Many of us dream of the days of not having to work and traveling whenever we please. Some of us dream of living in a home owned outright. Some are looking for the security of a large nest egg to know loved ones will be taken care of when we are gone.
Whatever financial freedom means to you, there are a few important habits to help get you there.
Automate Savings and Payments
We live in a digital world and with it comes helpful tools, such as automation. Set up an automatic withdrawal from your paycheck to your retirement and savings accounts to make it feel like it was never there in the first place. Avoid unnecessary fees and keep your credit score high by setting up automatic payments for your mortgage, insurance and credit cards. These small things can help reduce stress and keep you on track to financial freedom.
Share Your Goals
While it’s generally taboo to discuss money, make a point to tell a few people you are closest to about your financial goals. Sharing with a trusted friend or family member encourages accountability. If you feel comfortable, consider sharing bad financial habits with at least one person so you have someone to keep you from slipping back into those habits.
Simple and obvious, but incredibly important. Use a pen and paper or a budgeting software system to track how much you’re spending and where you’re spending your money. For example, you may be surprised by how much you’re spending at Target or eating out in a year. If you don’t know where your money is going, it’s harder to plan for the future. Knowing your spending habits will help you make positive changes on your financial journey.
Avoid Service Charges
Are you getting charged service fees on your checking or savings accounts? Are your credit card rewards worth the annual fee? It’s important to take some time to review your accounts to see where you can eliminate service charges. Some accounts are worth a service charge while others could be moved to a free account. Ensure the benefits of your accounts outweigh the costs.
Pay Down Debt
Some debt could leverage an asset, such as a mortgage, but you don’t want to be swimming in debt. On the road to financial freedom, it’s important to put emphasis on paying off credit card debt, student loans and car loans. Eliminating monthly payments means you have more money to contribute to savings or to investments.
Pay Into Your Retirement
Regardless of your age, there is no time like the present to get serious about saving for retirement. When it comes to retirement, it’s not a one-size-fits all system anymore. 401(k), IRA and Roth accounts are all retirement savings plans to consider. Meet with a Certified Financial Planner to help create a retirement savings plan that best fits your lifestyle and personal goals.
Write Down Your Goals
Taking the time to write out your goals for the next year, 5 years and beyond will help keep you on track. Financial freedom means something different to each person, so take some time to define what it means to you. Do you want to be able to travel without worry? Is your goal to live in a home without a mortgage? Do you want to own a vacation property? Whatever your definition of financial freedom and personal goals, write them down. Reassess your goals on a regular basis and take time to celebrate when a goal is achieved.
Looking for help mapping out your long term financial goals? Request a complimentary consultation from SH&J today.