Everyone wants financial freedom, but what does that look like? Is financial freedom the same for everyone? For some, it’s the ability to retire worry-free and enjoying the latter years. For others, it’s being able to make large purchases in cash or being able to handle an emergency without having to panic or the need to borrow. In reality, it’s the idea of being able to handle anything financial without taking on debt or stress.
There are a lot of points to consider when planning out your path to financial freedom. Here are a few easy to follow ideas to help you meet your financial goals towards financial freedom.
Needs Over Wants
We become shaped by the society we live in to want everything we see in the frame of a need and to need that item right now. This is something that can put a big dent in everyone’s/anyone’s finances. We have to move toward a habit of distinguishing what is necessary right now. Breaking this bad habit will take time as it will need to be a change for the way you see life, but it is possible.
As we are now approaching the holiday season it is important to focus on necessity over desire. This is especially true when it comes to the large purchases we often make during this time of the year. It is important to take a step back and consider the grand scheme of your current and future budget. Say you got approved for a larger loan or credit limit when you wanted to make a purchase. At the moment, the thought of going with a bigger, expensive buy may seem like the way to go. Bigger is better right? No! Don’t let possibility cloud your judgment.
Our biggest roadblock to gaining financial freedom is the inability to spend within our limit. This doesn’t mean that every now and then you can’t treat yourself to something extravagant. We need to be smart about when and how often we treat ourselves. Make big purchases part of your financial goals. Instead of spontaneous large purchases, budget and save for the items that you need. This way you don’t fall into buyers regret or deeper into debt. (See also:4 Essential Things to Include in Your Monthly Budget Plan)
Cash Instead of Card
It is a proven fact that people spend more money when they use a card over cash when making purchases. The idea is that the possibilities are endless when you have a card. You can pay for anything at any amount based on your credit at any time. There is no connection to the actual amount that is being given out. We hand over a piece of plastic and we don’t think about it again. If we had to count out those hard-earned $100 bills we would be quick to second-guess handing them over every time. We have turned using a card into a habit because of its convenience.
The things that are quick and convenient aren’t necessarily what is best for us and it’s definitely not what is best for our budget. Card usage and tapping technology have made making purchases and impulse buy the easiest it ever been. Since you don’t see your bank account, your purchasing habits don’t register until you get the bill at the end of the month or you look at your statement online.
The best way to combat that convenient habit is to make purchases in cash whenever and wherever you can. By using cash your money is tangible when you are trying to budget. The impact after every purchase is immediate. You know how much you’ve spent and what little you may or may not have left. This system will allow you to make smarter decisions on what you spend your money on. It will also most definitely help you make fewer impulse purchases.
This may seem counter-intuitive but it’s something you should be doing to foster personal contentment and growth. Part of financial freedom is building a better relationship with money. One of the ways to do this is by not being afraid of letting it go. Give some away, no matter how little, to a charity, or an organization you believe in. It will help change your financial mindset for the better. You will not feel tied down to the fear of what lack might be. You will also feel good by helping others who are in need.
There are no rigid guidelines when it comes to giving. Some people give 10% to their church. Others donate to support a cause that they feel is doing more than they could to those who need it the most. Hoarding in any capacity never helped anyone. Giving does something to and for you which can only be described as a form of peace and tranquillity. You can’t put a price on that kind of feeling.
Stay In or Plan Ahead
Nothing is better than a great meal at a restaurant with a breathtaking view or scenery. Eating out is a pleasurable experience. It allows us to relax, indulge and unwind after a long day at the office or a long week with all the household responsibilities. It saves time, effort and the best part there is no clean up afterward. It’s nice to indulge like this every now and then, but once it becomes a regular occurrence in our everyday life it can create a financial problem. As great as eating out is it isn’t great on your budget or your financial goals.
When it comes to financial freedom, the first thing that you must cut back on are extravagances like social drinking and eating out. Over time these activities can put a pretty big dent in your budget plans. There are two things that you can do to make sure that you can still indulge in decadent meals and drinks with friends. You can stay in or plan ahead.
There are many resources online that will teach you how to create all the things you enjoy drinking and eating. You can even make this a fun time with friends by having them take part in creating the food or drink you would go out for. Not only are you saving money you are also bonding and creating memories for everyone.
If you must get out and shed some stress, then be wise to start planning ahead. If you are going out after work or on the weekend the best thing to do is to see where the deals are. Great food still tastes great at a discount. Happy hour, weekend brunch and drink specials are an excellent way to get deals and save. It is also a great time to indulge in all the foods you love at a great price. It is still possible to have a great time and indulge while sticking to your budget plans if you plan ahead.
