. The reasoning is a person with reckless
financial habits is also likely to be reckless in other aspects of life
such as driving and drinking. This is why it is important to get a
credit report at regular intervals to ensure there are no erroneous
black marks ruining your good name.
Negotiate
Many Americans are hesitant to negotiate for goods and services,
worrying it makes them seem cheap. Overcome this cultural handicap and
you could save thousands each year. Small businesses, in particular,
tend to be open to negotiation, where buying in bulk or repeat business
can open the door to good discounts.
Continuous Education
Review all applicable changes in the tax laws each year to ensure all adjustments and deductions
are maximized. Keep up with financial news and developments in the
stock market, and do not hesitate to adjust your investment portfolio
accordingly. Knowledge is also the best defense against those who prey
on unsophisticated investors to turn a quick buck.
Proper Maintenance
Taking good care of property makes everything from cars and lawn
mowers to shoes and clothes last longer. Since the cost of maintenance
is a fraction of the cost of replacement, it is an investment not to be
missed.
Exercise and Eat Right
The principle of proper maintenance also applies to the body. Some
companies have limited sick days, making it a notable loss of income
once those days are used up. Obesity and ailments make insurance
premiums skyrocket, and poor health may force earlier retirement with
lower monthly income.
Get Out of Debt – Start Making Money
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