While the meaning of financial independence may vary, the general idea is to have the ability to completely support yourself without the help of family and friends and be free from massive debt. Today, a great number of young women are becoming more conscious about their finances and budgeting. However, we are often clouded by our different financial responsibilities, building a barrier towards financial independence.
Despite all that, women still can outlive these problems and take full control over their finances. As a starting point, we’ll be sharing some amazing financial habits to live by.
Determine your financial goals
Setting specific and measurable financial goals is the key to staying consistent with your journey to financial freedom. Take time to envision what independence means for you and what you need to do to achieve it. Are you planning to buy a house of your own? Do you want to retire early and travel around the world? Whatever it is for you, you need to be highly specific in planning them. How much do you need to save? How long will it take you? Answering such things will help you stay on track and handle hitches along the way.
Eliminate your debt
If you can’t eliminate all your debts before starting, you always have the option to at least reduce them. Begin by paying off your highest-interest debts like credit cards, extend your student loan repayment term, ask your creditors for ways to lower your interest rates, and most importantly, avoid creating new debts. Assess what works for your situation and work your way towards having minimum monthly debt payments. If you can, or your monthly income allows you, try to put more money to pay off your debts. Create a monthly budget to track your money.
Consider savings as an expense
If you aspire to be financially independent, you have to treat your savings as a non-negotiable expense. Don’t save after spending, but instead spend after saving. This might be difficult for many, especially you’re a low-income earner. But this isn’t something you need to rush. You can gradually increase your savings or just set a specific amount to save every month and stick to it. The most important things you should be saving for are your emergency fund, retirement account, future home, hobbies or skill top-offs, or travel.
Build your credit score
Most people think about having credit cards as a bad idea. But in reality, it is a great way to build your credit score if you use your card right. Having a healthy credit score is beneficial in so many ways. For instance, it can help you easily get an FHA loan and save on big-ticket ones’ interest rates. Having a high credit score can also give you better terms on various loan products, insurance discounts, and even more housing options. Some easy ways to build a good credit score are paying bills as early as you can, spending only 30% of your limit to ensure you can pay it off much easier and faster, keeping your balances low, and opening new accounts if needed.
Making responsible financial decisions can be confusing most of the time. For that reason, it’s a good idea to learn about the ins and outs of personal finance. Educate yourself about the different strategies for budgeting, saving, and investing. Luckily for you, there are tons of resources online you can access for free or at a low price. You can check out e-learning sites like Skillshare and Udemy or find professional financial advisors on YouTube. Take advantage of such resources and learn how to build your wealth the right way.
Live below your means
Suppose you haven’t started a frugal lifestyle yet; now the right time to do so. Living below your means and only spending on things that matter the most will greatly impact building wealth. The habit of living with less can’t just help you save more but also allow you to achieve early retirement, financial contentment and have the ability to overcome financial storms. Be smarter when making your decisions, and make financial planning a habit to help you be more frugal.
The journey to financial independence can be a tough road that will require you to change the way you live in so many ways. But if you’re willing to start a new lifestyle and understand the true meaning of financial freedom, the sacrifices will be worth it. Be patient and consistent in building your wealth, and you’ll soon get to live that life you’ve been dreaming of.