Alcohol? You might be thinking how is this going to help my budget? Drinking on the weekends with friends is a good time, but it is also a huge money sink. Depending on where you choose to have a drink you could be paying anywhere from $9-10 dollars per drink. When everyone is out having a good time, you could buy like 4 to 7 drinks, especially if you’re not the designated driver.
It is easy to spend anywhere from $100-150 on a night drink with friends or alone. Breaking this habit is going to be hard especially if this is the only social activity you partake in. Even so, it will go a long way towards your budget and savings plans. Alcohol is expensive but having a drink doesn’t have to be. Instead of a night on the town with friends why not have a night in where everyone can bring drinks or take turns providing them at the weekly hangout. Everyone can have whatever amount they prefer without having their bank account taking a hit.
Alcohol isn’t the only expensive habit. Think about all your indulgences and what you can do to limit them or avoid them all together. Cigarettes, decadent desserts, and even shoes can be affecting your finances. Determine what indulgences eat up the most of your budget and adjust how much or how often you partake in them. Everyone likes to have a good time, but there is no reason to break the bank over it.
Cut the Cord
Everyone has something that they like to do to help them escape reality for a little while. For some, it may be a good book and for others it’s television. There is “Must See T.V.” and “Thank God it’s Friday” and lots of other gimmicks to get you to tune in, but is it worth paying so much for 1-2 hours of television a week? No, it’s not.
Having cable won’t put you in debt, but it’s definitely not helping you reach your financial potential. There are currently many alternatives offering similar services to what you get from a cable provider at a more affordable rate. Streaming services such as Hulu and Netflix are becoming more of a go-to option. People are enjoying the ability to watch their shows and movies on their own time. There are some drawbacks such as waiting for the site to upload the episode or series. But at their affordable price, you can use the time to count your savings on your way to financial freedom.
One great way to save money and stay within your budget is to shop with intention. When going to the grocery store or just to the corner market to grab one thing it is an excellent idea to have a plan of execution. Create a plan ahead of time and stick to it. Stores of every kind are set up to draw your intention away from what you need and bring you around to the stuff you want. The snacks and drinks at the checkout line aren’t there by accident. They’re there to tempt you outside of your budget plans.
A great habit to form is making a list before you go out to know exactly what you want to do on your errand run. Planning ahead will allow you to see which stores are having the best deals. It will give you a chance to use your coupons without being in a rush. It also makes shopping quicker and easier when you know exactly what you need. When you shop with a vague idea of the things you need you, temptation sets in when going down the aisles for things you had no intention of buying. Having a plan cuts all that out and allows you to save more.
There are many avenues to save nowadays. You can save between 60% to 95% on products by using coupons and apps like Groupon. You can also get cash-back from sites such as MrRebates or Ebates. Companies are looking for new business and clientele. What better way to oblige them, but by trying their service for next to nothing. Coupons and apps are great ways to help you save on products. Shopper specific days are also an excellent way to budget for the things you need and want. Nothing beats a deal that allows you to stay within your budget and achieve your financial goals.
Plan for Emergencies
There is no way to predict when a financial emergency or any emergency for that matter will occur. What we can be certain of is that emergencies will happen. We cannot avoid them as that would be like trying to avoid life, but what we can do is be prepared. Planning for emergencies helps you avoid credit card debt and spending your savings.
Your plan should include saving enough for 3-6 months’ worth of expenses in case of the unexpected. These funds can cover items such as rent, utilities, and unexpected medical bills. Often times it’s for car problems and homeownership issues. These type of issues can cause you to raise stress your level and break budgets. If you plan ahead you will save yourself from more than a headache.
Adjust Your Mindset
Achieving all your financial goals are possible, but it will take time and you will have setbacks. A setback should not be a reason to quit. It should be a learning moment for you. Learning how to handle a budget, savings plans, and debt is the key to financial freedom. Once you learn how to balance all these things you will start to see a change in your relationship with your money. You will better understand all your needs and what the essentials are for you in your life. Nothing is more freeing than letting go of unnecessary stress. Financial success can lead you to that freed feeling. (See also: Building A Positive Mindset Around Money)
Invest in Your Financial Freedom
These were a few easy to follow financial tips but there is so much more you can do to secure true financial freedom. The best way to begin is to develop a plan and a budget before taking your first steps toward savings. BudgetPolitan can help with that. Sign up to get started with us today.