What does it mean to be financially independent? This goes beyond being able to meet your essential living needs like rent, food, utilities and medical care. Saving money, protecting it from inflation and squandering, and building up your capital over time are all important components of financial freedom. Your personal financial system should be able to assist you, even if your primary source of income is reduced or completely disappeared.
OctaFX provides its top 10 tips for achieving financial freedom. Keep in mind that the advice will be effective only if you make it a habit to use it. Although it requires time and effort, it is worthwhile.
track your spending
Start by learning your financial inflows and outflows. It can be difficult to keep your daily purchases in your head or on a piece of paper, so if your banking app doesn’t do it automatically, install one of the expense tracker apps.
come up with a realistic budget
Next, work out a realistic budget that suits your lifestyle. Doing so isn’t just about cutting expenses: If you’re used to drinking coffee every morning, cutting it from the budget won’t work. Instead, try to plan ahead what you’re going to spend your money on.
create an emergency fund
Creating an emergency fund will help you deal with unforeseen situations, without borrowing money or selling your things to get out of the situation quickly. Setting aside 1 USD a day at the end of the month will add another 30 USD to your account.
Pay your bills on time
Tracking your monthly bills is really a part of your budget planning. Paying your bills on time is an easy way to manage your spending and avoid charges.
Get rid of unnecessary recurring charges
If you’ve ever signed up for a free trial of a streaming service, you might have recurring charges that you forgot. Check your credit card statement and make sure you don’t overpay for something you can live without. Unsubscribe and set aside that money for your emergency fund!
Pay Cash for Expensive Things (Most of Them)
Loans help you with major life purchases like a house or a car. For other large purchases, say a 65″ TV, cash is often the best way to go because it saves you the monthly interest payment you would otherwise have to pay.
Use credit cards wisely
Most credit cards these days come with a free annual fee, and promotional offers can sometimes be beneficial. However, make sure your payments are on time, keep your credit card limit in place for tight situations, and pay off purchases within a month to avoid additional charges.
Diversify your savings
To protect your savings from inflation and other negative market factors, try to diversify them with different currencies, precious metals and real estate income (earned from renting out a property). This will make your portfolio more flexible.
start saving for retirement
Whatever your age, start saving for old age – the younger you are, the more you get. Set up a separate fund or fixed deposit to ensure that you do not use the money for purposes other than savings.
create an investment strategy
Choose thoughtfully. There are many forms of investing: some are more easily accessible, while others are more complex. However, even a small contribution to your investments has the potential for additional income and financial independence.
Let’s say it again: The tips above will help you create a more independent personal financial system, if followed daily. Being independent is not a hobby – it is a lifestyle.